Mahua Bagchi, Kolkata V. A.C.I.T., Circle - 61, Kolkata, Kolkata

ITA 3/KOL/2023

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The case revolves around the denial of a foreign tax credit claimed by Mahua Bagchi, an employee of Cognizant Technology Solutions India Pvt. Ltd., who worked in the UK and returned to India. She claimed a foreign tax relief of Rs. 17,72,470, which was deducted in the UK on the profits from equity shares granted under an Employee Stock Option Plan (ESOP). The Assessing Officer (AO) initially allowed the claim but later withdrew it due to the late filing of Form-67, required for claiming the credit. The Income Tax Appellate Tribunal (ITAT) in Kolkata overturned the AO's decision, allowing the credit despite the delay in filing Form-67, citing precedents and the absence of a specific provision in the Income Tax Act that mandates denial of credit for such a technicality.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128814 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-01-2023
• Other Referred Cases: Atanu Mukherjee Vs. ITO, Sobhan Lal Gangopadhyay Vs. ADIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief
• Section: 154; 143(3); 143(1); 139(1)

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'सी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA श्री राजपाल यादव, उपाध्यक्ष (कोलकाता क्ष े त्र) एवं श्री राज े श क ु मार, ल े खा सदस्य क े समक्ष Before SRI RAJPAL YADAV, VICE PRESIDENT & SRI RAJESH KUMAR, ACCOUNTANT MEMBER I.T.A. No.: 3/KOL/2023 Assessment Year: 2017-18 Mahua Bagchi..........................................................Appellant [PAN: ADXPB 7901 P] Vs. ACIT, Circle-61, Kolkata.......................................Respondent Appearances by: Sh. Somnath Ghosh, Adv., appeared on behalf of the Assessee. Smt. Ranu Biswas, Addl. CIT, Sr. DR, appeared on behalf of the Revenue. Date of concluding the hearing : July 5 th , 2023 Date of pronouncing the order : July 19 th , 2023 ORDER Per Rajesh Kumar, Accountant Member: This appeal preferred by the assessee is against the order passed by Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] for the Assessment Year (in short ‘AY’) 2017-18. I.T.A. No.: 3/KOL/2023 Assessment Year: 2017-18 Mahua Bagchi. Page 2 of 4 2. The only issue raised by the assessee is against the order of Ld. CIT(A) confirming the order passed by the Assessing Officer (in short ld. 'AO') u/s 154 r.w.s. 143(3) of the Income Tax Act, 1961 (in short the 'Act') wherein the claim of foreign tax relief amounting to Rs. 17,72,470/- was not allowed which was claimed u/s 90/90A of the Act. 3. Brief facts of the case are that the assessee is an employee of Cognizant Technology Solutions India Pvt. Ltd. since 1999 and was transferred to UK in May, 2008 and worked in UK till September, 2020. Thereafter the assessee was again transferred to India. The assessee got benefits from the employer in the form of equity shares granted to her under Employee Stock Option Plan (in short ‘ESOP’) and restricted stock. These stocks got vested over a period of four years if the assessee worked for the said employer company under ESOP. The profit which goes to the assessee would be determined on the basis of grant price of $19.66 and the sale price. Accordingly, the tax was deducted in UK amounting to Rs. 17,72,470/- which was claimed by the assessee as foreign tax u/s 90 of the Act. However, Form-67 as required to be filed on or before filing the return of income u/s 139(1) of the Act was not filed. The assessee filed the return of income after the due date and also filed Form-67 with the delay of two and a half years from the date of filing return. The AO CPC passed the order u/s 143(1) of the Act dated 28.03.2019 and the claim was allowed in respect of foreign tax. However, when the assessee filed the form 67 in respect of foreign tax deducted, the AO by passing order u/s 154 of the Act I.T.A. No.: 3/KOL/2023 Assessment Year: 2017-18 Mahua Bagchi. Page 3 of 4 withdrew the foreign tax credit of Rs. 17,72,470/- on the ground that the assessee has filed Form-67 two and a half years after the due date of filing the return. 4. Ld. CIT(A) also dismissed the appeal of the assessee of the assessee upholding the order of AO on the ground that form 67 was not filed in term of provisions of Rule 128 of Income Tax Rules,1962 on or before the due date of return of income u/s 139(10 of the Act. 5. After hearing rival contentions and perusing the material on record, we find that the assessee served abroad and some foreign tax to the tune of Rs. 17,72,470/- was deducted in United Kingdom under DTAA between India and UK and provision of Section 90(2) of the Act. We also note that Rule 128 sub-Rule 9 provides that Form-67 should be filed on or before the due date of filing the return of income. However, we note that nowhere it is stated that in case of delayed filing of Form-67 by way of foreign tax credit which is deducted from the assessee in foreign country i.e U.K. would be denied. Accordingly, we are of the considered view that the assessee is entitled to get this foreign tax credit of Rs. 17,72,470/- u/s 90 of the Act. We also note that the claim in respect of foreign tax was allowed in the order passed u/s 143(1) of the dated 28.03.2019 and was withdrawn by the AO by passing order u/s 154 of the Act when the assessee filed form 67 before the AO. In our opinion the credit in respect of foreign tax cannot be denied to the assessee for the technicality of not filing the form 67 within the due date of return u/s 139(1) of the Act. The case of the assessee finds support from the decision of Coordinate Benches in I.T.A. No.: 3/KOL/2023 Assessment Year: 2017-18 Mahua Bagchi. Page 4 of 4 the case of Atanu Mukherjee Vs. ITO in ITA No. 439/KOL/2022 for AY 2020-21 order dated 20.12.2022 and Sobhan Lal Gangopadhyay Vs. ADIT in ITA No. 782/KOL/2022 for AY 2020-21 order dated 09.05.2023. 6. In the result, the appeal filed by the assessee is allowed. Kolkata, the 19 th July, 2023. Sd/- Sd/- [Rajpal Yadav] [Rajesh Kumar] Vice-President Accountant Member Dated: 19.07.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. Mahua Bagchi, C/o. S.N. Ghosh & Associates, Advocates Sagar Mansion, 2, Garstin Place, 2 nd Floor, Suite Nos. 202 & 203, Hare Street, Kolkata-700 001. 2. ACIT, Circle-61, Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata