Kiran Khera, Delhi V. Circle Int.Tax. 1(1)(2), Delhi

ITA 433/DEL/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2942 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2019-2020
• Appeal Filed On: 02-03-2022
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Section: 90; 139; 143(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI G.S. PANNU, PRESIDENT & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.433/Del/2022 Assessment Years: 2019-20 Kiran Khera, C-6/4, Vasant Khera, New Delhi-1100 57 Vs. ADIT, CPC, Bangalore PAN :AIXPK0428M (Appellant) (Respondent) ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER: This is an appeal by the assessee against order dated 31.01.2011 of learned Commissioner of Income-Tax (Appeals)-42, New Delhi pertaining to assessment year 2019-20. 2. The basic grievance of the assessee is against disallowance of foreign tax credits amounting to Rs.6,42,677. Assessee by Shri Yudhister Mehtani, CA Department by Shri Sanjay Kumar, Sr. DR Date of hearing 08.09.2022 Date of pronouncement 26.09.2022 2 ITA No. 433/Del./2022 3. Briefly, the facts are, assessee is a resident individual stated to be deriving income by way of pension and annuity received from United States of America. In the impugned assessment year, assessee received pension and annuity amounting to Rs.22,14,620. 4. In the return of income filed on 15.03.2020 for the impugned assessment year, assessee offered the income received from pension and annuity. As against the income offered, assessee claimed foreign tax credits of Rs.6,42,677, being the amount of tax paid in United States on the income earned. Further, in compliance with the provisions of the Act, assessee filed Form No. 67 on 11.03.2020 claiming the foreign tax credits. While processing the return of income filed by assessee under Section 143(1) of the Act, the Centralized Processing Centre (CPC) disallowed foreign tax credits claimed by assessee under Section 90 of the Act. 5. Contesting such disallowance, assessee preferred an appeal before learned First Appellate Authority. However, first appellate authority sustained the disallowance, firstly, on the reasoning that in terms of Rule 128(9) of the Income-Tax Rules, assessee had to submit Form No.67 on or before the due date specified for furnishing the 3 ITA No. 433/Del./2022 return of income under sub-section 1 of section 139 of the Act. Secondly, he observed, in terms with Section 90(4) of the Act, assessee has to submit a residency certificate of any country outside India for claiming the relief and, thirdly, he observed, as per Rule 128(8), assessee is required to submit various other documents in addition to Form No. 67. 6. Alleging that assessee had not furnished all the requisite documents as specified under Rule 128(8) of the Act, he ultimately concluded that assessee is not entitled to claim foreign tax credits under Section 90 of the Act. 7. Before us, learned counsel appearing for the assessee submitted, though, assessee has not submitted Form No. 67 on or before the due date of furnishing of return specified under Section 139(1) of the Act, however, he has furnished Form No. 67 before actual date of filing the return of income for the assessment year under dispute. He submitted, the condition prescribed under Rule 128(9) cannot be considered to be mandatory in nature. In this context, he relied upon a decision of the Tribunal in case of M/s. 42 Hertz Software India (P) Ltd. vs. ACIT in ITA No.29/Bang./2021 dated 07.03.2022. Further, he drew our 4 ITA No. 433/Del./2022 attention to Notification No.100/2022/F.No.370142/35/2022-TPL dated 18.08.2022 issued by the Central Board of Direct Taxes (CBDT) and submitted that sub-rule (9) of Rule 128 of the Act has been amended w.e.f. Ist April,2022 by substituting the old provisions with the following: “(9) The statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the end of the assessment year relevant to the previous year in which the income referred to in sub-rule (1) has been offered to tax or assessed to tax in India and the return for such assessment year has been furnished within the time specified under sub-section (1) or sub-section (4) of section 139. Provided that where the return has been furnished under sub- section (8A) of section 139, the statement in Form No.67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) to the extent it relates to the income included in the updated return, shall be furnished on or before the date on which such return is furnished.” 8. Thus, he submitted, the benefit of the amended Rule should be given to assessee. As regards, the allegations of the learned Commissioner (Appeals) that various other documents were not furnished, learned counsel for the assessee submitted, all the documents as per Rule 128(8) of the Act were furnished along with 5 ITA No. 433/Del./2022 Form No. 67 and return of income. He submitted, this can be verified by the assessing officer. 9. The learned Departmental Representative submitted, the assessing officer may be directed to verify assessee’s claim in accordance with the statutory provisions. 10. We have considered rival submissions and perused the material available on record. 11. As far as factual aspect of the issue is concerned, there is no dispute that assessee has furnished its return of income for the impugned assessment year on 15.03.2020. Whereas, Form No.67 claiming foreign tax credits was furnished on 11.03.2020. Learned Commissioner (Appeals) has disallowed foreign tax credits, primarily, for non-fulfillment of conditions prescribed under sub-Rule (8) and(9) of Rule 128. In so far as, non-furnishing of Form No. 67 within the due date of furnishing of return of income as specified under Section 139(1) of the Act, we have noted, the co-ordinate Bench in case of M/s. 42 Hertz Software India (P) Ltd. vs. ACIT (supra) has held that the rule prescribed under Rule 128(9) of the Act cannot be treated as mandatory but is directory in nature as the said Rule does not provide 6 ITA No. 433/Del./2022 for disallowance of foreign tax credits in case of delay in filing Form No.67. That being the legal position, we hold that assessee’s claim of foreign tax credits cannot be disallowed merely on the reasoning that Form No. 67 was filed beyond the due date of furnishing of return under Section 139(1) of the Act. This view also get fortified by the subsequent amendment brought to Rule 128(9) of the Act by providing that Form No. 67 can be furnished within the time specified under sub-Section (1) and sub-Section (4) of section 139 of the Act. 12. As regards other allegations of the learned Commissioner (Appeals) that assessee has not furnished the other requisite documents as provided under Rule 128(8) of the Act, though, learned counsel appearing for the assessee has submitted before us that all those documents were filed before the assessing officer, however, on the face of the allegations made by learned Commissioner (Appeals) in paragraph 8.5 of the impugned order, we cannot give a clean chit to the assessee at this stage. Considering the fact that the assessee is stated to be in possession of documentary evidence, as required under rule 128(8) and (9), we direct the assessee to furnish them before the Assessing Officer for examination. The Assessing Officer is directed 7 ITA No. 433/Del./2022 to verify the documentary evidences filed or to be filed by the assessee and allow foreign tax credit in accordance with the extant rules read with section 90 of the Act. Grounds are allowed for statistical purposes. 14. In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 26 th September, 2022. Sd/- sd/- ( G.S. PANNU ) (SAKTIJIT DEY) PRESIDENT JUDICIAL MEMBER Dated: 26 th September, 2022. Mohan Lal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi 8 ITA No. 433/Del./2022 Sl. No. Particulars Date 1. Date of dictation (Order drafted through Dragon software): 14.09.2022 2. Date on which the draft of order is placed before the Dictating Member: 16.09.2022 3. Date on which the draft of order is placed before the other Member: .09.2022 4. Date on which the approved draft of order comes to the Sr. PS/PS: 20.09.2022 5. Date of which the fair order is placed before the Dictating Member for pronouncement: 22.09.2022 6. Date on which the final order received after having been singed/pronounced by the Members: 26.09.2022 7. Date on which the final order is uploaded on the website of ITAT: 27.09.2022 8. Date on which the file goes to the Bench Clerk 27.09.2022 9. Date on which files goes to the Head Clerk: 10. Date on which file goes to the Assistant Registrar for signature on the order: 11. Date of dispatch of order: