MRS. VENKATARAMAN LAKSHMI, CHENNAI V. ITO NON CORP CIRCLE-7(1), CHENNAI

ITA 704/CHNY/2023

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The case involves Mrs. Venkatraman Lakshmi, who appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the intimation by the Centralized Processing Center, Bengaluru, denying her claim for a foreign tax credit of Rs.1.22 Lacs for the Assessment Year 2019-20. The denial was initially based on the non-filing of Form 67 along with the return of income as required under Rule 128(9) of the Income Tax Rules. The Tribunal referenced several precedents where it was held that the filing of Form 67 is directory, not mandatory, and thus, the assessee's late submission of the form during the appellate proceedings should not disqualify her from receiving the tax credit.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134121 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-08-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 29-05-2023
• Other Referred Cases: Shri Prakash Varadarajulu vs. DCIT, Sonakshi Sinha vs. CIT, 42 Hertz Software India (P.) Ltd. vs. CIT, Ms. Brinda Rama Krishna vs. CIT, Vinodkumar Lakshmipathi vs. CIT(A), Wipro Ltd vs. CIT
• Laws Referred To: Income Tax Act, Income Tax Rules
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J. VIGNESH LD
• Section: 90; 143(1)

Judgement Text

आयकर अपीलीय अिधकरण “ए” ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI माननीय ी महावीर िसंह, उपा ! एवं माननीय ी मनोज कुमार अ%वाल ,लेखा सद( के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.704/Chny/2023 (िनधा)रण वष) / As sessment Year: 2019-20) Mrs. Venkatraman Lakshmi No.1, Palat Madhavan Road, Mahalingapuram, Chennai-600 034. बनाम / V s . ITO Non –Corporate Circle-7(1), Chennai. थायीलेखासं./जीआइआरसं./PAN/GIR No. AJDPL-4567-B (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ कीओरसे/ Appellant by : Shri J. Vignesh (CA) - Ld. AR थ कीओरसे/Respondent by : Ms. Deeptha M.S. (JCIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 31-08-2023 घोषणाकीतारीख /Date of Pronouncement : 31-08-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 28-04-2023 in the matter of an intimation issued by CPC, Bengaluru u/s 143(1) on 24-03-2021 denying Foreign Tax Credit of Rs.1.22 Lacs as claimed by the assessee u/s 90. The same was denied for want of filing of requisite Form 67 along with return of income. 2 ITA No.704/Chny/2023 2. The assessee filed Form 67 during appellate proceedings and lay claim on the credit by relying on certain decision of Tribunal as enumerated in assessee’s written submissions during first appellate proceedings. However, Ld. CIT(A) upheld the intimation on the ground that Form 67 as required under Rule 128(9) was not furnished along with return of income u/s 139(1). This condition was mandatory and not directory as pleaded by the assessee. Aggrieved, the assessee is in further appeal before us. 3. We find that this issue has been adjudicated by us in assessee’s favor in the decision of Shri Prakash Varadarajulu vs. DCIT (ITA No.990/Chny/2022 dated 16-02-2023) as under: - 4. We find that filing of Form 67 has been held to be directory and not mandatory in many decisions of the Tribunal. The Mumbai Tribunal, in its recent decision, titled as Sonakshi Sinha vs. CIT (142 Taxmann.com 414), held as under: - 12. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income-tax Rules, 1962 provides that 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 due date specified for furnishing the return of income under sub- section (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd. (Supra) wherein following its earlier order in the case of Ms. Brinda Rama Krishna (supra) it was held that "one of the requirements of rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67. Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi v. CIT(A) [IT Appeal No. 680/Bang/2022, 6-9-2022. It is well 3 ITA No.704/Chny/2023 settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further, the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income-tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed. In the absence of any contrary decision on record and respectfully following the consistent view of Tribunal on this issue, we direct lower authorities to grant the foreign tax credit as claimed by the assessee. 5. The appeal stand allowed. 4. Taking consistent view in the matter, we direct lower authorities to allow foreign tax credit as claimed by the assessee. 5. The appeal stand allowed. Order pronounced on 31 st August, 2023. Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा ! /VICE PRESIDENT लेखासद( / ACCOUNTANT MEMBER चे3ई Chennai; िदनांक Dated : 31-08-2023 DS आदेशकीJितिलिपअ%ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु