Nitin Prabhakar Dixit , Panvel V. Deputy Commissioner Of Income Tax , Panvel

ITA 798/PUN/2022

AI Insights

The case revolves around the denial of a foreign tax credit claimed by Nitin Prabhakar Dixit, who had earned salary income from Iraq and had foreign tax deducted therefrom. The primary legal issue was whether the foreign tax credit could be claimed despite the filing of the requisite Form No.67 after the due date for filing the income tax return under section 139(1) of the Income-tax Act, 1961. The Assessing Officer (AO) and the CIT(A) had denied the credit based on the strict interpretation of Rule 128(9) of the Income-tax Rules, which requires the submission of Form No.67 by the due date of the return. The Tribunal, however, interpreted the rule as directory, allowing the credit since the substantive conditions were fulfilled.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137229 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-03-2023
• Assessment Year: misc
• Appeal Filed On: 03-11-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. /ITA No.798/PUN/2022 िनधा रण वष / Assessment Year: 2018-19 Nitin Prabhakar Dixit, Flat No.601, Plot No.132, Heritage Heights, M.C.C.H. Society, Near ICICI Bank, Panvel, Maharashtra 412 206 PAN : AFIPD9976R Vs. DCIT, Panvel Appellant Respondent आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order dated 07-09-2022 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2018-19. 2. The only issue raised in this appeal is against not granting benefit of foreign tax credit amounting to Rs.12,35,432/-. Assessee by: Shri Balaji V. Revenue by: Shri Ramnath P. Murkunde Date of hearing 24-03-2023 Date of pronouncement 24-03-2023 ITA No.798/PUN/2022 Nitin Prabhakar Dixit 2 3. Briefly stated, the facts of the case are that the assessee is a resident who earned salary income of Rs.1,55,02,778/- from serving in Iraq. Tax of Rs.12,35,432/- was deducted in Iraq from the salary paid to him. The assessee claimed set off of such foreign tax credit in the return filed u/s 139(1) of the Act. However, evidence of payment of foreign tax in Form no. 67 was received on 04-09-2018, that is, after a few days from the due date of filing the return u/s 139(1) of the Act. The assessee filed Form No.67 on 25-03-2019 and a revised return on 26-03-2019 claiming foreign tax credit. Intimation u/s.143(1) was issued on 08-06-2020 in respect of the revised return denying the benefit of foreign tax credit, because such return claiming foreign tax credit was filed beyond the due date u/s.139(1), namely, 31-08-2018. The ld. CIT(A) affirmed the action of the AO by considering Rule 128 read with Form No.67. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 4. We have heard the rival submissions and gone through the relevant material on record. There is no dispute on the fact that the assessee paid foreign tax and the original return filed ITA No.798/PUN/2022 Nitin Prabhakar Dixit 3 u/s.139(1) did not have the requisite Form No.67 as it was actually received on 04-09-2018. Rule 128, dealing with foreign tax credit, provides that an assessee being a resident shall be allowed a credit for the amount of any foreign Tax paid by him in a country or specified territory outside India by way of deduction or otherwise in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India in the manner and to the extent as specified in this rule. Admittedly, the corresponding income to the foreign tax paid has been offered in the year under consideration. Clause (9) of Rule 128, which is material for our purpose, provides that the statement in Form No.67 shall be furnished on or before the due date specified for furnishing the return of income u/s.139(1). It is this clause of Rule 128 which has hindered the granting of foreign tax credit as the original return u/s.139(1) was without Form No.67, but the revised return accompanying Form No.67 was filed beyond the time u/s.139(1) of the Act. Under such circumstances, the question arises as to whether the amount of foreign tax paid by the assessee should be discredited? If we go with the strict language of Rule 128(9), it becomes clear that the ITA No.798/PUN/2022 Nitin Prabhakar Dixit 4 filing of Form No.67 within time allowed u/s.139(1) is sine qua non for claiming foreign tax credit. However, the point to be noted in the instant case is that the assessee did pay foreign tax and offered the corresponding income for taxation in India during the year. On payment of foreign tax, rule 128(1) gets triggered which provides for allowing credit for such foreign tax. The procedural requirement given in Rule 128(9) cannot be allowed to make the claim invalid when such a claim is made before the processing of the return u/s.143(1), after duly fulfilling the stipulated condition. In our considered opinion, the requirement stipulated under clause (9) of Rule 128 is directory and not mandatory. Once the substantive requirement of having paid foreign tax and filed Form No.67 is fulfilled, the requirement of furnishing such a form before the time allowed u/s.139(1) becomes directory, whose non-compliance cannot invalidate the claim for foreign tax credit. In view of the fact that the assessee actually received Form No.67 after the time allowed u/s.139(1) and revised the return accordingly submitting Form No.67 and it is further not disputed that the foreign tax relates to the corresponding income offered for taxation in the ITA No.798/PUN/2022 Nitin Prabhakar Dixit 5 year under consideration, we are of the considered opinion that the foreign tax credit cannot be withheld. The impugned order is, therefore, overturned and it is directed to allow foreign tax credit against the tax liability of the assessee. 5. In the result, the appeal is allowed. Order pronounced in the Open Court on 24 th March, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 24 th March, 2023 Satish आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent; 3. The Pr.CIT concerned 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे “A” / DR ‘A’, ITAT, Pune 5. गाड फाईल / Guard file आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune ITA No.798/PUN/2022 Nitin Prabhakar Dixit 6 Date 1. Draft dictated on 24-03-2023 Sr.PS 2. Draft placed before author 24-03-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *