SHRI ARIYALUR DEVASENATHIPATHY, CHENNAI V. ADIT, CPC, BANGALORE

ITA 994/CHNY/2022

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The case revolves around the denial of a foreign tax credit claimed by the assessee, Shri Ariyalur Deva Senathipathy, for the Assessment Year 2020-21. The credit was initially denied by the Centralized Processing Centre (CPC), Bengaluru, due to the belated filing of Form No. 67, which was required under Rule 128(9) of the Income Tax Rules. The assessee had filed the form with a revised return, which was after the due date. The Commissioner of Income Tax (Appeals) upheld the denial, leading the assessee to appeal before the Income Tax Appellate Tribunal. The Tribunal, referencing several precedents, concluded that the filing of Form No. 67 is a directory requirement and not a mandatory one, thus allowing the foreign tax credit.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134030 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-02-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 23-11-2022
• Other Referred Cases: Sonakshi Sinha vs. CIT (142 Taxmann.com 414), 42 Hertz Software India (P.) Ltd., Ms. Brinda Rama Krishna, Vinodkumar Lakshmipathi v. CIT(A), Wipro Ltd
• Laws Referred To: Income Tax Act, Income Tax Rules
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 90; 139; 139(5); 143(1)

Judgement Text

आयकर अपीलीय अिधकरण ‘सी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा01 एवं माननीय +ी मनोज कु मार अ6वाल ,लेखा सद9 के सम1। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.994/Chny/2022 (िनधाBरण वषB / Assessment Year: 2020-21) Shri Ariyalur Deva Senathipathy, New No.8, Old No.15, 62 nd Street, Ashok Nagar, Chennai – 600 083. बनाम/ V s. ADIT, CPC, Bengaluru. थायी लेखा सं./जीआइ आर सं./P AN/GI R No . AH MP P -9 0 0 6 - C (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Appellant by : Shri S.P. Chidambaram (Advocate) – Ld. AR थ की ओरसे/Respondent by : Shri P. Sajit Kumar (JCIT) –Ld. DR सुनवाई की तारीख/Date of Hearing : 16-02-2023 घोषणा की तारीख /Date of Pronouncement : 16-02-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2020-21 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 16-09-2022 in the matter of an intimation issued by Centralized Processing Centre (CPC), Bangaluru u/s 143(1) on 25-11-2021 denying foreign tax credit for Rs.25.08 Lacs in view of the fact that Form No. 67 was filed belatedly. 2. The Registry has noted delay of 9 days in the appeal, the condonation of which has been sought by Ld. AR. Considering the ITA No.994/Chny/2022 - 2 - period of delay, the delay is condoned and the appeal is admitted for adjudication on merits. 3. Upon perusal of case records, it could be seen that the assessee claimed foreign tax credit of Rs.25.08 Lacs in return of income filed u/s 139(1) on 30-10-2020. The assessee revised the income u/s 139(5) on 28-05-2021 and again claimed foreign tax credit of Rs.25.08 Lacs. However, the assessee did not file Form No.67 along with original return of income filed on 30-10-2020 but filed the same along with return of income filed on 28-05-2021. Since foreign tax credit was denied, the assessee preferred further appeal before Ld. CIT(A) who upheld the denial on the ground that Form No. 67 was filed beyond due date as specified u/s 139(1). Aggrieved, the assessee is in further appeal before us. 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 ITA No.994/Chny/2022 - 3 - 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 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. Order pronounced on 16 th February, 2023. Sd/- (MAHAVIR SINGH) उपा01 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद9 / ACCOUNTANT MEMBER चे+ई / Chennai; िदनांक / Dated : 16-02-2023 EDN/- आदेश की Vितिलिप अ 6ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु /CIT 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF