KAVISH ARORA,DELHI V. COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE (NFAC)

ITA 407/DEL/2024

AI Insights

The case revolves around the denial of Foreign Tax Credit (FTC) to the assessee, Kavish Arora, by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The denial was based on the late filing of Form 67, which is required to claim FTC under the India-USA Double Taxation Avoidance Agreement (DTAA) and section 90 of the Income Tax Act, 1961. The assessee argued that the delay in filing Form 67, being a procedural requirement, should not deprive him of the substantive right to claim FTC. The Tribunal, referencing several precedents, concluded that the late filing of Form 67 does not warrant the disallowance of FTC, emphasizing that procedural lapses should not override substantive rights.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 43521 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2020-2021
• Other Referred Cases: Ms. Brinda Rama Krishna Vs. ITO [2022] (135 taxmann.com 358) (Bang.), Bhaskar Dutta Vs. DCIT in ITA No.1869/Del/2022 dated 11.01.2023, ITAT Delhi, Nirmala Murli Relwani Vs. ADIT in ITA No.2094/Mum/2022 dated 01.12.2022, Neha Kapoor Vs. ITO in ITA No.135/Del/2023 dated 29.08.2023, Ajay Kumar Mishra in ITA No.1835/Del/2022 dated 17.04.2023
• Laws Referred To: Income-tax Act, 1961, India USA Double Taxation Avoidance Agreement (DTAA)
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: AJAY GUPTA
• Keywords: Revised return; Principle of natural justice
• Section: 250; 139(1); 90

Judgement Text

"I.T.A.No.407/Del/2024 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A No.407/Del/2024 िनधा\tरणवष\t/Assessment Year: 2020-21 Kavish Arora, T-14A, WINDSOR COURT, DLF PHASE IV, GURGAON. बनाम Vs. Commissioner of Income Tax (Appeals), NATIONAL FACELESS APPEAL CENTRE (NFAC), Delhi. PAN No.AAJPA6054H अपीलाथ\u0012 Appellant \u0014\u0015यथ\u0012/Respondent िनधा\u0007\bरतीक\rओरसे /Assessee by Shri Ajay Gupta, CA राज\u0012वक\rओरसे /Revenue by Shri Om Prakash, Sr. DR सुनवाईक\rतारीख/ Date of hearing: 28.01.2025 उ\u0018ोषणाक\rतारीख/Pronouncement on 19.02.2025 आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the assessee against the order under section 250 of the Income-tax Act, 1961 (“the Act”) dated 06.12.2023 for the AY 2020-21 in denying Foreign Tax Credit claimed by the assessee under article 25(2)(a) of the India USA Double Taxation Avoidance Agreement (DTAA) read with section 90 I.T.A.No.407/Del/2024 2 of the I.T. Act. The Assessee has raised the following revised grounds which read as under: - 1. “The Ld. Commissioner of Income Tax (Appeals) upholding the assessment order passed by the Ld. Assessing Officer disallowing the Foreign Tax Credit (FTC) of Rs.3,37,785/- merely due to the late filing of Form 67. It is submitted that the filling of Form 67 is a procedural requirement, and the delay in compliance should not be deprive the appellant of their substantive right to claim the FTC under the provisions of the Income Tax Act, 1961. The Ld. CIT(A) has failed to appreciate this distinction and has erred in law by denying the rightful claim of the appellant. 2. The Ld. CIT(Appeals) has further erred in law and on facts by upholding the disallowance of the FTC without affording a reasonable opportunity of being heard to the appellant, thereby violating the principles of natural justice. 3. The Ld. CIT(Appeals) has failed to consider the material evidence placed on record by the appellant and has not judicially interpreted the facts of the case. The disallowance of the FTC is arbitrary and unwarranted, and the demand raised is not sustainable. 4. The Ld. CIT(A) has erred in disregarding relevant judicial pronouncements and departmental circulars that support the appellant’s claim for FTC. The denial of the FTC merely due to the procedural lapse of delayed filing of Form 67 is contrary to the established principles of law and equity. 5. The appellant respectfully reserves the right to add, amend, modify, or withdraw any of the above I.T.A.No.407/Del/2024 3 grounds of appeal before or during the hearing of the case.” 2. Heard rival submissions. On reading of the orders of the authorities below we observed that the claim for Foreign Tax Credit was denied to the assessee for the reason that the assessee has filed Form 67 on 23.03.2022 on or after the extended due date of 10.01.2021 for filing return of income u/s 139(1) of the Act. The assessee filed revised return and claimed Foreign Tax Credit and also filed Form 67. Since the assessee filed Form 67 belatedly and not along with the return as specified under section 139(1) of the Act the claim for Foreign Tax Credit was denied. 3. Ld. Counsel for the assessee placed reliance on the following decisions: - 1. “Ms. Brinda Rama Krishna Vs. ITO [2022] (135 taxmann.com 358) (Bang.); 2. Bhaskar Dutta Vs. DCIT in ITA No.1869/Del/2022 dated 11.01.2023, ITAT Delhi; 3. Nirmala Murli Relwani Vs. ADIT in ITA No.2094/Mum/2022 dated 01.12.2022.” 4. Identical issue came up before the coordinate bench of the Tribunal in the case of Neha Kapoor Vs. ITO in ITA No.135/Del/2023 dated 29.08.2023, wherein the Tribunal directed the Assessing I.T.A.No.407/Del/2024 4 Officer to allow credit of Foreign Tax Credit to the assessee observing as under: “8. We have considered the submissions of the parties and perused the records. It is evident that the solitary ground of denial of the claim of the assessee for FTC is delay in filing Form 67. It is an admitted position that the assessee filed Form 67 on 26.03.2021 along with the revised return before the end of the relevant AY 2020-21 which is in conformity with the CBDT notification No. 100/2022 amending Sub Rule 9 of Rule 128 of the Rules. Various coordinate benches of the Tribunal have held that filing Form 67 is a procedural/directory requirement and is not a mandatory requirement. We, therefore, disagree with the view of the Ld. CIT(A) on the point and reproduce below the decision in the case of Miss Brinda Rama Krishna (supra) in which facts are identical: \"16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.\" I.T.A.No.407/Del/2024 5 9. Respectfully we follow the decision (supra). 10. Accordingly, we hereby direct the Ld. AO to allow the impugned credit of FTC to the assessee in the light of the decision in the case of Ms. Brinda Rama Krishna (supra).” 5. Similar view has been taken by the coordinate bench in the case of Ajay Kumar Mishra in ITA No.1835/Del/2022 dated 17.04.2023. Following the above orders, we direct the Assessing Officer to accept Form 67 filed by the assessee and allow Foreign Tax Credit in accordance with law. 6. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 19/02/2025 Sd/- Sd/- (NAVEEN CHANDRA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19.02.2025 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi "