KUMAR RANGANATHAN,BANGALORE V. DCIT CIRCLE 1(1)(1), BANGALORE

ITA 20/BANG/2025

AI Insights

The case involves Kumar Ranganathan, the appellant, who contested the disallowance of a Foreign Tax Credit (FTC) by the Deputy Commissioner of Income Tax, Circle-1(1)(1), Bangalore. The FTC of Rs.1,58,200 was initially disallowed due to the late submission of Form 67, a procedural requirement under the Income Tax Act. The appellant argued that the substantive provisions of the DTAA and Section 90 should prevail over procedural technicalities, citing judicial precedents that support the view that procedural lapses should not nullify substantive tax reliefs intended to prevent double taxation. The Tribunal, referencing similar cases, ruled in favor of the appellant, allowing the FTC despite the procedural oversight.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126539 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2021-2022
• Other Referred Cases: Ms. Brinda Ramakrishna Vs. ITO, Sanjiv Gopal Vs. ADIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEHA SAHAY
• Assessee Lawyers: HARISH SAMPANGI
• Keywords: Double taxation relief; Procedural lapse
• Section: 250; 143(1); 90

Judgement Text

"ITA No.20/Bang/2025 Kumar Ranganathan, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.20/Bang/2025 Assessment Year: 2021-22 Kumar Ranganathan 15, Defence Colony Indiranagar Karnataka 560 038 PAN NO : AIIPR4940C Vs. DCIT Circle-1(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Harish Sampangi, A.R. Respondent by : Ms. Neha Sahay, D.R. Date of Hearing : 09.04.2025 Date of Pronouncement : 22.04.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of the ld. ADDL/JCIT(A)-8 Mumbai dated 18.10.2024 vide DIN & Order No. ITBA/APL/S/250/2024-25/1069778378(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2021-22. 2. The assessee has raised the following grounds of appeal: ITA No.20/Bang/2025 Kumar Ranganathan, Bangalore Page 2 of 5 ITA No.20/Bang/2025 Kumar Ranganathan, Bangalore Page 3 of 5 2. Before us, the ld. A.R. of the assessee submitted that the present appeal is filed by the assessee against the order of ld. ADDL/JCIT(A)-8 Mumbai wherein the assessee’s claim of Foreign Tax Credit (FTC) amounting to Rs.1,58,200/- was disallowed solely on the technical ground of late submission of Form 67 while passing intimation u/s 143(1) of the Act dated 13/10/2022. Despite the assessee’s bonafide payment of foreign taxes and the explicit intent of the India-United States Double Taxation Avoidance Agreement (DTAA) to prevent double taxation, the ld. ADDL/JCIT(A) has, by strictly enforcing a procedural timeline, effectively imposed an additional tax burden contrary to the substantive rights and intentions of both the DTAA and section 90 of the Act. The ld. A.R. further submitted that the legislative and treaty framework governing FTC claims emphasizes substantive justice over procedural technicalities. The principle that treaties and substantive provisions of domestic law intended to mitigate double taxation should not be nullified by procedural lapses is well recognized in judicial precedents. In view of the above the ld. A.R. for the assessee prayed to grant the foreign tax credit of Rs.1,58,200/- for AY 2021-22, recognizing that the delayed filing of Form 67 was a procedural lapse with no bearing on the substantive treaty based entitlement and to direct the ld. AO to grant FTC notwithstanding the delayed submission of Form 67, thereby upholding the DTAA’s purpose and ensuring that procedural rules do not defeat substantive relief by treating the delayed filing of Form 67 as a condonable procedural oversight, especially since the assessee had no intention of withholding information or evading tax, and since the required taxes were indeed paid and duly disclosed in the return filed. ITA No.20/Bang/2025 Kumar Ranganathan, Bangalore Page 4 of 5 3. The ld. D.R. on the other hand relied upon the orders of the authorities below. 4. After hearing both the parties, we are of the opinion that similar issue came for consideration before this Tribunal in the case of Ms. Brinda Ramakrishna Vs. ITO (2022) 193 ITD 840 (Bangalore Trib.), wherein held as under: 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.” 4.1 Further, similar issue also came for consideration before this Tribunal in the case of Sanjiv Gopal Vs. ADIT reported in 198 ITD 411 (Bangalore Trib.), wherein the Tribunal held as under: “The only issue under consideration in the instant appeal is that the NFAC denied of FTC available to the assessee merely because there was a delay in filling Form 67 i.e., it was filed after the due date for filling original return of prescribed under section 139(1). The said issue under consideration is no longer res integra. It is to that on identical issue, the co-ordinate Bench of Tribunal, Bangalore in the case of -Ifs. Brinda Ramakrishna v. ITO [2022] 135 taxmann.com 358/193 ITD 840 held 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. Therefore, non-furnishing of Form No. 67 before the due date under section 139(!) is not fatal to the claim for FTC. [Para 6] ITA No.20/Bang/2025 Kumar Ranganathan, Bangalore Page 5 of 5 The aforesaid decision has also been followed by a Division Bench of Tribunal Surat Bench in the case of Sanjay Patil v. Assessing Officer [IT Appeal No. 189/SRT/2021, dated 18-5-2022]. Following the view expressed in the aforesaid decision, it is to be held that the assessee is entitled to FTC and the Assessing Officer is to be directed to allow the claim. [Para 7]” 4.2 In view of the above order of the Tribunal, taking a consistent view, we hold that the assessee is entitled to FTC and the ld. AO is directed to grant the same after due verification. 5. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 22nd Apr, 2025 Sd/- (Laxmi Prasad Sahu) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 22nd Apr, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "