PRABHNOOR SINGH,BANGALORE V. INCOME TAX OFFICER, WARD 6(1), CHANDIGARH, CHANDIGARH

ITA 904/CHANDI/2025

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The case revolves around the assessee, Prabhnoor Singh, who was on an international assignment in the U.S. during the assessment year 2021-22 and employed by Ernst & Young. The primary issue was the late filing of Form 67, which is required to claim credit for taxes paid abroad under the DTAA. The Income Tax Officer (ITO) initially rejected the claim due to the delayed submission of Form 67, which was filed with the revised return on March 31, 2022. The Commissioner of Income Tax (Appeals) upheld this decision, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal, referencing several precedents and the provisions of the DTAA, ruled in favor of the assessee, allowing the credit for taxes paid in the U.S.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792032 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Appeal Filed On: 11-07-2025
• Other Referred Cases: Ms. Brinda Rama Krishna Vs The Income Tax Officer, Bangalore, Hertz Software Private Ltd. V ACIT, Sanjiv Gopal Vs Assistant Director of Income-tax, Shri Shashidhar Seetharam Sharma Vs ITO, Duraiswamy Kumaraswamy Vs ITO, Shri Ritesh Kumar Garg Vs ITO Jaipur, Sonakshi Sinha Vs ACIT, Shri Ashish Agarwal V. ITO
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: PREETI GOYAL
• Keywords: Revised return; Period of limitation; Competent authority; Double taxation relief; Time period of passing order; Residential status
• Section: 154

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 904/CHD/2025 Ǔनधा[रण वष[ / Assessment Year: 2021-22 Prabhnoor Singh, B-408, Meda Heights, Bellandur, Doddakannelli Road, Near AET Circle, Bangalore. Vs The ITO, Ward 6(1), Chandigarh. èथायी लेखा सं./PAN NO: DCJPS5821M अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Ms. Preeti Goyal, CA Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr.DR Date of Hearing : 08.12.2025 Date of Pronouncement : 09.12.2025 HYBRID HEARING O R D E R PER LALIET KUMAR, JM This appeal is filed by the assessee feeling aggrieved by the order passed by the Commissioner of Income Tax (Appeals)[in short ‘the CIT (A)’] dated 11.06.2025 passed for assessment year 2021-22. 2. The facts of the case are that during the assessment year under consideration, the assessee was an employee of Ernst & Young LLP (‘EY India’) and was on international assignment to Printed from counselvise.com ITA No.904/CHD/2025 A.Y.2021-22 2 Ernst & Young US LLP (‘EY US’) posted at U.S. There was a delay in filing Form 67 alongwith the return of income. It was submitted by the assessee that the assessee had filed the return of income on 31.07.2021 and thereafter filed the revised return of income on 31.03.2022 and alongwith the revised return of income, the assessee has filed Form 67 as contemplated u/s 128 of the Income Tax Rules,1962. Thereafter the intimation was issued by the lower authorities on 31.10.2022. 3. Despite the above, the ld. AR had submitted that the ld.CIT (Appeals) has dismissed the appeal of the assessee on the ground that there is a delay in filing the Form 67 and she has drawn our attention to paragraph Nos. 7 and 8 of the order passed by the ld.CIT (Appeals). It was submitted by the ld. AR that the issue raised by the assessee is covered in favour of the assessee by the decision of the Co-ordinate Benches and our attention was drawn to written submission filed before us on 07.11.2025 and the synopsis filed therein. The ld. AR has placed reliance on the following judgements of the Hon'ble High Courts/Tribunals : Printed from counselvise.com ITA No.904/CHD/2025 A.Y.2021-22 3 a) Ms. Brinda Rama Krishna Vs The Income Tax Officer, Bangalore [ITA No.454/Bang/2021) b) Decision of Bangalore Tribunal dated 07.03.2022 in the case of Hertz Software Private Ltd. V ACIT c) Decision of ITAT Bangalore Bench in the case of Sanjiv Gopal Vs Assistant Director of Income-tax [2022] 145 taxmann.com 378 d) Decision of ITAT Bangalore Bench dated 19.09.2022 in the case of Shri Shashidhar Seetharam Sharma Vs ITO (ITA No.708/Bang/2022) e) Decision of the Madras High Court in case of Duraiswamy Kumaraswamy [TS-681 -HC-2023-(MAD)] dated 6 October 2023. f) Decision of Jaipur Tribunal in the case of Shri Ritesh Kumar Garg Vs ITO Jaipur [2022] 261 g) Decision of Mumbai Tribunal dated 20.09.2020 in the case of Sonakshi Sinha Vs ACIT [ITA No.1704/Mum/2022] 4. Per contra, ld. DR relied upon decision of the lower authorities. 5. We have heard both the parties and perused the material available on record. Admittedly, in the present case, Form 67 was filed alongwith the revised return of income on 31.03.2022 within the permissible time limit as provided by the Act. The solitary ground for not according the benefit of the DTAA and giving credit of the taxes paid in U.S. was that Form 67 as contemplated u/s 128(9) was not filed alongwith the return of income. In the present case, undoubtedly, the intimation was issued by the Competent Authority on 31.10.2022 and before that the assessee had already revised Printed from counselvise.com ITA No.904/CHD/2025 A.Y.2021-22 4 the return of income and Form 67 was already placed on record. That Form 67 was available for review to the CPC and therefore, it was incumbent upon the CPC to look into the form and decide the issue accordingly. However, the same has not been done. Quite surprisingly, when this issue was brought to the notice of the ld.CIT (Appeals) at the appellate stage, the ld.CIT (Appeals) sought closed over the abovesaid issue despite the binding decisions of various High Courts and the Tribunals. For the abovesaid purposes, it will be useful to mention here that the Hyderabad Bench in the case of Shri Ashish Agarwal V. ITO (2023) 203 ITD 562 in which one of us was the signatory, had decided the issue in favour of the assessee by giving the following reasoning : “9. We have heard the rival submissions and perused the material placed on record. It could be seen from the record that there was a delay of 710 days in preferring the appeal before the learned CIT(A) and the reason attributed for the delay in filing the appeal to the pandemic. As a matter of fact, though the learned DR does not concede to condone the delay, there is no denial of the fact that the Hon'ble Supreme Court in the Suo Motu proceedings in the case of M.A.No. 21/2022 in M.A.No. 665/2021 in SMW(C) No.3 of 2020 by order dated ITA No. 337/Hyd/2023 Page 5 of 8 10/01/2022 held that in cases, where the limitation would have expired during the period between 15/03/2020 and 28/02/2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01/03/2022, and in the event of actual balance period of limitation remaining with effect from 01/03/2022 is greater than 90 days, that longer period shall apply. Since the limitation period is applicable to this appeal also, following the direction of Hon'ble Hon'ble Apex Court, we condone the delay. Printed from counselvise.com ITA No.904/CHD/2025 A.Y.2021-22 5 10. Besides the above, the assessee after the receipt of intimation u/s. 143(1) of the Act, had filed a rectification application before the CPC on 07/11/2022 and the CPC had passed order on 09/01/2023, thereby not accepting the request of the assessee for granting the relief as claimed in the original return of income. Having heard the rival submissions, we are of the considered opinion that delay in filing the appeal before the learned CIT(A) was on account of the reasons mentioned hereinabove and more particularly for the assessee to avail the proceedings u/s. 154 of the Act before the CPC. In view of the above, the delay in filing the appeal before the learned CIT(A) is required to be condoned. We also observed from the perusal of the learned CIT(A)’s findings that the learned CIT(A) has not adjudicated the appeal of the assessee on merits and merely dismissed the same on account of delay in filing the appeal before the learned CIT(A). In our view, though invariably the issue is required to be remitted to the file of learned CIT(A), considering the smallness of the issue and the issue is covered in favour of assessee, we deem it appropriate to adjudicate the grounds on merits. Accordingly, we have also taken into account that the rectification application was also filed well within the permissible time limit i.e., upto 31st March, 2025 as per Section 154(7) of the Act. 11. As far as the issue of FTC is concerned, learned AR placed reliance on the decision in the case of Ms. Brinda Rama Krishna (supra). In the case of Ms. Brinda Rama Krishna (supra), the Bench considered the issue in the light of the provisions of DTAA, section 295(1) of the Act, the decisions of the Hon'ble Apex Court in the case of Mangalore Chemicals & Fertilizers Ltd. Vs. Deputy Commissioner (1992 Supp (1) SCC 21), Sambhaji Vs. Gangabai (2008) 17 SCC 117 and a lot many decisions of the Hon'ble Apex Court including the case in Union of India Vs. Azadi Bachao Andolan (2003) 263 ITR 706 (SC) etc. and reached a conclusion that since Rule 128(9) of the Rules does not provide for disallowance of FTC in the case of delay in filing Form 67 and such filing within the time allowed for filing the return of income under section 139(1) of the Act is only directory, since DTAA over rides the Act, and the Rules cannot be contrary to the Act. 12. We find from Article 25(2)(a) of the DTAA that where a resident of India derives income which, in accordance with the provisions of the convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of the resident an amount equal to the income tax paid, paid in the United States, whether directly or by deduction. In view of this provision over riding the provisions of the Act, according to us, Rule 128(9) of the Rules has to be read down in conformity thereof. Rule 128(9) of the Rules cannot be read in isolation. Rules must be read in the context of the Act and the DTAA impacting the rights, liabilities and disabilities of the parties. 13. In the case of Purushothama Reddy Vankireddy (supra) also the Co-ordinate Bench of the Tribunal, in the similar circumstances, allowed the appeal of assessee for FTC claim. Respectfully following the same, we are of the considered opinion that the decisions relied upon by the assessee Printed from counselvise.com ITA No.904/CHD/2025 A.Y.2021-22 6 are applicable to the facts of the case and the grounds raised by the assessee are accordingly allowed. 14. In the result, appeal of the assessee is allowed. 6. Therefore, respectfully following the rationale of the Hon'ble Co-ordinate Bench in the case of Shri Ashish Agarwal (supra) we deem it appropriate to allow the appeal filed by the assessee and accordingly, the appeal of the assessee is allowed and the Assessing Officer is directed to give credit of the taxes paid by the assessee in U.S. as reflected in Form 67, though filed on 31.03.2022. 7. In the light of the above, the appeal of the assessee is allowed. Order pronounced on 09.12.2025. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER “Poonam” आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 5. गाडᭅ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "