SANKARAN,CHENNAI V. ITO, NCW-17(7), CHENNAI

ITA 1212/CHNY/2025

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The case involves an appeal by the assessee, Sankaran, against the order of the CIT(A) which confirmed the disallowance of a foreign tax credit claimed under section 90 of the Income Tax Act, 1961. The assessee had claimed a foreign tax credit of \\u20b919,84,504 but failed to file the prescribed Form 67 within the due date. The Assessing Officer initially rejected the claim, and the CIT(A) upheld this decision citing a Supreme Court judgment that deemed the filing of such a declaration mandatory. However, the Tribunal found that the requirement to file Form 67 is directory in nature, referencing decisions from the Madras High Court that supported this interpretation. Consequently, the Tribunal allowed the appeal for statistical purposes and directed a re-evaluation of the assessee's eligibility for the foreign tax credit.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706079 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2023-2024
• Other Referred Cases: PCIT v. Wipro Limited, Duraiswamy Kumaraswamy v. PCIT, Shri Kuthoore Natarajan Venkatasubramanian v. PCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR
• Assessee Lawyers: N.V. LAKSHMI
• Section: 90

Judgement Text

"आयकर अपीलीय अिधकरण, ’डी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी जगदीश, लेखा सद˟ क े समƗ । Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Jagadish, Accountant Member आयकर अपील सं./I.T.A. No.1212/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2023-24 Sankaran, 73/28, Balakrishnan Street Extension, West Mambalam, Chennai 600 033. [PAN:BPBPS4698F] Vs. The Income Tax Officer, Non Corporate Ward 17(7), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Ms. N.V. Lakshmi, Advocate ŮȑथŎ की ओर से/Respondent by : Shri Vijay Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 18.06.2025 घोषणा की तारीख /Date of Pronouncement : 30.06.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 14.02.2025 passed by the Addl./JCIT(A)-5, Mumbai for the assessment year 2023-24. 2. The assessee raised 2 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the disallowance made by the Assessing Officer towards foreign tax credit claimed at ₹.19,84,504/- under section 90 of the I.T.A. No.1212/Chny/25 2 Income Tax Act, 1961 [“Act” in short] in the facts and circumstances of the case. 3. We note that the assessee filed his return of income for AY 2023-24 declaring total income of ₹.64,07,353/- after claiming relief under section 90 of the Act and however, not filed the prescribed Form 67 for claiming the foreign tax credit. The Assessing Officer, CPC passed intimation under section 143(1) of the Act dated 29.08.2024 rejected foreign tax credit claimed under section 90 of the Act. On appeal, the ld. CIT(A) confirmed the denial of foreign tax credit by following the judgement of the Hon’ble apex Court in the case of PCIT v. Wipro Limited in Civil Appeal No. 1449 of 2022, wherein, it was held that requirement of filing a declaration within a timeline is “mandatory” in nature and dismissed the appeal of the assessee. 4. The ld. AR Ms. N.V. Lakshmi, Advocate submits that the assessee has very well filed Form 67 on 25.09.2024 and by oversight, the assessee could not file within due date of filing. She submits that the return of income of the assessee has been selected for scrutiny and the scrutiny proceedings are in progress. She further submits that pending scrutiny assessment, the assessee filed Form 67 before the Assessing Officer and moreover, along with intimation order, the assessee filed an appeal I.T.A. No.1212/Chny/25 3 before the ld. CIT(A) to condone the delay in filing Form 67 and to grant relief. But, however, the ld. CIT(A) denied claim of foreign tax credit and dismissed the appeal by following the judgement in the case of PCIT v. Wipro Limited (supra), which is highly distinguishable. The ld. AR vehemently contended that filing of FTC in terms of Rule 128 of the Income Tax Rules is directory and by relying upon the decisions of the Hon’ble High Court of Madras in the case of Duraiswamy Kumaraswamy v. PCIT in W.P. 5834 of 2022 dated 06.10.2023 as well as in the case of Shri Kuthoore Natarajan Venkatasubramanian v. PCIT in W.P. No. 12578 of 2024 dated 26.09.2024, which is directly on the issue, prayed to follow the same and allow the grounds raised by the assessee. 5. The ld. DR Shri Vijay Kumar, JCIT relied on the order of the ld. CIT(A). 6. Heard both the parties and perused the material available on record. In this case, the assessee claimed FTC of ₹.19,84,504/- under section 90 of the Act. The return filed by the assessee on 23.07.2023 was processed under section 143(1) of the Act dated 29.08.2024 by denying the claim of foreign tax credit since the assessee could not file Form 67. Thereafter, the assessee filed Form 67 on 25.09.2024 belatedly. It is the submission of the assessee that the return of income of the assessee has I.T.A. No.1212/Chny/25 4 been selected for scrutiny and the scrutiny proceedings are in progress. Meanwhile, against the intimation order, the assessee preferred an appeal before the ld. CIT(A). By referring to the judgement of the Hon’ble Supreme Court in the case of PCIT v. Wipro Limited (supra), holding that the requirement of filing a declaration within a timeline is “mandatory” in nature, the ld. CIT(A) denied the claim of foreign tax credit amounting to ₹.19,84,503/-, which was claimed by the assessee in the return of income. We have perused the case law relied on by the ld. CIT(A) and find no application to the facts of the present case. We have also perused the case law placed on record by the assessee, in the case of Duraiswamy Kumaraswamy v. PCIT (supra), wherein, the Hon’ble High Court has held that filing of aforesaid form in terms of Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature and decided the issue in favour of the assessee. Under the above facts and circumstances, we direct the Assessing Officer to verify, whether the assessee is eligible for foreign tax credit in AY 2023-24 or not and pass order in accordance with law. Thus, the grounds raised by the assessee are allowed for statistical purposes. I.T.A. No.1212/Chny/25 5 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 30th June, 2025 at Chennai. Sd/- Sd/- (JAGADISH) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 30.06.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "