SUCHI AGARWAL,NOIDA V. ITO WARD 5(2)(4), NOIDA

ITA 568/DEL/2024

AI Insights

The case involves Suchi Agarwal, the appellant, who contested the denial of Foreign Tax Credit (FTC) by the ITO, Ward-5(2)(4), Noida. The FTC was initially denied because Form 67 was filed after the due date for filing the income tax return under section 139(1) of the Income Tax Act. The Tribunal referenced several precedents where it was held that the procedural requirement of filing Form 67 does not extinguish the substantive right to claim FTC. The Tribunal directed the Assessing Officer to allow the FTC as per the provisions of the law after admitting Form 67.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 43519 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Other Referred Cases: Neha Kapoor Vs. ITO, Miss Brinda Rama Krishna, Isha Mago vs. Asstt. Director of Income Tax, Central Processing Centre, Rameshwar Prasad Shrivastava vs. ITO, Vikash Daga vs. ACIT, Ajay Kumar Mishra vs. DCIT, Surendra steel Pvt Ltd Vs CPC, Vinod Kumar Lakshmipati Vs CIT, Sanjeev Agarwal Vs DCIT, Ajay Kumar Mishra vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANDEEP PANWAR
• Assessee Lawyers: SHWETA SHANDILYA; DEEPAK SOOD
• Keywords: Set aside; Revised return; Double taxation relief; Non compliance; Procedural lapse
• Section: 143(1); 139(1); 90; 80IC; 80IC

Judgement Text

"I.T.A.No.568/Del/2024 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ.अ.सं/.I.T.A No.568/Del/2024 िनधा\tरणवष\t/Assessment Year: 2019-20 Suchi Agarwal Sector 93, B Gautam Buddha Nagar, Noida, Uttar Pradesh. बनाम Vs. ITO, Ward-5(2)(4), Noida, Uttar Pradesh. PAN No.CMNPA2096K अपीलाथ\u0012 Appellant \u0014\u0015यथ\u0012/Respondent िनधा\u0007\bरतीक\rओरसे /Assessee by Ms. Shweta Shandilya, Adv. & Shri Deepak Sood, Adv. राज\u0012वक\rओरसे /Revenue by Shri Mandeep Panwar, Sr. Dr सुनवाईक\rतारीख/ Date of hearing: 10.01.2025 उ\u0018ोषणाक\rतारीख/Pronouncement on 24.01.2025 आदेश /O R D E R This appeal is filed by the assessee against the order of the Ld. Addl./JCIT(Appeals), Madurai dated 08.01.2024 for the AY 2019-20 in denying Foreign Tax Credit claimed by the assessee. 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 after filing return of income u/s 139(1) of the Act. The assessee filed 154 application and claimed Foreign Tax Credit I.T.A.No.568/Del/2024 2 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. 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 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 I.T.A.No.568/Del/2024 3 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.\" 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).” 4. It is further observed that in assessee’s own case for the AY 2020-21 the Tribunal in ITA No.601/Del/2024 dated 31.05.2024 directed the Assessing Officer to accept Form 67 and verify the assessee’s claim for credit for Foreign Tax Credit observing as under: “6. The Ld. AR submitted that both lower authorities failed to appreciate the important fact that the requisite filing of Form 67 is a procedural and directory requirement and it is not mandatory. He also submitted that violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC. 7. Per contra, the learned Departmental Representative (‘Ld. DR’) relied upon the findings of lower authorities. 8. During the course of hearing, the Ld. AR humbly prayed that the impugned order dated 30.12.2023 passed I.T.A.No.568/Del/2024 4 by Ld. CIT(A) should be set aside and the present appeal filed by the assessee should be allowed and in support of his argument / claim, Ld. AR relied on orders of the co- ordinate Benches of ITAT, as follows: • Order dated 04.04.2024 in the case of Isha Mago vs. Asstt. Director of Income Tax, Central Processing Centre in ITA No.173/Del/2024. • Order dated 11.09.2023 in the case of Rameshwar Prasad Shrivastava vs. ITO, in ITA No. 1839/Del/2023. • Order dated 14.06.2023 in the case of Vikash Daga vs. ACIT in ITA No. 2536/Del/2022. • Order dated 17.04.2023 in the case of Ajay Kumar Mishra vs. DCIT in ITA No. 1835/Del/2022. 8.1 For the ease of ready reference we reproduced the decisions of the Co-ordinate Benches of ITAT, as under: In the case of Isha Mago vs. Asstt. Director of Income Tax (supra), held as under: “5.2. It is also noticed that under similar facts and circumstances the ITAT Delhi Bench B' in the case of Eastman Industries Ltd. vs. ACIT (supra) has adjudicated identical issue, observing as under: \"7. Since in the present case the claim of the assessee was denied on this technical aspect without going into the merits of the FTC therefore, we deem it fit to restore the issue to the files of the AC. The AO is directed to decide the claim of foreign tax credit as per the provisions of the law after admitting / accepting form -67. This common grievance is also allowed for statistical purpose. In the case of Rameshwar Prasad Shrivastava vs. ITO (supra), held as under:- I.T.A.No.568/Del/2024 5 “5. That the claim of FTC was made by the assessee in terms of section 90 of the Income Tax Act. It is a settled principle that where is there is special agreement/ DTAA signed by the government, the specific provisions made in such agreement shall prevail over the general provisions contained in the Income Tax Act. The CBDT vide its Circular No. 333 dated 02/04/1982 has held that:- SECTION 90. AGREEMENT WITH FOREIGN COUNTRIES [CORRESPONDING TO SECTION 40A OF THE 1922 ACT] 627. Specific provisions made in double taxation avoidance agreement Whether it would prevail over general provisions contained in Income- tax Act 1. It has come to the notice of the Board that sometimes effect to the provisions of double taxation avoidance agreement is not given by the Assessing Officers when they find that the provisions of the agreement are not in conformity with the provisions of the Income- tax Act, 1961. 2. The correct legal position is that where a specific provision is made in the double taxation avoidance agreement, that provisions will prevail over the general provisions contained in the Income-tax Act. In fact that the double taxation avoidance agreements which have been entered into by the Central Government under section 90 of the Income-tax Act, also provide that the laws in force in either country will continue to govern the assessment and taxation of income in the respective countries except where provisions to the contrary have been made in the agreement. 3. Thus, where a double taxation avoidance agreement provides for a particular mode of computation of income, the same should be I.T.A.No.568/Del/2024 6 followed, irrespective of the provisions in the Income-tax Act. Where there is no specific provision in the agreement, it is basic law, i.e., the Income-tax Act, that will govern the taxation of income. Circular: No. 333 [F. No. 506/42/ 81-FTD] dated 2-4-1982. 6. There is no condition prescribed in DTAA that the FTC can be disallowed for non- compliance of any procedural provision. As the provisions of DTAA overrides the provisions of the Act, the assessee has vested right to claim the FTC under the tax treaty, and the same cannot be disallowed for mere delay in compliance of a procedural provision. In other words, we would like to submit that as per the provisions of section 90(2) of the Act, where the Central Government of India has entered into a DTAA, the provisions of the Act would apply only to the extent they are more beneficial to a taxpayer. Therefore, the provisions of DTAA override the provisions of the Act, to the extent they are beneficial to the assessee. 7. That the lower authorities intends to disallow the claim of the assessee in terms of Rule 128(9), however as stated above, the provisions laid down in the Income Tax Rules shall stand to be overridden by the specific provisions mentioned in the DTAA more so to the extent that the same• is beneficial to the tax payer. And as such, since the DTAA does not specifically state to disallow the claim of FTC on mere delay in filing of Form 67, we would submit that the disallowance made by the CPC and further confirmed by the CIT(A) is arbitrary, unjustified and fit to be deleted. 8. That lastly, we would like to contend that this being a debatable issue, the disallowance made by CPC was uncalled as the I.T.A.No.568/Del/2024 7 same cannot be termed as an adjustment in terms of section 143(1). In a similar matter before the Hon'ble ITAT Kolkata Bench in the case of M/s Surendra steel Pvt Ltd Vs CPC in ITA No. 78/Kol/2022 dated 20/05/2022, it was held as below:- We have duly considered rival contentions and perused the material available on record. To our mind there are two issues involved. First being the procedural irregularity and second the legitimate quantification for disallowance. If the adjustment has been made on the basis of first' defect i.e., for procedural irregularity then according to the decisions referred by the Id. Counsel for the assessee, this irregularity is not fatal enough to deny the claim of deduction u/s 80IC of the Act. More so, when in response to the first proposed adjustment, the assessee has reiterated submission of Form 10CCB. As far as the arguments raised by the Id. D/R is concerned, if a disallowance is to be made after filing of Form 1OCCB, then it is a debatable issue and the same is not permissible u/s 143(1) in a prima facie adjustment and the assessee should have been given a notice for that. In other words, if a disallowance is required to be established by arguments and long drawn process of reasoning on points, which there may conceivably be two opinions about, then the case should have been selected for scrutiny assessment. In view of the above discussion, we delete the disallowance of deduction u/s 80IC of the Act, made by the Assessing Officer and upheld by the Ld. CIT(A) and allow the appeal of the assessee. As such, we would like to contend that the CPC was not right in disallowing the claim of FTC solely on the ground that Form 67 was filed belated. 9. That in support of our above contentions above, we would like to rely upon the following decisions of the coordinated Benches of ITAT:- * Vinod Kumar Lakshmipati Vs CIT (NFAC) Delhi -145 taxmann.com 235 - ITAT Bangalore - It was held that:- I.T.A.No.568/Del/2024 8 Section 90, read with section 90A, of the Income-tax Act, 1961 and ride 128 of the Income-tax Rules, 1962 Double Taxation Relief - Where agreement exists (Foreign tax credit) Assessment year 2018- 19-Assessee claimed foreign tax credit under section 90/90A Assessing Officer disallowed claim, on ground that assessee had not filed Form No. 67 along with return Assessee filed Form No. 67 before Commissioner (Appeals) Commissioner (Appeals) held that since assessee had failed to file Form No. 67 within due date specified for filing return under section 139(1), Assessing Officer had rightly disallowed claim for foreign tax credit - It was noted that Bangalore Bench of Tribunal on identical issue in case of Ms. Brinda Ramakrishna v. ITO [2022] 135 taxmann.com 358/193 ITD 840 held that non-furnishing of Form No., 67 before due date specified for furnishing return under section 139(1) was not fatal to claim for foreign tax credit - Whether Assessing Officer was to be directed to give credit for foreign tax as per Form No. 67 filed before Commissioner (Appeals) Held, yes [Paras 5 and 6] [In favour of assessee] * Ritesh Kumar Garg Vs ITO in ITA No. 261/JP/2022 dated 15/09/2022 - ITAT Jaipur Bench held that:- Held that filing of Form 67, in my view, is a procedural/directory requirement and is not a mandatory requirement. Therefore, violation of procedural norms does not extinguish the substantive right of claiming the credit of FTC. There are no conditions prescribed in DTAA that FTC can be disallowed for non compliance of any procedural provision, therefore, the provisions of DTAA override the provisions of the Act. As the assessee has vested right to claim the FTC under the tax treaty and the same cannot be disallowed for mere delay in compliance of a procedural provision. * Sanjeev Agarwal Vs DCIT in ITA No. 71/JP/2023 dated 10/05/2023 - ITAT Jaipur bench held that:- I.T.A.No.568/Del/2024 9 Form 67 filed by the respective assessees, even after the end of the relevant assessment year makes the assessee entitled to claim FTC. Therefore, considering the facts of the present case, the FTC deserves to be allowed to the assessee even if Form 67 was filed by the assessee after the due date of filing the return under section 139(1) of the IT Act, 1961, and in our view not allowing foreign tax credit by AO (CPC) was nothing, but a mistake apparent on record. Therefore, we direct the revenue to allow the claim of the assessee. In the case o f Vikash Daqa vs. ACIT (supra), held as under: “8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the assessee holds a foreign tax credit certificate for Rs.1887114/-. In our considered opinion filing of form 67 is a procedural / directory requirement and is not a mandatory requirement. Therefore, violation of procedural norms does not extinguish the substantive right of claiming the credit of FTC. We accordingly direct the AO to allow the credit of FTC and hold that rule 128(9) of the Rules does not provide for disallowance FTC in case of delay filing of form 67 is not mandatory but a directory requirement and DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. ” 9. In the light of foregoing discussions, we are of the opinion that filing of Form 67 is a directory not mandatory and violation of procedural norm does not adversely affect the substantive rights or claims. 10. On the basis of discussion, submissions and abovementioned binding precedents, we set aside the orders of authorities below and restore the matter to the file of Ld. AO with the direction to verify the assessee’s claim in respect of foreign tax credit as per law after admitting / accepting Form 67 and decide the issue in accordance with law.” I.T.A.No.568/Del/2024 10 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 24/01/2025 Sd/- (C.N. PRASAD) JUDICIAL MEMBER Dated: 24.01.2025 *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 "