VINCE J CHEMPARATHY, V. THE UNION OF INDIA,

WP(C)/26045/2022

AI Insights

The case involves Vince J Chemparathy, the petitioner, who is an assessee under the Income Tax Act, 1961. He filed a return for the assessment year 2019-2020, initially declaring no tax payable, which was later revised to include income earned in the USA. The tax paid in the USA was claimed for credit under the Double Taxation Avoidance Agreement (DTAA) between India and the USA. However, the credit was denied due to the late submission of Form 67, required under Rule 128(9) of the IT Rules, 1962. The petitioner argued that the procedural rule should not override the substantive rights conferred by the DTAA. The Income Tax Department contended that adherence to the rules was mandatory, and any delay in filing Form 67 could not be condoned without a specific application to the CBDT.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 724469 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 29-01-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962, Double Taxation Avoidance Agreement between India and USA
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: RAJAKANNAN; M NAMBIAR; K MATHAI; JOSON KURYAN THOMAS; PAULOSE ABRAHAM
• Keywords: Centralized Processing Center; Double Taxation Avoidance; Form 67; Income Tax; Credit of Tax Paid Abroad
• Section: 143(1); 139(1); 119(2)(b); 139(5)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 29TH DAY OF JANUARY 2024 / 9TH MAGHA, 1945 WP(C) NO. 26045 OF 2022 PETITIONER/S: VINCE J CHEMPARATHY, AGED 54 YEARS VILLA NO. 47, NOEL PALMDALE,RAJAGIRI VALLEY P.O., KAKKANAD, KOCHI, PIN - 682039 BY ADVS. RAJA KANNAN M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RESPONDENT/S: 1 THE UNION OF INDIA, REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI, PIN - 110004 2 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE WARD 1(1), C.R BUILDING, I.S. PRESS ROAD, KOCHI, PIN - 682018 3 THE PRINCIPAL COMMISSIONER OF INCOME TAX, C.R. BUILDING, I.S. PRESS ROAD, KOCHI, PIN - 682018 4 THE DEPUTY COMMISSIONER, E-FILING UNIT, CENTRALISED PROCESSING CENTER,INCOME TAX DEPARTMENT, BENGALURU, PIN - 560500 OTHER PRESENT: JOSE JOSEPH-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 26045 OF 2022 2 JUDGMENT Dated this the 29th day of January, 2024 The petitioner, is an assessee under the provisions of the Income Tax Act,1961(‘the IT Act’ for short). The petitioner is a resident in India. He filed his return of income for the assessment year 2019-2020 on 30.08.2019 under Section 139(1) of the IT Act. As per the return filed on 30.08.2019, no tax was payable by the petitioner for the said assessment year 2019-2020. The petitioner’s return was processed by the Centralized Processing Center (‘the CPC’ for short) and an intimation under Section 143(1) of the IT Act was issued by the CPC. The petitioner earned business income in the United States of America (‘the USA’ for short) to the tune of Rs. 52,97,577/- arising from the business carried on there. The petitioner filed revised return of his income under Section 139(5) showing his income earned in USA in the revised return. The petitioner has paid the tax on the said income earned in USA. The amount of tax paid in USA by the petitioner on the income earned by him is covered by the Double Taxation Avoidance Agreement (‘the DTAA’ for short) between USA and India which is dated 20.12.1990, has been placed on record as Ext.P4. The petitioner had filed Form 67 on 17.06.2020 ie., the day before the revised return was filed by the petitioner on 18.06.2020. The claim of the petitioner for credit of tax amount paid by him in USA has been denied on the ground that the petitioner did not submit the WP(C) NO. 26045 OF 2022 3 Form 67 within the time limit prescribed under Rule 128(9) of the IT Rules, 1962. 2.Learned counsel for the petitioner submits that it is the revised return filed by the petitioner under Section 139(5) of the IT Act, 1961 which had been processed and not the original return filed under Section 139(1). He therefore, submits that, the Form 67 filed by him on or before the filing of the revised return should have been considered by the assessing authority that the form filed on time and due credit of the tax paid by him in USA, on the income earned by the petitioner should have been given. 3.He further submitted that the Rule 128 is only procedural in nature. The substantive right of the credit for the tax paid in USA is governed by the DTAA and not by the Rules. The procedure cannot override the substantive provision of the DTAA. He therefore, submits that by not giving the credit of the tax paid by the petitioner in USA is against the statutory prescription of the DTAA, and the assessment order to that extent is incorrect and liable to be set aside. 4. On the other hand, the Adv. Jose Joseph, learned Senior Standing counsel for the Income Tax Department submits that the petitioner is claiming credit of the tax paid by him in USA under the provisions of the IT Act and Rules made thereunder. The petitioner is therefore, would be required to comply with the rules which provides for giving such credit. Rule 128(9) of the IT Rules, 1962 provides that WP(C) NO. 26045 OF 2022 4 the certificate in Form 67 should be submitted on or before due date of filing the return under Sections 139(1), 139(4) and 139(9), The petitioner assessee did not filed Form 67 within the time prescribed under the statutory rules. The assessing authority has no other option but to reject the claim of the petitioner for giving him credits of the tax paid by him in USA. 5.Adv. Jose Joseph further submits that the CBDT has the power under Section 119(2)(b) to condone delay or relax the condition for claiming benefit etc. The petitioner ought to have applied before the CBDT for relaxing the time prescribed for filing Form 67. In this case, instead of approaching the CBDT, the petitioner has rushed to this court and this court may not grant any such indulgence as claimed by the petitioner. 6.Section 119(2)(b) of the IT Act, 1961, on reproduction is hereunder:- ****(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise 11[any income-tax authority, not being a 12*** Commissioner (Appeals)] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;” 7.On due consideration of the aforesaid provision, it is evident WP(C) NO. 26045 OF 2022 5 that the CBDT has ample power to condone the delay in filing Form 67 by the petitioner considering the nature of the rights conferred on the petitioner under the provisions of the DTAA. 8.It is not in dispute that the petitioner had filed Form 67 before the date of filing the return under Section 139(5), and the said return has been possessed by the CPC on which the intimation under Section 143(1) has been issued. In view thereof, and considering the aforesaid facts, the petitioner is permitted to file an application within a period of one week from today before the CBDT under Section 119(2)(b) of the IT Act, for relaxing / extending the time limit for submitting Form 67 till 17.06.2022. If such an application is filed, CBDT shall take all the facts and circumstances of the case into consideration and pass necessary order in accordance with the law, expeditiously. Till the CBDT takes a decision, the further proceedings in pursuance to the intimation under Section 143(1), shall be kept in abeyance. The present writ petition is disposed of as above. Sd/- DINESH KUMAR SINGH JUDGE SJ WP(C) NO. 26045 OF 2022 6 APPENDIX OF WP(C) 26045/2022 PETITIONER EXHIBITS EXHIBIT P1 THE TRUE COPY OF THE ELECTRONIC RETURN OF INCOME DATED 30.08.2019 FILED BY THE PETITIONER FOR THE A.Y. 2019-20 EXHIBIT P2 THE TRUE COPY OF THE ELECTRONIC INTIMATION DATED 29.10.2019 ISSUED BY THE CPC, BENGALURU, UNDER SECTION 143(1) OF THE ACT, FOR THE A.Y. 2019-20 EXHIBIT P3 THE TRUE COPY OF THE RETURN OF INCOME DATED 16.03.2019 FILED BY THE PETITIONER IN FORM NO. 1040NR IN RESPECT OF HIS INCOME EARNED IN USA FOR THE YEAR 2018 EXHIBIT P3(a) THE TRUE COPY OF THE RETURN OF INCOME DATED 16.03.2019 FILED BY THE PETITIONER IN FORM NO. 40NR (ALABAMA) IN RESPECT OF HIS INCOME EARNED IN USA FOR THE YEAR 2018 EXHIBIT P4 THE TRUE COPY OF THE RELEVANT EXTRACT OF THE DTAA BETWEEN INDIA AND USA (NOTIFICATION NO. GSR 992(E) DATED 20.12.1990 EXHIBIT P5 THE TRUE COPY OF THE RELEVANT EXTRACT OF SECTION 90 OF THE INCOME TAX ACT, 1961 EXHIBIT P6 THE TRUE COPY OF THE RELEVANT EXTRACT OF RULE 128 OF THE INCOME TAX RULES, 1962 EXHIBIT P7 THE TRUE COPY OF FORM NO. 67 DATED 17.06.2020 UPLOADED BY THE PETITIONER FOR THE A.Y 2019-20 EXHIBIT P8 THE TRUE COPY OF THE E-ACKNOWLEDGMENT DATED 17.06.2020 GENERATED IN THE WEB- PORTAL OF INCOME TAX DEPARTMENT, AFTER THE UPLOADING OF EXT.-P7 EXHIBIT P9 THE TRUE COPY OF THE COMPUTATION STATEMENT DATED NIL REGARDING THE FOREIGN TAX CREDIT P10 THE TRUE COPY OF THE ELECTRONIC RETURN OF INCOME (REVISED) DATED 18.06.2020 FILED BY THE PETITIONER FOR THE A.Y. 2019-20 EXHIBIT P10(a) THE TRUE COPY OF THE REVISED STATEMENT OF INCOME DATED 18.06.2020 CORRESPONDING TO EXT.-P10 REVISED RETURN OF INCOME EXHIBIT P11 THE TRUE COPY OF THE ELECTRONIC INTIMATION DATED 24.03.2021 ISSUED BY THE CPC, BENGALURU, UNDER SECTION 143(1) OF THE WP(C) NO. 26045 OF 2022 7 ACT, FOR THE A.Y. 2019-20 EXHIBIT P12 THE TRUE COPY OF THE PETITION DATED 03.09.2021 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT EXHIBIT P12(a) THE TRUE COPY OF THE EXTRACT OF SECTION 119 OF THE INCOME TAX ACT, 1961, DOWNLOADED FROM THE WEBSITE OF INCOME TAX DEPARTMENT EXHIBIT P13 THE TRUE COPY OF THE LETTER (WITHOUT ANNEXURES) DATED 09.11.2021 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT EXHIBIT P14 THE TRUE COPY OF THE ORDER DATED 02.06.2022 ISSUED BY THE CHIEF COMMISSIONER OF INCOME TAX, HOLDING CHARGE OF PRINCIPAL COMMISSIONER OF INCOME TAX, KOCHI-1 "