Anisha Sachdeva vs Asstt. Director of Income Tax

“4.3

From the perusal of above Rules of IT Rules, it is clear that it is mandatory on the part of appellant to file Form 67 within due date to get the credit of FTC. It is an admitted fact that Form no.67 has neither been filed by the Appellant at the time of filing of RoI nor before the time limit as specified u/s. 139(1) for AY 2019-20 and such omission is attempted to be justified by the Appellant on the ground that filing of Form No.67 is not mandatory by relying on certain judgements of the Tribunal. It is pertinent to note that there are divergent views of the different Tribunals on this subject as Hon’ble ITAT vizag bench in the case of Muralikrishna Vaddi v. Asstt. CIT/Dy. CIT [IT Appeal No.269 (Viz.) of 2021, dated 14-6-2022] held the issue in favour of revenue. In such scenarios of divergent views, it is always appropriate to go by the statutes. From the plain reading of Rule 128(8)(1) and 128(9) of the IT Rules, it is clear that the statement in Form-67 shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139 of the Act to claim FTC. Therefore, since the word "shall have been used in the Rule 128(9), it is mandatory to file Form 67 within due date and not directory as claimed Having failed to file the same, the CPC was correct in denying the credit of FTC paid abroad.

4.4

Further, it is to be noted that the hon’ble Supreme Court in the case of Principal Commissioner of Income-tax vs. Wipro Ltd. [2022] 140 taxmann com 223 (SC)/[2022] 288 Taxman 491 (SC)/(2022) 446 ITR 1 (SC) (11-07-2022) clearly held that Where assessee claimed benefit under section 10B(8) by furnishing declaration in revised return much after due date prescribed under section 139(1), same was to be denied as requirement of furnishing declaration before AO before due date of filing original return under section 139(1) was a mandatory condition not directory. It is also pertinent to mention that the Hon'ble Supreme Court in catena of cases had held that any benefit under the provisions of the Act can be claimed only when the Rol and the related Forms are filed within the timelines prescribed by the Act

4.5

Hence, having failed to file the Form 67 within the stipulated time period by the appellant, the FTC has not been allowed and hence, there is no infirmity found in the order of ADIT, CPC and the ground of appeal filed in this regard is dismissed.

5.

Accordingly, the appeal of the Appellant is DISMISSED.”

“1.

That on the facts and in circumstances of the case, the Ld. ADDL/JCIT(A)-4, Chennai has acted arbitrarily, erroneously, contrary to law and against the principles of natural justice while upholding the Intimation u/s 143(1) and/or order u/s 154 of the Ld. Asstt. Director of Income Tax, CPC Bangaluru who also acted arbitrarily, erroneously, contrary to law and against to the principles of natural justice while disallowing the claim of FTC by the Appellant u/s 90 of the Income tax Act 1961

2.

That, on the facts and in circumstances of the case, the Ld. ADDL/JCIT(A)-4, Chennai while disallowing the claim of the assessee for FTC u/s 90 of the Act read with Double Taxation Avoidance Agreement with Govt. of Nepal to the tune of Rs.2,86,260/-, has passed the order u/s 250 without application of mind.

3.

That the Ld. ADDL/JCIT (A)-4, Chennai has erred in law while not considering the Judgement/Order of the Ld. ADDL/JCIT (A)-1, Mumbai dated 09th October 2023 in the case of the Assessee herself for AY 2020-21 on similar facts and grounds.

4.

That the ADDL/JCIT(A)-4, Chennai erred in confirming the demand so raised for Rs.3,52,820/- which is unfounded, ungrounded and devoid of merits.”

“SYNOPSIS

IN THE APPEAL OF ANISHA SACHDEVA, PAN: AWFPS6959P

ITA No.5288/DEL/2025

1)

The present appeal is against the order of the CIT(A) wherein Ld. CIT(A) has dismissed the appeal for the credit of FTC on the ground that the Form 67 is not filed within the stipulated time period under Rule 128(8)/(9). [Refer page 10/11 of the CIT(A) order Para 4.5]

2)

Form 67 along with TDS Certificate has been filed on 21/02/2022 [Refer page 27-30 of paper book]

3)

Section of the Act does not impose any prohibition on the assessee from claiming relief from double taxation in accordance with the provisions of the applicable Double Taxation Avoidance Agreement (DTAA) merely on the ground that Form No. 67 was not filed within the prescribed time

4)

Article 23(2)(i)(a) of DTAA between India and Nepal states that India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Nepal.

5)

Rule 128 cannot overrule the provisions of section 90/91 of the Income Tax Act, 1961.

6)

The Department has accepted the delayed filing of Form 67 for the y 2020-21 and give the effect of the order of CIT(A) [Refer Page 26 & Page 16-25 of the Paper Book]

7)

Hon'ble High Court of Madras in the case of Duraiswamy Kumaraswamy vs PCIT (2023) 156 taxmann.com 445 (Madras) had observed that the filing of Form-67 for claiming Foreign Tax Credit (FTC) in terms of Rule 128 of the Income-tax Rules, 1962, is only a directory in nature

8)

There are host of judicial pronouncements, observed that the Foreign Tax Credit (FTC) cannot be denied merely on the ground of delay in filing of Form-67, which is not mandatory but only directory. The Appellant relies upon the Smt. Sonali Verma Vs Income Tax Officer ITA No.778/Hyd/2025.”

“4.

Heard rival submissions. On reading of the orders of the authorities below, we observe 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. Since the assessee filed Form 67 belatedly and not along with the return as specified u/s 139(1) of the Act the claim for FTC was denied.

5.

We observe that identical issue came up before the coordinate bench of the Delhi Tribunal in the case of Neha Kapoor vs. ITO in ITA 135/Del/2023 dated 29.08.2023, wherein the Tribunal directed the Assessing Officer to allow credit for 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 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)."

6.

Similar view has been taken by the coordinate benches in the following cases:

1.

Ajay Kumar Mishra in ITA No.1835/Del/2022 dated 17.04.2023;

2.

Suchi Agarwal vs. ITO in ITA No.568/Del/2024 dated 24.1.2024;

3.

Dharmendra Kumar Singh vs. ITO in ITA No.1661/Del/2024 dated 24.01.2025;

4.

Vinod Kumar Laxmi Pati vs. CIT, NFAC 145 taxmann.com 235 (Bang.);

5.

Ritesh Kumar Garg vs. ITO in ITA No.261/Jaipur/2022 dated 15.09.2022 (Jaipur);

6.

Sanjeev Agarwal vs. DIT in ITA No.71/Jaipur/2023 dated 10.05.2023

7.

Surender Kumar Goenka vs. ADIT in ITA No.1831/Kol/2024 dated 20.11.2024.

7.

Following the above orders, we direct the Assessing Officer to accept Form 67 filed by the assessee and allow Foreign Tax Credit after due verification and in accordance with law.

8.

In the result, assessee's appeal is allowed."

“8.

Heard the learned counsel appearing on either side and perused the materials available on record.

9.

In the present case, the petitioner initially worked at Kenya and subsequently, he became the resident of India from the assessment years d 2018-19 and 2019-20. The petitioner admitted the fact that he has filed his return in India on August 10, 2019. The intimation under section 143(1) was issued on March 26, 2020. However, he has filed the return without form 67 which is required to be filed under rule 128 to claim the benefit of foreign tax credit and the same came to be filed on February 2, 2021 which was well before the completion of the assessment year. The intimation under section 143(1) was issued from the Centralized Processing Centre only on March 26, 2021.

10.

According to the learned counsel appearing for the respondent, the procedure under rule 128 is mandatory and cannot be considered as directory in nature. The petitioner has filed his return including his Kenya income along with his Indian income-tax and claimed the benefits of foreign tax credit. However, the petitioner would submit that it is not mandatory. The rule cannot make anything mandatory and it can be directory in nature, that too before the assessment, the claim to avail of the benefits of foreign tax credit is filed. Therefore, it would amount to due compliance under the Act. The petitioner referred to the judgment of the hon’ble Supreme Court in the case of CIT v. G. M. Knitting Industries (P.) Ltd. in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated July 24, 2015, wherein it was held that form 3AA is required to be filed along with the h return of income to avail of the benefit and even if it is not filed, but the same is filed during assessment proceedings but before the final order of assessment is made that would amount to sufficient compliance.

11.

The law laid down by the hon’ble apex court in CIT v. G. M. Knitting Industries (P.) Ltd. in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated July 24, 2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without foreign tax credit, however the same was filed before passing of the final assessment order. The filing of foreign tax credit in terms of the 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. This is what the hon’ble Supreme Court had held in the above cases when the returns were filed without furnishing form 3AA and the same can be filed subsequent to the passing of the assessment order.

12.

Further, in the present case, the intimation under section 143(1) was issued on March 26, 2021, but the foreign tax credit was filed on February 2, 2021. Thus, the respondent is supposed to have provided the due credit to the foreign tax credit of the petitioner. However, the foreign tax credit was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside.

13.

Accordingly the impugned order dated January 25, 2022 is set aside. While setting aside the impugned order, this court remits the matter back to the respondent to make reassessment by taking into consideration of the foreign tax credit filed by the petitioner on February 2, 2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set aside only to the extent of disallowing of foreign tax credit claim made by the petitioner and hence, the first respondent is directed to consider only on the aspect of rejection of foreign tax credit claim within a period of eight weeks from the date of receipt of a copy of this order.

14.

With the above direction, this writ petition is disposed of. No costs. Consequently, connected miscellaneous petitions are also closed.”

“ 10. Even the submission on behalf of the assessee that it was not necessary to exercise the option under section 10B (8) of the IT Act and even without filing the revised return of income, the assessee could have submitted the declaration in writing to the assessing officer during the assessment proceedings has no substance and the same cannot be accepted. Even the submission made on behalf of the assessee that filing of the declaration subsequently and may be during the assessment proceedings would have made no difference also has no substance. The significance of filing a declaration under section 10B (8) can be said to be co-terminus with filing of a return under section 139(1), as a check has been put in place by virtue of section 10B (5) to verify the correctness of claim of deduction at the time of filing the return. If an assessee claims an exemption under the Act by virtue of Section 10B, then the correctness of claim has already been verified under section 10B (5). Therefore, if the claim is withdrawn post the date of filing of return, the accountant's report under section 10B (5) would become falsified and would stand to be nullified. ...xxx...

12.. Even the submission on behalf of the assessee that the assessee had a substantive statutory right under Section 10B (8) to opt out of Section 10B which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under Section 10B (8) as being mandatory also has no substance. As observed hereinabove, the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement."