Income Tax relief u/s 90 can not be denied for mere delay in filing Form No. 67

Income Tax relief u/s 90 for tax paid in a foreign country can not be denied for mere delay in filing Form No. 67 as the provision not mandatory but directory- ITAT 

ABCAUS Case Law Citation:
ABCAUS 3747 (2023) (05) ITAT

Important Case Laws relied upon:
Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448
Inodkumar Lakshmipathi  V  CIT(A)  NFAC

In the instant case, the assessee had challenged the order passed by the National Faceless Appeal Centre / CIT(A) in not allowing the relief of tax paid in Republic of Korea and claimed in the return u/s 90 of the Income Tax Act, 1961 (the Act) under Article 23(a)(i) in DTAA with Republic of Korea.

The undisputed fact was that the appellant asessee was an individual and during the assessment year under consideration, had been out of India for employment in South Korea.

In the return of income, the assessee had claimed relief u/s 90 of the Act being tax paid in Republic of Korea.

However, while processing the return u/s 143(1)(a) of the Act, the said claim of relief u/s 90 of the Act was denied to the assessee on account of the reason that the prescribed Form No. 67 read with Clause 8 of Rule 128, was filed belatedly i.e., after the due date of filing return u/s 139(1) of the Act.

Before the Tribunal, the assessee submitted that the issue was squarely covered by the decision of the Co-ordinate Bench wherein it has been held that filing of Form No. 67 is directory in nature and not mandatory.

The Co-ordinate Bench had considered the question as to whether assessee was entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income not complied by the assessee but same was filed before the completion of the assessment proceedings?

The Co-ordinate Bench noted that one of the requirements of Rule128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory rather it is directory in nature. This is because Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67.

The Co-ordinate Bench held that it is well settled that while laying down a particular procedure if no negative or adverse consequences are contemplated for non-adherence to such procedure the relevant provision is normally not taken to be mandatory and is considered to be purely directory.

The Co-ordinate Bench held that the assessee was eligible for foreign tax credit as she has filed form number 67 before completion of the assessment though not in accordance with rule 128 (9) of The Income Tax Rules which provided that such form shall be filed on or before the due date of filing of the return of income.

In view of the decision of the Co-ordinate Bench the Tribunal following it held that the Assessing Officer ought not to have denied the relief u/s 90 of the Act merely for delay in filing of Form 67.

Accordingly, the Tribunal allowed the appeal.

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