Case Number: ITA 1869/DEL/2022
Appellant: Bhaskar Dutta, New Delhi
Respondent: DCIT, Int. Taxation 1(2)(2), New Delhi
Assessment Year: 2020-21
Result: Allowed
Case Filed on: 2022-08-18
Order Type: Final Tribunal Order
Date of Order: 2023-01-11
Pronounced on: 2023-01-11
Bhaskar Dutta, a non-resident individual, filed his return of income for the assessment year 2020-21 on 18th August 2020. The return showed an income of Rs.1,59,95,120. However, the Centralized Processing Centre (CPC) did not allow the foreign tax credit claimed by Bhaskar Dutta, citing that Form 67 was not filed before the due date of filing the return.
The appellant, aggrieved by this decision, filed an application under Section 154 of the Income Tax Act for rectification, which was rejected by the CPC. Subsequently, an appeal was filed before the Commissioner of Income-Tax (Appeals), which also upheld the disallowance of the foreign tax credit.
The appeal was heard by the Delhi Bench ‘D’ of the Income Tax Appellate Tribunal, comprising Shri G.S. Pannu (President) and Shri Saktijit Dey (Judicial Member). The tribunal heard the arguments from both sides on 3rd January 2023 and pronounced the order on 11th January 2023.
The appellant was represented by Shri K. Sampath, Adv., while the respondent was represented by Shri Sanjay Kumar, Sr. DR.
The appellant argued that the delay in filing Form 67 was due to restrictions imposed during the COVID-19 pandemic. He cited the Supreme Court’s extension of limitation periods for legal proceedings, which should apply to the filing of Form 67 as well. Additionally, it was argued that Rule 128 of the Income Tax Rules, which mandates the filing of Form 67 before the due date, should be considered directory rather than mandatory.
The respondent contended that the provisions of Rule 128 are clear and mandatory, and the foreign tax credit cannot be allowed if Form 67 is not filed within the prescribed time. The respondent relied on the decision in Murli Baddi Vs. ACIT (2022) – 142 Taxmann.com 32 to support their case.
After considering the submissions from both sides, the tribunal noted that the due date for filing the return for the assessment year was 31st October 2020, and Bhaskar Dutta filed his original return on 18th August 2020. However, Form 67 was filed on 31st May 2021, along with a revised return.
The tribunal acknowledged the Supreme Court’s orders extending the limitation periods due to the COVID-19 pandemic. As per these orders, the period from 15th March 2020 to 28th February 2022 was excluded for the purpose of limitation. Therefore, Form 67 filed by the appellant on 31st May 2021 was within the extended period.
The tribunal also analyzed the provisions of Rule 128 and previous judicial precedents. It was observed that Rule 128 does not provide for disallowance of the foreign tax credit in case of a delay in filing Form 67. The tribunal referred to decisions in the cases of Ms. Brinda Rama Krishna Vs. ITO and Sonakshi Sinha Vs. CIT(A)/NFAC, which held that the requirement to file Form 67 is directory and not mandatory.
The tribunal concluded that the appellant’s claim of foreign tax credit should not be disallowed due to the delay in filing Form 67, especially considering the extensions granted due to the pandemic and the directory nature of the filing requirement.
In light of the aforementioned reasons, the tribunal directed the Assessing Officer to allow the foreign tax credit to Bhaskar Dutta. The appeal was allowed in favor of the appellant.
The final order, pronounced on 11th January 2023, stated:
“In the result, the appeal is allowed. The Assessing Officer is directed to allow the foreign tax credit to the assessee.”
Order pronounced in the open court on 11th January 2023.
Signed by: G.S. PANNU (President) and SAKTIJIT DEY (Judicial Member)
Dated: 11th January 2023
Bhaskar Dutta vs. DCIT, Int. Taxation 1(2)(2), Case Filed Due to Disallowance of Foreign Tax Credit
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