This legal case involves Rani Khanna’s appeal against the decision of the National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2020-21. The main contention revolves around the denial of a foreign tax credit due to late filing of Form No.67, which is critical for claiming such credits under Rule 128(9) of the Income-tax Rules.
The appeal concerns the assessment year 2020-21 where the authorities initially denied Rani Khanna’s claim for a foreign tax credit due to her failure to submit Form No.67 on time. This form is essential for taxpayers who need to claim tax credits for taxes paid outside India.
The appellant’s counsel argued that the mere delay in filing Form No.67 should not preclude the taxpayer from receiving the foreign tax credit, citing a similar precedent set by the ITAT Mumbai Bench. The bench in Mumbai had previously ruled that the procedural delay in submitting Form No.67 is not sufficient ground to deny a foreign tax credit.
The Tribunal acknowledged the Mumbai Bench’s decision and directed that the foreign tax credit should be allowed, stating that procedural requirements should not override the substantive rights of taxpayers. The ruling emphasized that the Income Tax Act’s rules are meant to be directory rather than mandatory in such contexts.
The decision was in favor of the appellant, Rani Khanna, allowing her the foreign tax credit initially denied due to the procedural delay. This case sets a precedent that may influence how similar cases are handled by tax tribunals in the future, particularly concerning the timeliness of procedural filings versus substantive taxpayer rights.
Rani Khanna vs. DCIT Circle-28(1), New Delhi – ITA 2541/DEL/2022
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