This review examines the Income Tax Appellate Tribunal’s decision in the case between Vikash Daga and ACIT Circle 3(1), Gurgaon concerning the denial of foreign tax credit (FTC) for the assessment year 2019-2020.
Vikash Daga, an individual taxpayer, contested the denial of FTC amounting to Rs. 18,87,114/- by the assessing officer (AO). The denial was based on the non-timely submission of Form 67, which is required for claiming FTC. The issue was initially processed under section 143(1) of the Income Tax Act, where a demand was raised against the assessee.
The main legal contention revolved around the timeliness and technical issues related to the filing of Form 67. The assessee argued that despite the delay, the substantive right to claim FTC should not be negated by procedural lapses.
The Tribunal, comprising Judicial Member Sh. Saktijit Dey and Accountant Member Sh. N. K. Billaiya, addressed the procedural versus substantive rights issue. It was held that the filing of Form 67, while procedural, should not impact the assessee’s substantive right to claim the FTC. The Tribunal directed the AO to allow the credit, overriding the procedural defect.
The Tribunal’s decision highlights the precedence of substantive rights over procedural requirements in tax claims. It underscores the importance of the Double Taxation Avoidance Agreement (DTAA) and its supremacy over domestic tax rules, providing a significant precedent for similar cases.
Vikash Daga vs. ACIT Circle 3(1), Gurgaon – ITA 2536/DEL/2022
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