Form No.67 not compulsory but directory requirement for FTC

Form No.67 is not compulsory but a directory requirement, Disallowance of Foreign Tax Credit due to delay in filing the same not valid: ITAT

• Income tax Form No.67 is not Compulsory However a directory requirement, the Income Tax Appellate Tribunal Bangalore Bench has held that Income tax disallowance of Foreign Tax Credit due to delay in filling of form 67 is not valid. Shri. Y. Sridhar, Chartered Accountants appeared for the Income tax assessee &  K. Sankar Ganesh appeared for the revenue.
• Income tax assessee filed the ITR on 24-07-2017 admitting an income of INR 69.22,004/- which included income from other sources of Rs.6,96,084. The income from other sources included dividend income of INR 4,77,500/-  received from a Denmark Company. On this dividend received from Denmark, TDS of INR 1,28.925/- was deducted @ 27%.
• The appellant later stage filed income tax Form No. 67 on 08-02-2020 & made a rectification application on 29-05-2020 before the Income Tax Dept  Centralized Processing Centre Bangalore for giving credit to the Taxes deducted outside India. The Income Tax Dept Centralized Processing Centre rejected the claim through order stating that fresh claims of relief were being sought in the rectification application & which is not a mistake apparent from the records.
• On appeal, the National Faceless Assessment Centre denied Foreign Tax Credit  available to the Assessee merely because there was a delay in filling Income tax  Form 67 as it was filed after the deadline date for submission original return of income specified U/s 139(1) of the Act.
• it was observed that income atx Rule 128(9) of the Rules does not provide for Foreign Tax Credit disallowance of in case of delay in submissions income tax Form No.67 and filing of income tax Form No.67 is not compulsory however a directory requirement.

The Income Tax Appellate Tribunal Bangalore Bench decided that following an appeal

FTC is not disallowed under Rule 128(9) of the ITR if Form No. 67 is filed late;

• In addition, the Double Taxation Avoidance Agreement (DTAA) supersedes the Income Tax Act (ITA) to the degree that it is in the taxpayer’s best interest, and Form No. 67 submission is merely a directory requirement rather than a requirement in itself. Considering that the DTAA has no clause allowing the FTC to be denied due to a procedural rule’s non-compliance.
• For simply being late in compliance with a procedural obligation, the same cannot be denied. Consequently, despite the delayed furnishing of Form No. 67, the Tribunal accepted the FTC claim.
• Income Tax Appellate Tribunal  bench that non-submission of Income tax Form No.67 before due date under section 139(1) of the income tax Act is not fatal to the claim for Foreign Tax Credit.
• By following the case of Sanjay Patil Vs Assessing Officer Order dated, the Income Tax Appellate Tribunal held that the Assessee is entitled to Foreign Tax Credit & Assesses Officer is directed to allow the claim.

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