In a significant decision, the Assessment Tribunal has granted an appeal to an assessee who had filed Form 67 during the appellate proceedings. The assessee had originally claimed a foreign tax credit based on a Tribunal decision cited in their written submissions during the first appellate proceedings. However, the CIT(A) upheld the intimation, arguing that the filing of Form 67, as required by Rule 128(9), had not been submitted along with the return of income u/s 139(1). The CIT(A) contended that this condition was mandatory and not directory, contrary to the arguments made by the assessee. Dissatisfied with this decision, the assessee moved forward with a further appeal.

In reaching their judgment, the Tribunal referred to a previous ruling in the case of Prakash Varadarajulu vs. DCIT , which had been adjudicated in favor of the assessee. This case had declared the filing of Form 67 as directory rather than mandatory, aligning with the views of various other Tribunal decisions. Notably, the Mumbai Tribunal’s recent decision in Sonakshi Sinha vs. CIT had emphasized the directory nature of filing Form 67.

The Tribunal considered the crucial question of whether an assessee could be entitled to a foreign tax credit even if Form 67 was not filed according to Rule 128(9) of the Income Tax Rules before the due date of filing the return of income. The Tribunal noted that although the law stipulated the filing of the form by the due date, the provision did not specify any disallowance of the foreign tax credit in the event of a delay in filing Form 67. Moreover, the amendments made to the rule allowed the assessee to submit Form 67 up until the end of the assessment year. The Tribunal concluded that the rule did not provide for any consequences if the prescribed form was not filed by the due date. Ultimately, the Tribunal held that the assessee was eligible for the foreign tax credit since they had filed Form 67 before the completion of the assessment, albeit not in strict accordance with Rule 128(9).

Based on the absence of any contradictory decisions on record and following the consistent view of the Tribunal on this matter, the lower authorities are directed to grant the foreign tax credit as claimed by the assessee. With this ruling, the Tribunal has provided clarity and relief to taxpayers seeking to claim foreign tax credits in similar situations.

Amit Sharma

Author of Tax Concept

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