The appeal is filed by the assessee against the order dated 26.07.2021 passed by the Commissioner of Income-tax Appeals (CIT(A)) in a faceless appeal. The grounds of appeal are as follows:
- The CIT(A), the Assessing Officer (AO), and the Central Processing Centre (CPC) have erred in denying the Foreign Tax Credit (FTC) of Rs. 15,87,973/- claimed in the revised return as per the provisions of the Income Tax Act, 1961 and India-US Double Taxation Avoidance Agreement (DTAA).
- The CIT(A) erred in law and on facts by denying the FTC claimed in the revised return, on the assumption that the Appellant failed to file Form 67 before submitting the return under Section 139(1) of the Act.
- The CIT(A) failed to consider that Form 67 was filed online by the Appellant on 7th August 2018 before filing the original return and updated before the revised return was filed under Section 139(5) of the Act to claim the enhanced Foreign Tax Credit (FTC).
- The CIT(A) and the AO erred in not granting credit for foreign tax paid, despite the fact that two Form 67 were filed online and available at the time of the Order, causing a miscarriage of justice to the Appellant.
The appellant reserves the right to add, alter, rescind, or modify the grounds or present further documents, facts, or evidence before or during the hearing.
The appeal requests necessary relief.
Brief Facts:
The assessee is a Green Card Holder of the USA and was employed at Thomson Reuters India Pvt. Ltd. The original return was filed on 7th August 2018, declaring total income of Rs. 9,08,20,122/- and claiming a credit for taxes paid in the US under Article 25(2)(a) of the India-US DTAA amounting to Rs. 2,95,156/-.
A revised return was filed under Section 139(5) of the Act, declaring total income of Rs. 9,04,62,460/- and claiming a credit for taxes paid in the US under Article 25(2) of the India-US DTAA amounting to Rs. 18,83,129/-. The case was selected for limited scrutiny and the assessment was completed at the revised return on 18.03.2021, but the AO denied the relief claimed under Section 90 of the Act for the credit of tax already paid and disclosed in the revised return.
The assessee filed an appeal with the CIT(A) who observed that the Appellant is entitled to the credit for taxes paid in the US against the declared income in India if the procedures for obtaining foreign tax credit as per Rule 128 of the Income Tax Rule are followed. The Appellant was required to file Form 67, foreign tax deduction certificate, and foreign tax payment proof before the due date for filing the return under Section 139(1) of the Act. The Appellant failed to file the relevant documents before the original return and furnished Form 67 on 30.03.2019, a day before the revised return. The case laws cited by the Appellant relate to double taxation of foreign income, while the issue at hand is the allowance of credit for foreign tax paid, which is governed by Rule 128 of the Income Tax Rule.
Tribunal Decision:
The assessee was aggrieved with the order from the Ld.AO and filed an appeal with the Ld.CIT(A). The Ld.CIT(A) found that, based on the evidence and submissions provided during the appeal, the assessee was eligible for a foreign tax credit in India if they followed the procedures outlined in Rule 128 of the Income Tax Rule, including filing Form No. 67, tax certificates, and payment proofs. However, the assessee failed to file these documents with their original return and instead submitted them a day before the revised return. The Ld.CIT(A) concluded that the cited case laws, which dealt with double taxation, were not applicable and ruled that the assessee was not entitled to the foreign tax credit due to their failure to comply with Rule 128.
The assessee then filed an appeal with the Tribunal after being dissatisfied with the Ld.CIT(A)’s ruling.
At the start, the Ld.AR noted that there was a 31-day delay in filing the appeal. They explained that the extension of the ITA No. 560/Bang/2021 deadline due to the COVID-19 second wave was revoked by the Hon’ble Supreme Court on 23.09.2021, taking effect on 03.10.2021. The Ld.AR submitted that the deadline for filing the present appeal started from 03.10.2021. The Ld.DR was unable to refute this. After reviewing the submissions from both sides, the Hon’ble Supreme Court’s order dated 23.09.2021, which excluded the limitation period expiring between 15.03.2021 and 02.10.2021, was considered.
As a result, the present appeal is deemed to have been filed within the limitation period.
The Ld.AR argued that the Ld.CIT(A) did not consider the Foreign Tax Credit (FTC) claim due to non-compliance with Rule 128, which required the filing of necessary evidence in Form 67 along with the original return of income. The assessee submitted that all the required details are now available and that the rule was introduced after the filing of the original return. The Ld.DR opposed the request, but the Ld.AR’s argument was not disputed.
After reviewing the submissions and records, the Tribunal deemed it proper to remand the issue to the Ld.CIT(A) for a detailed examination of the claim. The Ld.CIT(A) was directed to grant the assessee proper opportunity to be heard and to issue a detailed order on the merits. The appeal was allowed for statistical purposes, and the grounds raised by the assessee were allowed. The order was pronounced in open court on January 31, 2022.
Pradeep Lankapalli, Bangalore vs Deputy Commissioner Of Income
