Facts of the Case

The assessee, an individual, earned salary income in India from JP Morgan Services India Pvt. Ltd. for the period April 2018 to August 2018 and salary income from Australia from Tyoto Finance for the period October 2018 to March 2019. For Assessment Year 2019-20, the assessee filed his return of income on 02.08.2019 declaring gross total income of ₹49,68,411, including Australian salary income, and claimed foreign tax credit of ₹11,51,500 under Sections 90/91 in respect of tax paid in Australia.

An intimation under Section 143(1) denied the foreign tax credit, resulting in a demand of ₹14,32,900. The assessee subsequently filed Form No. 67 on 08.04.2021 and made rectification requests under Section 154 on 08.04.2021 and again on 22.03.2022. Rectification orders were passed on 29.04.2021 and 19.08.2024, but the foreign tax credit was still not granted. The assessee filed an appeal before the CIT(A), Ahmedabad-13, which was dismissed on the ground of delay. Aggrieved, the assessee approached the Tribunal.

Issues Involved

Whether the delay in filing appeal before the CIT(A) deserved to be condoned, whether the CIT(A) erred in dismissing the appeal without adjudicating the foreign tax credit claim on merits, and whether the claim of foreign tax credit under Sections 90/91 warranted verification after filing of Form 67.

Petitioner’s Arguments

The assessee contended that there was no deliberate delay, as rectification proceedings under Section 154 were continuously pursued and concluded only in August 2024. It was argued that the CIT(A) incorrectly computed the delay without considering the dates of rectification orders. The assessee further submitted that Form 67 had been duly filed and was available on record, and therefore foreign tax credit of ₹11,51,500 relating to tax paid in Australia ought to have been granted. It was submitted that appellate powers are co-terminus with those of the Assessing Officer and the matter deserved adjudication on merits.

Respondent’s Arguments

The Revenue relied on the orders of the lower authorities and contended that the CIT(A) had rightly dismissed the appeal on account of delay.

Court Order / Findings

The ITAT Ahmedabad observed that the assessee was not continuously residing in India and was pursuing the matter through a tax consultant, particularly through rectification proceedings under Section 154. The Tribunal held that the CIT(A) failed to take cognizance of the genuine and bona fide reasons for the delay and that the delay deserved to be condoned.

On merits, the Tribunal noted that the issue related to grant of foreign tax credit for tax paid in Australia and that Form 67 had been filed subsequently in accordance with Rule 128. The Tribunal held that the matter required proper verification by the Assessing Officer. Accordingly, the issue was restored to the file of the Assessing Officer to verify the foreign tax credit claim and adjudicate the same in accordance with law after granting opportunity of hearing to the assessee.

Important Clarification

The Tribunal clarified that where an assessee demonstrates bona fide reasons for delay and has subsequently complied with procedural requirements such as filing of Form 67, appellate authorities should adjudicate the claim on merits rather than rejecting it on technical grounds. Foreign tax credit claims must be examined substantively in accordance with Sections 90/91 and Rule 128.

Final Outcome

The appeal filed by the assessee was partly allowed for statistical purposes. The delay in filing the appeal was condoned, and the issue of foreign tax credit of ₹11,51,500 under Sections 90/91 was restored to the file of the Assessing Officer for fresh verification and adjudication in accordance with law after providing adequate opportunity of being heard to the assessee.

Link to download order https://www.mytaxexpert.co.in/uploads/1769063854_RAJATRAJENDRAPRASADRASTOGIAHMEDABADVS.THEITOWARD2INTL.TAXN..pdf

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