Home Income tax Corporate Income tax Madras HC Permits FTC Claim as Form-67 Filed After ITR But Just Before Intimation

Madras HC Permits FTC Claim as Form-67 Filed After ITR But Just Before Intimation

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Madras HC Permits FTC Claim as Form-67 Filed After ITR But Just Before Intimation
Madras HC's Order for Duraiswamy Kumaraswamy

The Madras Excessive Court docket has permitted the Overseas Tax Credit score (FTC) declare primarily based on the submission of Type-67 after the Earnings Tax Return (ITR) submitting however earlier than receiving an intimation, deeming it as compliant.

Justice Krishnan Ramasamy’s bench famous that originally, the returns had been filed sans the FTC, however it was submitted earlier than the ultimate evaluation order. Rule 128’s requirement for FTC submission is seen as extra of a suggestion to implement the Act’s provisions, sustaining its non-binding nature.

The petitioner, employed as a CEO in Kenya from 2016 to 2018, was an Indian resident within the monetary yr 2018-2019, reporting each Kenyan and Indian incomes of their Indian Earnings Tax return.

They sought Overseas Tax Credit score (FTC) advantages underneath Part 90/91 of the Earnings Tax Act, 1961, along side Article 24 of the India-Kenya Double Taxation Avoidance Settlement. The petitioner filed taxes for his or her Kenyan revenue individually. The claimant asserted their proper to a Overseas Tax Credit score (FTC).

The applicant clarified that whereas submitting the Indian ITR for the evaluation yr 2019-2020, they by chance omitted to add Type-67, mandated by Rule 128 of the Earnings Tax Guidelines, 1962, for FTC claims.

On February 2, 2021, the petitioner submitted Type 67 and the TDC certificates. Subsequently, on March 26, 2021, the Centralized Processing Centre (CPC) in Bangalore processed the revenue tax return underneath Part 143(1) of the Act, sending the petitioner an intimation through e-mail.

Nevertheless, the FTC wasn’t applied. Therefore, on March 27, 2021, the petitioner requested the CPC to activate the FTC. Moreover, on Could 3, 2021, through e-proceedings, they requested the CPC in Bangalore to right the sooner intimation by honouring the FTC.

Sadly, regardless of these efforts, the petitioner’s enchantment wasn’t accepted, they usually acquired one other intimation on Could 18, 2021, underneath Part 143(1) of the Act, citing the talked about demand. Subsequently, on Could 26, 2021, the petitioner once more urged the CPC to use for the FTC by means of a letter.

By June 15, 2021, the petitioner received a rectification order through e-mail on July 21, 2021, nonetheless reflecting a requirement of Rs. 29,69,260.

The petitioner argued that Rule 128’s course of is extra of a suggestion than a strict mandate. Regardless of submitting the FTC nicely earlier than the evaluation proceedings had been concluded, the intimation underneath Part 143(1) arrived on March 26, 2021, whereas the petitioner uploaded the FTC on February 2, 2012.

The Division argued that Rule 128’s process is compulsory and can’t be seen as merely advisory. In line with Part 139, Type-67 should be submitted by or earlier than the deadline for submitting the revenue tax return.

The court docket dominated that though the intimation underneath Part 143(1) was issued on March 26, 2021, the FTC had been filed on February 2, 2021. Subsequently, the respondent ought to have rightfully acknowledged the petitioner’s FTC. Nevertheless, the division’s rejection of the FTC is improper and doesn’t align with the regulation.

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