Madras High Court
Venkatanarayanan Somayaji ... vs The Principal Commissioner Of Income ... on 4 April, 2025
Author: Krishnan Ramasamy
Bench: Krishnan Ramasamy
W.P.No.28199 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 04.04.2025
Coram
The Hon'ble Mr.Justice Krishnan Ramasamy
W.P.No.28199 of 2024
and
W.M.P.Nos.30742 and 30744 of 2024
Venkatanarayanan Somayaji Lakshminarasimha ... Petitioner
..Vs..
1. The Principal Commissioner of Income Tax-8,
BSNL Tower, No.16 Greams Road,
Chennai- 600 006.
2. Assistant Director of Income Tax
Centralized Processing Centre
Post Box No.-1, Electronic City Post Office,
Bangalore- 560 100.
Karnataka, India.
3. Deputy Commissioner of Income Tax
Non Corporate Circle 17(1) Chennai
Room No.514, BSNL Building,
5th Floor, Income Tax Office-BSNL Tower
No.16, Greams Road,
Chennai- 600 006. ... Respondents
Prayer: This Writ Petition filed under Article 226 of the Constitution of India
for issuance of a Writ of Certiorarified Mandamus to call for the records
1/10
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W.P.No.28199 of 2024
relating to the impugned order dated 06.09.2024 passed by the 3rd Respondent
vide ITBA/COM/F/17/2024-25/1068426359(1) for Assessment Year 2018-2019
and quash the same and direct the 3rd Respondent allow the foreign tax credit
for the Assessment Year 2018-2019,if necessary by condoning the delay in
filing Form No.67.
For Petitioner : Mr.Baskar G
For Respondents : Dr.B.Ramaswamy
Senior Standing Counsel
ORDER
This writ petition has been filed challenging the impugned order
dated 06.09.2024 passed by the 3rd Respondent vide ITBA/COM/F/17/2024-
25/1068426359(1) for Assessment Year 2018-2019 and quash the same and
direct the 3rd Respondent allow the foreign tax credit for the Assessment Year
2018-2019,if necessary by condoning the delay in filing Form No.67.
2. The facts giving rise to the writ petition, in a nutshell are as follows:
(i) The petitioner filed his income tax return for the Assessment Year
2018-2019 on 30.06.2018, admitting an income of Rs.68,81,870/- which
included foreign income of Rs.65,61,171 and claimed a sum of Rs.18,85,919/-
towards foreign tax credit which was withheld by employer. While so, the 2nd
respondent sent a communication to the petitioner dated 14.05.2020 stating that
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relief under Section 90 of the Act i.e. Foreign tax credit was not considered, for
the reason that Form 67 was not submitted along with income tax return.
(ii) The corresponding foreign salary income of Rs.65,61,170/- admitted
by the petitioner has been accepted by the Department. The petitioner return of
income which was e-filed on 30.06.2018, was accepted by the portal even
without alerting the petitioner of any error for non-filing of Form 67, before
the due date. The petitioner was under the bonafide impression that the foreign
tax credit will be allowed automatically in the return form itself. Therefore,
Form 67 which was introduced for the first time from the Assessment Year
2018-19 vide Income Tax Rule 128(9) was filed on 20.05.2020.
(iii) The petitioner originally was assessed by the Deputy Commissioner
of Income Tax, International Taxation Circle 1 (2), Bangalore. His file was
transferred to Chennai vide Communication dated 09.12.2020 to the Income
Tax Officer, International Taxation, Chennai, and the jurisdiction presently lies
with the 3rd Respondent. Thereafter, the petitioner preferred a rectification
petition under Section 154 of the Act with his erstwhile jurisdictional Assessing
Officer Bangalore on 20.05.2020 and the copy of the same was furnished to the
Jurisdictional Officer, Chennai on 27.04.2022. The file was again internally
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transferred to 3rd respondent. The petitioner's authorized representatives made a
written representation to the Commissioner of Income Tax-8, Non Corporate
Range 17(1) vide their letter dated 29.08.2024 requesting for early doposal of
the rectification petition, but the same was rejected by the 3rd respondent vide
letter dated 06.09.2024 for the reason that the petitioner have failed to furnish
Form 67, within due date of filing Return of Income and Form 67 was
submitted only after the processing of Return of Income. The said order is
impugned in this writ petition.
2. The learned counsel appearing for the petitioner would submit that the
delay in filing Form 67 is only the procedural lapse on the part of the petitioner
and that apart requirement of filing Form 67 is only directory and not
mandatory. In support of his contention, he relied upon the decision of this
Court in the case of Duraiswamy Kumaraswamy Vs. Principal Commissioner
of Income Tax [2023] 156 taxmann.com. 445 (Madras).
3. The learned Senior Standing Counsel appearing for the respondents
would fairly submit that the aforesaid order passed by this Court in similar
circumstances, may be followed in the present case also.
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4.Heard both sides. Perused the records.
5. There is no dispute with regard to filing of income tax return in time
i.e., 30.06.2018. While filing the income tax return, the petitioner disclosed
Foreign Income at 65,61,171/- and claimed a sum of Rs.18,85,919/- towards
foreign tax credit which was withheld by employer. The 2nd respondent vide
order dated 14.05.2020 rejected the foreign tax credit on the ground that Form
67 was not submitted along with Income Tax Return. The Form 67 was
introduced for the 1st time from the Assessment Year 2018-19 vide Rule 128(9)
Income Tax Act and the same was filed by the petitioner on 20.05.2020.
Thereafter, the petitioner filed the rectification petition on 20.05.2020 and the
same was rejected by the 3rd respondent on the ground that Form 67 was not
filed in time.
6. As rightly contended by the learned counsel for the petitioner the
delay in filing the Form 67 is only the procedural lapse. That apart, this Court
in the decision cited by the learned counsel for the petitioner has observed that
Rule 128 is not mandatory but to be considered as directory in nature. The
relevant portion of the said decision is extracted hereunder:
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“9.In the present case, the petitioner initially worked
at Kenya and subsequently, he became the resident of
Indian from the assessment year 2018-2019 and 2019-
2020. The petitioner admitted the fact that he has filed his
return in India on 10.08.2019. The intimation
under Section 143(1) was issued on 26.03.2020. However,
he has filed the return without Form-67 which is required
to be filed under Rule 128 to claim the benefit of FTC and
the same came to be filed on 02.02.2021 which was well
before the completion of the assessment year. The
intimation under Section 143(1) was issued from the
CPC only on 26.03.2021.
10.According to the learned counsel appearing for
the respondent, the procedure under Rule 128 is
mandatory and and cannot be considered as directory in
nature. The petitioner has filed his return including his
Kenya income along with his Indian Income tax and
claimed the benefits of FTC. However, the petitioner would
submit that it is not mandatory. The Rule cannot make
anything mandatory and it can be directory in nature, that
too before the Assessment, the claim to avail the benefits of
FTC is filed. Therefore, it would be the amounts to due
compliance under the Act. The petitioner referred to the
Judgment of the Hon'ble Supreme Court in the case
of Commissioner of Income-Tax, Maharashtra v.
G.M.Knitting Industries (P) Limited in Civil Appeal
Nos.10782 of 2013 and 4048 of 2014 dated 24.06.2015,
wherein it was held that Form 3AA is required to be filed
along with the return of income to avail the benefit and
even if it is not filed, but the same is filed during
assessment proceedings but before the final order of
assessment is made that would amount to sufficient
compliance.
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11.The law laid down by the Hon'ble Apex Court in
Commissioner of Income-Tax, Maharashtra v.
G.M.Knitting Industries (P) Limited in Civil Appeal
Nos.10782 of 2013 and 4048 of 2014 dated 24.06.2015,
which was referred above, would be squarely applicable to
the present case. In the present case, the returns were filed
without FTC, however the same was filed before passing of
the final assessment order. The filing of FTC in terms of
the Rule 128 is only directory in nature. The rule is only
for the implementation of the provisions of the Act and it
will always be directory in nature. This is what the Hon'ble
Supreme Court had held in the above cases when the
returns were filed without furnishing Form 3AA and the
same can be filed the subsequent to the passing of
assessment order.
12. Further, in the present case, the intimation under
Section 143(1) was issued on 26.03.2021, but the FTC was
filed on 02.02.2021. Thus, the respondent is supposed to
have provided the due credit to the FTC of the petitioner.
However, the FTC was rejected by the respondent, which is
not proper and the same is not in accordance with law.
Therefore the impugned order is liable to be set aside.
13. Accordingly the impugned order dated
25.01.2022 is set aside. While setting aside the impugned
order, this Court remits the matter back to the respondent
to make reassessment by taking into consideration of the
FTC filed by the petitioner on 02.02.2021. The respondent
is directed to give due credit to the Kenya income of the
petitioner and pass the final assessment order. Further, it
is made clear that the impugned order is set aside only to
the extent of disallowing of FTC claim made by the
petitioner and hence, the first respondent is directed to
consider only on the aspect of rejection of FTC claim
within a period of 8 weeks from the date of receipt of copy
of this order.”
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7. In the light of the aforesaid decision and also in the interest of
justice, this Court is inclined to condone the delay in filing the Form 67 subject
to payment of a cost of Rs.10,000/- to the Principal Government Naturopathy
Medical College and Hospital.
8. Accordingly, this Court passes the following order:
(i) The impugned order dated 06.09.2024 is set aside subject
to the payment of a sum of Rs.10,000/- to the Principal
Government Naturopathy Medical College and Hospital,
Account No.7883022723, IFSC Code: IDIB000M157, within
a period of 2 weeks from the date of receipt of copy of this
order and the setting aside of the impugned order will take
effect from the date of payment of the said amount.
(ii) Upon production of proof with regard to the payment
of a sum of Rs.10,000/- as stated above, the 3rd
Respondent shall consider and pass orders within a period
of two weeks thereafter.
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10. With the above directions, this writ petition is disposed of. No costs.
Consequently, the connected miscellaneous petitions are closed.
04.04.2025
Speaking/Non-speaking order
Index : Yes / No
Neutral Citation : Yes / No
arr
To
1. The Principal Commissioner of Income Tax-8,
BSNL Tower, No.16 Greams Road,
Chennai- 600 006.
2. Assistant Director of Income Tax
Centralized Processing Centre
Post Box No.-1, Electronic City Post Office,
Bangalore- 560 100.
Karnataka, India.
3. Deputy Commissioner of Income Tax
Non Corporate Circle 17(1) Chennai
Room No.514, BSNL Building,
5th Floor, Income Tax Office-BSNL Tower
No.16, Greams Road,
Chennai- 600 006.
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Krishnan Ramasamy,J.,
arr
04.04.2025
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