Kavish Arora v. NFAC, ITA No. 407/Del/2024
Income Tax Appellate Tribunal (ITAT) Delhi has ruled in Kavish Arora v. NFAC (ITA No. 407/Del/2024) that delayed filing of Form 67 should not result in denial of Foreign Tax Credit (FTC) under the India-USA Double Taxation Avoidance Agreement (DTAA).
Background:
The assessee, Kavish Arora, had paid taxes in the USA and sought relief under Article 25(2)(a) of the India-USA DTAA and Section 90 of the Income-tax Act, 1961. However, the Assessing Officer denied the FTC on grounds of late filing of Form 67, which was submitted after the due date under Section 139(1).
The CIT(A) upheld this disallowance, prompting the assessee to file an appeal before the ITAT.
Tribunal’s Findings:
The ITAT held that:
- Filing Form 67 is a procedural formality, not a condition precedent for granting FTC.
- The assessee filed Form 67 within the assessment year, though not with the original return.
- Denying FTC solely due to delay in Form 67 is unjust, especially when taxes have been actually paid abroad.
The Tribunal referred to a series of consistent judgments including:
- Brinda Rama Krishna v. ITO [(2022) 135 taxmann.com 358]
- Neha Kapoor v. ITO [ITA No. 135/Del/2023]
- Ajay Kumar Mishra v. ITO [ITA No. 1835/Del/2022]
These cases affirm that Form 67 is directory, not mandatory, and should not block substantive tax relief.
Key Takeaway:
This ruling is a vital clarification for:
- NRIs and expatriates working in countries like the USA
- Individuals who pay taxes abroad but miss procedural compliance deadlines
- Tax professionals and CAs handling cross-border tax filings
The ITAT’s decision reinforces that substantive rights under DTAA cannot be denied merely due to technical lapses in compliance.
Conclusion:
The ITAT Delhi’s pro-taxpayer stance in Kavish Arora v. NFAC emphasizes that justice should not be sacrificed at the altar of procedure. The ruling brings clarity and relief to global taxpayers relying on DTAA provisions for tax credit and helps maintain fairness in India’s international tax regime.