ITAT Bangalore Ruling: Substantive Foreign Tax Credit Cannot Be Denied Over Procedural Delays in Filing Appeals

In the realm of international taxation, the mechanism of claiming Foreign Tax Credit (FTC) is a fundamental right designed to prevent the double taxation of global income. However, taxpayers frequently encounter administrative roadblocks where legitimate claims are rejected due to procedural technicalities or delays in statutory filings. The recent judicial pronouncement by the Income Tax Appellate Tribunal (ITAT), Bengaluru Bench, in the matter of Dr. Sanghmitra Dasgupta Vs ITO, serves as a crucial precedent reinforcing the supremacy of substantive justice over rigid procedural compliance.

The Tribunal fundamentally established that an assessee cannot be deprived of lawfully claimed tax credits under Section 90 of the Income-tax Act, 1961, merely because of an inadvertent delay in initiating appellate proceedings, provided the mandatory documentation, such as Form No. 67, was submitted within the stipulated timeframe.

Factual Matrix of Dr. Sanghmitra Dasgupta Vs ITO

The Assessee's Profile and Income Declaration

The dispute centers around an assessee who operates professionally as a dental surgeon and concurrently holds the position of a managing partner within a Bengaluru-based partnership firm. Her financial portfolio for the relevant period included diverse revenue streams: remuneration from her partnership firm, interest yields across seven distinct bank accounts, commission income from a corporate entity, and notably, professional fees sourced internationally from Elite Dental Clinic Limited located in Tanzania. Furthermore, the assessee had declared interest obligations on borrowed capital categorized under "Income from house property."