Foreign tax credit cannot be denied for delayed Form 67 filing where treaty relief and substantive entitlement otherwise exist.

Foreign tax credit could not be denied merely because Form 67 was filed after the due date under section 139(1), since Rule 128 was treated as procedural and directory rather than a substantive condition for relief. The assessee had offered the foreign income to tax in India and paid tax in the United Kingdom, so treaty-based relief under sections 90 and 91 remained available. The resulting disallowance was therefore an error apparent from the record, and rectification under section 154 was warranted.

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Issues: Whether foreign tax credit could be denied merely because Form 67 was filed after the due date prescribed under section 139(1), and whether such disallowance could be rectified under section 154.

Analysis: The assessee had offered the foreign-source income to tax in India and had paid tax in the United Kingdom. The credit claim was supported by the treaty provision governing relief from double taxation and by the statutory framework under sections 90 and 91. Rule 128 required furnishing Form 67, but the rule did not create a substantive bar to the credit where the form was filed belatedly. The requirement was treated as procedural and directory, not mandatory. In view of the treaty entitlement and the consistent view that delayed filing of Form 67 does not extinguish the substantive claim, the rejection of foreign tax credit was held to be an error apparent from the record.

Conclusion: The denial of foreign tax credit for delayed filing of Form 67 was unsustainable, and the rectification application ought to have been allowed.

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