Foreign tax credit cannot be denied for delayed Form 67 filing where treaty entitlement is otherwise established.

Delay in furnishing Form No. 67 under Rule 128(9) was held not to defeat the substantive right to foreign tax credit where the assessee was otherwise entitled under Section 90 and the India-Australia treaty. The Tribunal treated the form-filing requirement as procedural and directory, not as a mandatory condition extinguishing the credit, because the rule does not expressly provide disallowance for late filing. It also held that the treaty-based entitlement, being more beneficial, could not be overridden by a restrictive reading of the rule, and that the issue was not debatable for Section 154 purposes, so rectification relief was available.

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Issues: Whether delay in furnishing Form No. 67 under Rule 128(9) of the Income Tax Rules, 1962 disentitles the assessee from foreign tax credit, and whether such non-furnishing could justify denial of the claim in rectification proceedings.

Analysis: The assessee was otherwise entitled to foreign tax credit under Section 90 of the Income-tax Act, 1961 and Article 24 of the India-Australia tax treaty. Rule 128 was examined as the procedural mechanism for claiming the credit, including the requirement to furnish Form No. 67 by the due date. The Tribunal held that the rule does not expressly provide for disallowance of foreign tax credit on account of delayed filing of the form. It treated the filing requirement as directory and procedural, not mandatory in the sense of extinguishing the substantive right to credit. The Tribunal also held that the treaty entitlement, being more beneficial, could not be overridden by a restrictive reading of the rule, and that the issue was not debatable so as to bar rectification relief under Section 154.

Conclusion: Delay in filing Form No. 67 did not justify denial of foreign tax credit, and the assessee succeeded on the issue.

Final Conclusion: The assessment action disallowing foreign tax credit was set aside and the assessee's claim was restored.

Ratio Decidendi: A procedural rule governing the manner and time for furnishing Form No. 67 cannot be construed to defeat the substantive treaty-based right to foreign tax credit in the absence of an express statutory consequence of disallowance.

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