ITAT Mumbai: Form 67 Filing Requirement Directory, Not Mandatory

The Appellate Tribunal ITAT Mumbai allowed the appeal of the assessee, granting foreign tax credit for assessment year 2018-19. The Tribunal held that the requirement of filing Form 67 before the due date of filing the return of income was directory, not mandatory. Despite the belated filing of Form 67, the assessee was deemed eligible for foreign tax credit as it was submitted before the completion of assessment proceedings. The Tribunal distinguished between violations of acts and rules without specified consequences, ultimately providing relief to the assessee on various grounds related to the foreign tax credit claim.

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Issues:
- Disallowance of foreign tax credit by National Faceless Appeal Centre for assessment year 2018-19.
- Requirement of filing Form 67 for claiming foreign tax credit.
- Interpretation of Rule 128 of The Income Tax Rules, 1962 regarding the mandatory nature of filing Form 67.
- Assessment of total income and disallowance of foreign tax credit by the assessing officer.
- Appeal by the assessee against the assessment order before National Faceless Appeal Centre.
- Legal arguments regarding the mandatory nature of filing Form 67 for claiming foreign tax credit.
- Decision of the National Faceless Appeal Centre dismissing the appeal.
- Further appeal before the Appellate Tribunal ITAT Mumbai.
- Arguments presented by both the authorised representative and the departmental representative.
- Reference to the decision of the Supreme Court in a similar matter.
- Analysis of the requirement of filing Form 67 before the due date of filing the return of income.
- Decision of the Appellate Tribunal ITAT Mumbai allowing the appeal of the assessee.
- Conclusion of the judgment allowing the appeal and granting foreign tax credit to the assessee.

Detailed Analysis:
- The appeal was filed by the assessee against the appellate order passed by the National Faceless Appeal Centre, denying foreign tax credit for assessment year 2018-19.
- The issue revolved around the requirement of filing Form 67 for claiming foreign tax credit, as per Rule 128 of The Income Tax Rules, 1962.
- The assessing officer disallowed the foreign tax credit claimed by the assessee due to the belated filing of Form 67, despite the return of income being filed within the due date.
- The National Faceless Appeal Centre upheld the disallowance, emphasizing the mandatory nature of filing Form 67 before the due date of filing the return of income.
- The assessee argued that the filing of Form 67 should not be considered mandatory for claiming foreign tax credit, citing legal precedents and interpretations.
- The Appellate Tribunal ITAT Mumbai analyzed the provisions of Rule 128 and held that the requirement of filing Form 67 before the due date of filing the return of income was not mandatory but directory in nature.
- Referring to previous decisions and the absence of adverse consequences for non-compliance, the Tribunal allowed the appeal of the assessee and granted foreign tax credit.
- The Tribunal concluded that the assessee was eligible for foreign tax credit as Form 67 was filed before the completion of the assessment proceedings, even though not in accordance with Rule 128.
- The judgment allowed the appeal of the assessee, emphasizing the distinction between a violation of the act and a rule without prescribed consequences for non-compliance.
- The Tribunal also allowed other grounds of appeal related to the claim of foreign tax credit, ultimately granting relief to the assessee.

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