Foreign Tax Credit relief cannot be denied for delayed Form 67 filing where treaty entitlement remains intact.

Foreign Tax Credit under section 90 and the relevant DTAA was held to be a substantive treaty-based entitlement that could not be defeated merely because Form No. 67 was filed after the section 139(1) due date. Rule 128(9) was treated as a procedural prescription for the manner and timing of filing, and it was found to contain no express consequence of denial for delayed compliance. The Tribunal therefore regarded the filing requirement as directory rather than mandatory, and held that the rules cannot override the Act or treaty relief. The credit was directed to be allowed despite the delay.

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Issues: Whether Foreign Tax Credit could be denied merely because Form No. 67 was furnished after the due date prescribed under section 139(1), despite the claim being otherwise supported by the return and treaty relief.

Analysis: The Tribunal held that section 90 of the Income-tax Act, 1961 read with the relevant DTAA confers relief against double taxation, and that Rule 128(9) of the Income-tax Rules, 1962 is a procedural requirement governing the manner and time for filing Form No. 67. It was found that the rule does not contain any express consequence of denial of Foreign Tax Credit for delayed filing. The Tribunal followed the view that the filing requirement is directory, not mandatory, and that the Rules cannot operate contrary to the Act or the treaty provisions. The contrary view taken in another bench was distinguished on facts.

Conclusion: Delay in filing Form No. 67 did not disentitle the assessee from claiming Foreign Tax Credit, and the credit was directed to be allowed.

Ratio Decidendi: A procedural filing requirement in the tax rules cannot defeat a substantive treaty-based entitlement to Foreign Tax Credit unless the statute or rules expressly provide for such denial.

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