Foreign tax credit under treaty cannot be denied solely for late Form 67 filing; procedural rule yields to substantive entitlement.

A treaty-based foreign tax credit entitlement cannot be defeated by a procedural filing requirement under the Income-tax Rules. Where the relevant tax treaty grants credit for foreign tax paid, Rule 128(9) must be read consistently with the Act and treaty, so the timing of Form 67 filing is directory rather than mandatory if necessary to preserve the substantive right. On that basis, delayed filing of Form 67 by itself does not justify denial of foreign tax credit, and the claim must be examined on merits under the governing law and treaty provisions.

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Issues: Whether foreign tax credit could be denied merely because Form 67 was filed along with the revised return instead of before the due date under section 139(1) of the Income-tax Act, 1961.

Analysis: The relevant treaty provision entitled a resident to credit for tax paid in the United States, and that entitlement could not be defeated by a procedural rule. Rule 128(9) was therefore required to be read in conformity with the treaty and the Act. On that footing, the filing timeline for Form 67 was treated as directory rather than mandatory, and delay in filing the form did not by itself justify denial of foreign tax credit.

Conclusion: The issue is answered in favour of the assessee. Foreign tax credit could not be denied solely on the ground of delayed filing of Form 67.

Final Conclusion: The appeal succeeded and the assessee was entitled to have the foreign tax credit claim examined on merits in accordance with the governing law and treaty provisions.

Ratio Decidendi: Where a treaty grants credit for foreign tax paid, a procedural filing requirement under the Income-tax Rules cannot override that substantive entitlement and must be read as directory if necessary to preserve the treaty right.

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