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

Foreign tax credit could not be denied merely because Form 67 was filed after the return due date, as Rule 128(9) requires timely filing but does not state that delay extinguishes the substantive credit entitlement. The treaty framework under Article 25 of the India-USA DTAA and the principle that a procedural lapse should not defeat an otherwise established foreign tax liability supported the taxpayer's claim, so the revenue's disallowance was unsustainable.

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Issues: Whether foreign tax credit could be denied merely because Form 67 was filed after the due date prescribed for the return of income.

Analysis: The assessee, a resident taxpayer, claimed foreign tax credit for taxes paid in the United States. The credit was denied only on the ground that Form 67 was filed belatedly. Rule 128(9) of the Income Tax Rules, 1962 prescribes filing of Form 67 on or before the due date under Section 139(1) of the Income-tax Act, 1961, but the rule does not expressly provide that delay in filing the form extinguishes the substantive entitlement to foreign tax credit. The decision also relied on the applicable treaty framework under Article 25 of the India-USA DTAA and the principle that a procedural lapse should not defeat a substantive benefit where the underlying foreign tax liability is otherwise established.

Conclusion: Foreign tax credit could not be denied merely for belated filing of Form 67, and the disallowance made by the revenue authorities was unsustainable.

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