Foreign tax credit cannot be denied merely for delayed Form 67 filing, but factual verification of overseas income remains necessary.

Rule 128 governing Form No. 67 is procedural and directory, so delayed filing of the return or the form by itself does not extinguish a taxpayer's treaty-based entitlement to foreign tax credit under section 90. The Tribunal treated the foreign tax credit claim as not liable to denial solely for that delay, but it required fresh verification of whether the relevant salary income was actually earned outside India and whether foreign tax was paid on that income, as those facts were necessary to determine the extent of credit admissible.

---

---

Issues: Whether delay in filing the return of income and Form No. 67 beyond the due date under section 139(1) of the Income-tax Act, 1961, could justify denial of foreign tax credit, and whether the claim required fresh verification as to whether the relevant income was earned outside India.

Analysis: Foreign tax credit was claimed under section 90 of the Income-tax Act, 1961, read with the relevant treaty provisions and was supported by Form No. 67. The Tribunal held that Rule 128 of the Income Tax Rules, 1962, is a procedural framework for claiming the credit and does not create a disallowance consequence for delayed filing of Form No. 67. The treaty entitlement was treated as prevailing over the procedural rule, and the delay in filing the return was not treated as fatal to the credit claim. At the same time, the record did not clearly establish whether the salary income in respect of which credit was claimed was earned outside India, which was necessary to quantify entitlement.

Conclusion: Denial of foreign tax credit merely on the ground of delayed filing of the return and Form No. 67 was not justified, but the matter required fresh examination on the factual extent of income earned abroad and foreign tax paid thereon.

Final Conclusion: The assessee obtained relief on the legal issue concerning delay in filing Form No. 67, but the quantum and eligibility of the credit were restored for fresh adjudication on facts.

Ratio Decidendi: Rule 128 is directory and procedural in nature, and delayed filing of Form No. 67 does not by itself extinguish the statutory and treaty-based entitlement to foreign tax credit.

---