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

Foreign tax credit under section 90 and the India-USA DTAA could not be denied merely because Form 67 was filed after the due date under Rule 128. The Tribunal treated the rule as a procedural filing mechanism, not a mandatory condition that extinguishes the substantive treaty-based entitlement. As the assessee had otherwise established the underlying foreign tax credit claim and the only defect was delayed compliance, the procedural lapse was not allowed to defeat relief from double taxation. The disallowance of foreign tax credit was therefore unjustified and the credit remained allowable.

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Issues: Whether foreign tax credit could be denied merely because Form 67 was filed after the due date prescribed under Rule 128 of the Income-tax Rules, 1962.

Analysis: The Tribunal noted that the assessee had otherwise established the claim of foreign tax credit and that the only default was delayed filing of Form 67. It followed coordinate bench decisions holding that Rule 128 is a procedural mechanism for claiming relief under section 90 and the India-USA DTAA, and that the rule does not provide for forfeiture of the credit for delayed compliance. The Tribunal treated the filing requirement as directory and not mandatory, and held that a procedural lapse could not defeat the substantive entitlement to relief from double taxation.

Conclusion: The disallowance of foreign tax credit was unjustified and the assessee was entitled to the credit.

Ratio Decidendi: A procedural filing requirement under Rule 128 does not extinguish a substantive treaty-based right to foreign tax credit where the underlying claim is otherwise verifiable and admissible.

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