Foreign Tax Credit cannot be denied for late filing of Form 67 as it's directory procedural formality under Income Tax Rules

The ITAT Kolkata held that filing Form 67 under Income Tax Rules, 1962 is directory, not mandatory, and Foreign Tax Credit cannot be denied solely for late filing as it constitutes mere procedural formality. Despite minor delay in furnishing Form 67, the assessee was entitled to claimed Foreign Tax Credit for the relevant assessment years. The Tribunal consistently maintained that late filing of Form 67 should not result in denial of relief under section 90. Decision favored the assessee.

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Issues:
Denial of relief claimed u/s 90 of the Income Tax Act on account of delay in furnishing Form 67 prescribed under Income Tax Rules, 1962.

Analysis:
The judgment pertains to appeals by the assessee against orders of the Commissioner of Income Tax, Appeal, Addl/JCIT(A)-10, Mumbai, regarding the denial of relief claimed under sections 90/90A of the Income Tax Act due to delay in submitting Form 67. The assessee, an individual earning income from salary in Bhutan, claimed relief under section 90 for multiple assessment years. The claim was denied initially due to a delay in furnishing Form 67, which was subsequently rectified through a rectification application under section 154. However, the appeal before the CIT(A) was dismissed due to a delay in filing the appeal, leading to the present appeal before the Tribunal.

The primary issue before the Tribunal was the denial of relief under sections 90/90A of the Act based on the delay in filing Form 67. The Tribunal noted that the assessee had obtained and e-filed Form 67 for the relevant assessment years with necessary attachments, albeit with a minor delay. The tax credit claimed by the assessee was in line with the tax paid in Bhutan, and the delay in filing the appeal was due to pursuing an alternative remedy under section 154, which was unsuccessful. The Tribunal acknowledged the bonafide nature of the delay and decided to condone it.

The Tribunal considered whether to remand the matter to the CIT(A) for adjudication or decide on the merits itself. Given the small amount of tax credit involved and to avoid further litigation, the Tribunal opted to adjudicate the appeal on its merits. Citing previous tribunal decisions, the Tribunal emphasized that filing Form 67 is procedural and not mandatory, and the denial of foreign tax credit solely based on a delay in filing Form 67 is unwarranted. The Tribunal referred to specific cases where similar issues were resolved in favor of the assessee, highlighting the procedural nature of Form 67 filing and the entitlement of the assessee to foreign tax credit.

Ultimately, the Tribunal allowed the appeals of the assessee, reversing the findings of the CIT(A) and granting the alleged Foreign Tax Credit claimed for the respective assessment years. The judgment emphasized the bonafide nature of the claim and the procedural aspect of Form 67 filing, ensuring the assessee's entitlement to the relief claimed under sections 90/90A of the Income Tax Act.

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