Foreign tax credit cannot be denied for delayed Form 67 filing where treaty entitlement remains intact

Foreign tax credit under section 90(2) and the relevant DTAA was treated as a substantive treaty entitlement that could not be denied merely because Form No. 67 was filed after the due date under rule 128(9). The filing requirement was regarded as procedural, and the rules did not prescribe disallowance for delayed compliance. As Form No. 67 had been furnished before completion of assessment, the procedural lapse did not extinguish the credit claim, and the foreign tax credit was directed to be allowed.

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Issues: Whether foreign tax credit could be denied merely because Form No. 67 was filed after the due date prescribed under rule 128(9) of the Income-tax Rules, 1962.

Analysis: The claim for foreign tax credit was examined in the light of section 90(2) of the Income-tax Act, 1961, the relevant DTAA provision, and rule 128(9) of the Income-tax Rules, 1962. The governing treaty provision entitled a resident to credit for foreign tax paid, and neither the Act nor the treaty prescribed disallowance of such credit merely for delayed filing of Form No. 67. The filing requirement was treated as procedural in nature, with no adverse consequence specified for delay. Since the assessee had furnished Form No. 67 before completion of assessment, the substantive entitlement to credit was held to survive the procedural lapse.

Conclusion: Delayed filing of Form No. 67 did not extinguish the assessee's entitlement to foreign tax credit, and the credit was directed to be allowed.

Ratio Decidendi: A procedural filing requirement for claiming foreign tax credit cannot defeat the substantive treaty-based entitlement unless the statute or rule expressly provides disallowance for non-compliance.

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