Foreign tax credit cannot be denied for delayed Form 67 filing where treaty entitlement is more beneficial.

Foreign tax credit under a treaty and section 90 could not be denied merely because Form No. 67 was filed late. Rule 128(9) was treated as a procedural requirement only, not a mandatory disallowance provision, and the treaty's more beneficial entitlement prevailed over the filing default. The assessee's substantive right to credit for tax paid abroad was therefore not defeated by delayed submission of the form, and the claim had to be examined on merits after verification.

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Issues: Whether foreign tax credit could be denied merely because Form No. 67 was filed beyond the time prescribed, and whether the delay in filing the form was a mandatory bar to the claim.

Analysis: The claim for foreign tax credit arose under the treaty and section 90 of the Income-tax Act, 1961, which gives effect to the more beneficial treaty provisions. Rule 128(9) of the Income-tax Rules was held to regulate procedure only and not to create a disallowance of foreign tax credit for delayed filing of Form No. 67. The requirement was treated as directory, not mandatory, and the treaty provisions were held to prevail over a contrary procedural rule. The assessee's substantive entitlement to credit for tax paid abroad was therefore not defeated by the delay in filing the form.

Conclusion: Delay in filing Form No. 67 did not extinguish the assessee's claim to foreign tax credit, and the issue was decided in favour of the assessee.

Final Conclusion: The credit claim could not be rejected on a purely procedural default, and the matter was sent back for decision on merits after verification.

Ratio Decidendi: A procedural filing requirement under the Income-tax Rules cannot override a substantive treaty entitlement to foreign tax credit where the treaty is more beneficial, and delay in filing the prescribed form is not by itself a ground to deny the credit.

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