Foreign Tax Credit cannot be denied for delayed Form 67 filing where treaty entitlement otherwise exists.

Foreign Tax Credit could not be denied merely because Form 67 was filed after the return under section 139(1). Rule 128(9) was treated as procedural and directory, not a mandatory condition for disallowance, so a belated filing did not extinguish the substantive FTC entitlement. The Tribunal also noted that treaty relief under article 25(2)(a) of the India-USA DTAA, read with section 90 of the Income-tax Act, could not be defeated by this procedural lapse. Accordingly, delay in filing Form 67 alone was insufficient to deny the credit, and the assessee remained entitled to FTC.

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Issues: Whether Foreign Tax Credit could be denied merely because Form 67 was filed after the return of income, and whether such belated filing was a mandatory or only a directory compliance.

Analysis: The claim for Foreign Tax Credit was rejected only on the ground that Form 67 was not filed along with the return under section 139(1) of the Income-tax Act, 1961. The Tribunal followed coordinate bench decisions which had held that Rule 128(9) of the Income-tax Rules, 1962 does not provide for disallowance of Foreign Tax Credit for delay in filing Form 67, and that the filing requirement is procedural and directory in nature. It was also noted that the treaty entitlement under article 25(2)(a) of the India USA Double Taxation Avoidance Agreement, read with section 90 of the Income-tax Act, 1961, could not be defeated by a procedural lapse of this nature.

Conclusion: Belated filing of Form 67 did not justify denial of Foreign Tax Credit, and the assessee was entitled to the credit.

Ratio Decidendi: A procedural delay in filing Form 67 does not, by itself, extinguish the substantive entitlement to Foreign Tax Credit where the treaty benefit is otherwise available.

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