Foreign Tax Credit claim cannot be denied merely for late Form 67 filing where supporting details are on record.

For the relevant pre-amendment period, delay in filing Form No. 67 under Rule 128(9) did not by itself justify denial of Foreign Tax Credit, as the time limit was treated as directory rather than mandatory. The Tribunal also held that an appellate order sustaining the denial was unsustainable where it relied on an incorrect rule reference, ignored the filed Form No. 67 and supporting material, and reflected non-application of mind and breach of natural justice. The matter was set aside and remitted for fresh verification of the Foreign Tax Credit claim.

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Issues: (i) Whether Foreign Tax Credit could be denied merely because Form No. 67 was filed after the due date under Rule 128(9) of the Income-tax Rules, 1962; (ii) Whether the appellate order sustaining the denial suffered from non-application of mind and breach of natural justice.

Issue (i): Whether Foreign Tax Credit could be denied merely because Form No. 67 was filed after the due date under Rule 128(9) of the Income-tax Rules, 1962.

Analysis: The claim for Foreign Tax Credit had been uploaded before the intimation under section 143(1) of the Income-tax Act, 1961. The Tribunal followed the consistent view that, for the relevant period, Rule 128(9) was directory and not mandatory, and that delay in filing Form No. 67 by itself did not authorise denial of Foreign Tax Credit. The amended rule was also noticed as reflecting legislative relaxation of the time limit.

Conclusion: The denial of Foreign Tax Credit solely on the ground of belated filing of Form No. 67 was not sustainable in law.

Issue (ii): Whether the appellate order sustaining the denial suffered from non-application of mind and breach of natural justice.

Analysis: The Tribunal found that the appellate authority had taken a position contrary to its own prior notice, had relied on an incorrect rule reference, and had not meaningfully examined the filed Form No. 67 and supporting materials. This was treated as a volte-face and as an order passed mechanically without proper consideration of the record.

Conclusion: The appellate order was held to be unsustainable for breach of natural justice and non-application of mind.

Final Conclusion: The matter was set aside and remitted for fresh consideration of the Foreign Tax Credit claim after due verification, with the assessee obtaining partial substantive relief.

Ratio Decidendi: For the relevant pre-amendment period, the time limit for filing Form No. 67 under Rule 128(9) is directory and not mandatory, and Foreign Tax Credit cannot be refused merely for delay where the supporting claim is otherwise on record and capable of verification.

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