Foreign Tax Credit: belated Form 67 filing is directory and may be accepted if substantiated after verification.

Belated furnishing of Form No. 67 under the Rules is treated as a directory procedural requirement; late submission does not automatically forfeit entitlement to foreign tax credit. The rule should be read to permit acceptance of Form 67 filed after return processing or during rectification, subject to factual verification of the foreign tax claim. Assessing authorities are directed to verify the belatedly submitted documentation and allow the foreign tax credit if the details and taxes paid abroad are substantiated; procedural non-compliance alone cannot be a standalone ground for denial.

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Issues: Whether foreign tax credit (FTC) can be disallowed solely on the ground that Form No. 67 was not furnished within the time prescribed under Rule 128(9) of the Income-tax Rules.

Analysis: The question involves interpretation of the procedural requirement under Rule 128(9) concerning filing of Form No. 67 and its effect on entitlement to FTC. Relevant statutory framework includes Section 143(1) of the Income-tax Act, 1961 (return processing) and Rule 128(9) of the Income-tax Rules (form filing requirement). Judicial authorities have examined whether Rule 128(9) is directory or mandatory; several decisions treat the rule as directory, permitting acceptance of Form 67 filed belatedly (including during pendency of rectification or before appellate authorities), while at least one tribunal decision took a contrary view. On the facts, Form 67 was furnished after processing and during rectification proceedings; the filing was accepted as capable of factual verification. The assessing authority was directed to verify the belatedly filed Form 67 and allow FTC if substantiated.

Conclusion: Rule 128(9) is directory in nature and belated furnishing of Form No. 67 does not disentitle the taxpayer from claiming foreign tax credit; FTC is to be allowed after factual verification of Form 67. The decision is in favour of the assessee.

Ratio Decidendi: A procedural filing requirement under Rule 128(9) of the Income-tax Rules is directory, and belated submission of Form No. 67, when factually verifiable, cannot be a standalone ground to deny foreign tax credit.

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