Foreign Tax Credit: belated Form 67 does not defeat credit where the audited company filed its return within the due date.

Foreign tax credit entitlement under bilateral relief provisions is not defeated by non filing or belated filing of Form 67 where the company, being subject to statutory audit, filed its income tax return within the statutory due date; the requirement to file Form 67 is treated as procedural/directory and cannot alone justify denial of credit under Sections 90/90A, therefore the disallowance is set aside and the assessing officer must grant consequential relief to the assessee.

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Issues: (i) Whether the disallowance of foreign tax credit of Rs. 10,69,740 for assessment year 2018-19 on the ground of non-filing/late filing of return and Form 67 was justified.

Analysis: The assessee is a private limited company subject to statutory audit and filed the original return within the extended due date under section 139(1) of the Income-tax Act, 1961. Form 67 claiming foreign tax credit was filed subsequently on 18.10.2018. The tribunal examined whether non-filing or belated filing of Form 67 justified denial of foreign tax credit under Sections 90/90A read with section 143(1). The tribunal analysed the timing of the return filing relative to the due date and treated the requirement to file Form 67 as procedural. The tribunal relied on coordinate orders applying the principle that Form 67 is a directory/procedural requirement and that where the return itself was filed within the statutory due date applicable to the assessee, denial of foreign tax credit solely for belated Form 67 filing was not warranted.

Conclusion: The disallowance of the foreign tax credit is set aside and the appeal is allowed in favour of the assessee; consequential relief to be given by the assessing officer.

Ratio Decidendi: Where a company subject to statutory audit files its return within the due date under section 139(1), non filing or belated filing of Form 67, being a procedural/directory requirement, does not justify denial of foreign tax credit under Sections 90/90A of the Income-tax Act, 1961.

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