Foreign tax credit filing of Form 67 is procedural, and delayed compliance cannot defeat the substantive credit claim.

Foreign tax credit under section 90 read with Article 25(2)(a) of the India-USA DTAA was held to be a substantive entitlement available to the extent of Indian tax payable. Rule 128(9) requiring filing of Form 67 was treated as procedural and directory, so belated or initially incorrect filing did not extinguish the credit claim. The disallowance was therefore unsustainable, and the assessee remained entitled to foreign tax credit within the statutory limit.

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Issues: Whether the assessee was entitled to foreign tax credit despite belated or initially incorrect filing of Form 67 and whether such filing requirement under Rule 128(9) was mandatory or merely procedural.

Analysis: The assessee had claimed foreign tax credit for taxes withheld in the United States and had filed Form 67, albeit after the original return and later through a revised return. The Tribunal noted that section 90 of the Income-tax Act, 1961 read with Article 25(2)(a) of the India-USA DTAA permits credit for foreign taxes to the extent of Indian tax payable. It further noted that Rule 128(9) prescribes the filing of Form 67, but the rule does not state that non-compliance, delay, or an incorrect filing permanently extinguishes the underlying entitlement to foreign tax credit. The requirement was treated as procedural and directory, not as a condition defeating the substantive right.

Conclusion: The disallowance of foreign tax credit was unsustainable, and the assessee was held entitled to the credit limited to the proportion of Indian tax payable.

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