Filing Form 67 for Foreign Tax Credit is directory not mandatory despite late submission

ITAT Delhi held that filing Form 67 for Foreign Tax Credit (FTC) is directory, not mandatory. The tribunal ruled that procedural violations do not affect substantive rights. Despite late filing, the assessee's FTC claim was valid. The matter was remanded to AO with directions to verify and decide the FTC claim after accepting Form 67. The assessee's appeal was allowed, overturning lower authorities' denial of FTC solely based on late procedural filing.

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Issues Involved:
1. Denial of Foreign Tax Credit (FTC) due to late filing of Form 67.

Summary:

1. Denial of Foreign Tax Credit (FTC) due to late filing of Form 67:
The assessee filed an appeal against the order of the Ld. CIT(A) confirming the action of the Ld. AO, who denied the foreign tax credit amounting to Rs. 10,29,861/- on the grounds that Form 67 was not filed within the due date. The assessee argued that the filing of Form 67 is a procedural requirement and not mandatory, citing various decisions from the Principal Bench, Delhi, which held that violation of procedural norms does not extinguish the substantive right of claiming FTC.

The Ld. AO disallowed the FTC for non-compliance with the procedural provision of filing Form 67 along with the ITR, issuing an intimation order u/s 143(1) and subsequent orders u/s 154, imposing a tax liability of Rs. 8,02,380/-. The Ld. CIT(A) upheld the AO's decision, emphasizing the failure to file Form 67 within the prescribed time.

The Ld. AR contended that the lower authorities did not appreciate that the filing of Form 67 is a procedural requirement and not mandatory, and that the substantive right to claim FTC should not be denied due to procedural delays. The Ld. DR supported the findings of the lower authorities.

The ITAT referred to various decisions from co-ordinate Benches, including Isha Mago vs. Asstt. Director of Income Tax, Rameshwar Prasad Shrivastava vs. ITO, Vikash Daga vs. ACIT, and Ajay Kumar Mishra vs. DCIT, which consistently held that the filing of Form 67 is a procedural requirement and not mandatory. The ITAT emphasized that procedural delays should not affect the substantive right to claim FTC, and the provisions of DTAA override the provisions of the Income Tax Act to the extent they are beneficial to the assessee.

The ITAT concluded that the filing of Form 67 is a directory requirement, not mandatory, and directed the AO to verify the assessee's claim for FTC after accepting Form 67 and decide the issue in accordance with the law. Consequently, the appeal of the assessee was allowed for statistical purposes.

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