Foreign Tax Credit allowed despite delayed Form 67 filing as Rule 128(9) held directory not mandatory

The ITAT Delhi ruled in favor of the assessee regarding disallowance of Foreign Tax Credit (FTC) despite failure to file Form No. 67 before the due date under section 139(1). The tribunal held that Rule 128(9) provisions are directory in nature and cannot override section 90 of the Act. Following the precedent in Bhaskar Dutta case, the tribunal determined that Rule 128(9) does not bar FTC claims due to delayed filing of Form No. 67. The Assessing Officer was directed to grant FTC after factual verification. The assessee's appeal was allowed.

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Issues: Disallowance of Foreign Tax Credit (FTC) due to non-filing of Form No. 67 within the due date provided under Section 139(1) of the Income Tax Act.

Analysis:
The appeal before the Appellate Tribunal ITAT Delhi concerned the disallowance of Foreign Tax Credit (FTC) by the Assessing Officer due to the non-filing of Form No. 67 within the prescribed due date under Section 139(1) of the Income Tax Act for the assessment year 2020-21. The assessee, a resident individual, had originally filed the return of income and later submitted a revised return claiming FTC amounting to Rs. 49,54,248 along with Form No. 67. However, the claim was disallowed by the CPC on the grounds of late submission of Form No. 67. The First Appellate Authority upheld the disallowance citing Rule 128(9). The Tribunal analyzed the case in light of previous decisions and held that the provisions of Rule 128(9) are directory and cannot override the provisions of Section 90 of the Act, which governs FTC. The Tribunal referred to various judgments, including Bhaskar Dutta vs. DCIT, to support the view that the filing of Form No. 67 is a directory requirement and not mandatory for claiming FTC. The Tribunal emphasized that Rule 128(9) does not specify any adverse consequences for delayed filing of Form No. 67 and noted that the Act does not prescribe a timeline for such filing. The Tribunal also highlighted that the amendment to the rule allows filing of Form No. 67 by the end of the assessment year. The Tribunal, following the consistent view of Coordinate Benches in similar cases, allowed the assessee's claim for FTC and directed the Assessing Officer to grant the credit after factual verification.

Judgments Delivered by the Tribunal:
- The Tribunal cited decisions in Manoj Kumar Srivastava vs. ACIT, Deepak Shimoga Padmaraju vs. Assistant Director of Income Tax/ITO, and ITO vs. Ramesh Kumar Rathi, which supported the view that the filing of Form No. 67 for claiming FTC is a directory requirement and not mandatory, as per Rule 128(9) of the Income Tax Rules.

This comprehensive analysis highlights the Tribunal's reasoning behind allowing the assessee's claim for Foreign Tax Credit despite the delayed filing of Form No. 67, based on the interpretation of relevant statutory provisions and precedents set by Coordinate Benches.

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