Foreign Tax Credit denied for Form 67 delay was held unsustainable; mechanical rectification order set aside.

Foreign Tax Credit could not be denied merely for alleged delay in filing Form No. 67 under Rule 128, as the filing requirement was treated as directory rather than mandatory. The rejection of the claim in rectification proceedings was found mechanical because the material showing foreign tax paid was not properly examined. The rectification order under the Income-tax Act was therefore set aside, and the claim was remitted for fresh consideration on merits.

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Issues: Whether the denial of Foreign Tax Credit for want of timely filing of Form No. 67 under Rule 128 of the Income Tax Rules, 1962 was sustainable, and whether the rectification order rejecting the claim required interference.

Analysis: The return for the assessment year was filed along with Form No. 67, but the Foreign Tax Credit was not considered while issuing intimation under Section 143(1) of the Income-tax Act, 1961. The rectification request seeking consideration of the foreign tax paid was also rejected without examining the material aspect. The governing requirement regarding Form No. 67 was treated as directory, not mandatory, and the rejection was found to be mechanical and not in accordance with law.

Conclusion: The denial of Foreign Tax Credit was unsustainable. The impugned rectification order was set aside, and the matter was remitted for reconsideration of the Foreign Tax Credit claim.

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