Assessee wins foreign tax credit relief under sections 90/90A despite delayed Form 67 filing

ITAT Patna allowed the assessee's appeal regarding foreign tax credit relief under sections 90/90A. Despite delayed filing of Form No. 67, the tribunal found the form contained valid information about foreign tax credit on allowances received in Hungary. Following the precedent in Bijender Singh case, ITAT directed the Assessing Officer to accept the form and grant the foreign tax credit in accordance with law. The assessee's grievance was allowed.

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Issues Involved:

1. Denial of Foreign Tax Credit (FTC) due to delay in filing Form No. 67.
2. Interpretation and procedural nature of filing Form No. 67 under Rule 128 of the Income Tax Rules, 1962.

Detailed Analysis:

1. Denial of Foreign Tax Credit (FTC) due to delay in filing Form No. 67:

The core issue in this appeal is whether the assessee is entitled to a Foreign Tax Credit (FTC) of Rs. 2,19,610, which was deducted at source on foreign allowances received while working in Budapest, Hungary. The Centralized Processing Center (CPC) denied this credit solely because Form No. 67 was filed late. The assessee argued that the delay was due to technical issues and the non-availability of facilities to upload the document. Despite the late filing, the assessee contended that the FTC should not be denied as the information was verifiable and the delay was procedural. The Tribunal noted that the lower authorities had no other objections to the claim apart from the delay in filing Form 67, indicating that the claim was valid.

2. Interpretation and procedural nature of filing Form No. 67 under Rule 128 of the Income Tax Rules, 1962:

The Tribunal emphasized that the filing of Form No. 67 is procedural and directory, not mandatory. This interpretation aligns with the precedent set by the Coordinate Bench in similar cases, where it was consistently held that the delay in filing Form No. 67 should not result in the denial of FTC. The Tribunal referenced several cases, including Bijender Singh vs. ITO and Krishna Kumar Chaudhary, where the Tribunal allowed FTC claims despite delays in filing Form No. 67. The Tribunal reiterated that Rule 128(9) does not prescribe disallowance of FTC for late filing of Form No. 67, and neither Section 90 nor 91 of the Income Tax Act specifies a timeline for such declarations. Thus, the Tribunal directed the Assessing Officer to accept Form No. 67 and allow the FTC claim, reversing the CIT(A)'s decision.

In conclusion, the Tribunal allowed the appeal, directing that the FTC be granted, emphasizing that procedural delays in filing Form No. 67 should not hinder legitimate FTC claims. The judgment underscores the directory nature of Form No. 67 filing and supports the assessee's position that substantive compliance should suffice for FTC entitlement.

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