Foreign tax credit cannot be denied for delayed Form 67 filing where treaty-based relief and disclosure are otherwise established.

Foreign tax credit under section 90 and the applicable DTAA could not be denied merely because Form No. 67 was filed after the due date under rule 128(9), where the assessee had disclosed the foreign income and tax details in the return and the substantive entitlement to relief was otherwise established. The Tribunal held that the rule prescribes a procedural filing requirement and is directory, not mandatory, because it does not expressly provide that delay extinguishes the credit. Belated filing of Form No. 67 therefore did not defeat the treaty-based and statutory right to foreign tax credit, and the credit was allowable in accordance with law.

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Issues: Whether foreign tax credit could be denied merely because Form No. 67 was filed after the due date prescribed under rule 128(9), when the assessee had disclosed the foreign income and tax details in the return and claimed relief under the applicable tax treaty and section 90 of the Income-tax Act, 1961.

Analysis: The claim for foreign tax credit arose from taxes paid outside India in respect of income also assessed in India. The Tribunal noted that the treaty provisions for elimination of double taxation prevail to the extent they are more beneficial to the assessee, and that section 90 of the Income-tax Act, 1961 enables relief in accordance with the applicable agreement. Rule 128(9) prescribes filing of Form No. 67 by the due date, but the rule does not itself provide that delayed filing destroys the substantive entitlement to credit. The Tribunal followed the consistent view of coordinate benches and the High Court that the filing requirement is procedural and directory, not mandatory, and that delay in filing Form No. 67 does not extinguish the right to claim foreign tax credit where the underlying entitlement is otherwise established.

Conclusion: Foreign tax credit could not be denied solely on account of belated filing of Form No. 67, and the assessee was entitled to the credit in accordance with law and the applicable DTAA.

Ratio Decidendi: A procedural filing requirement for claiming foreign tax credit cannot defeat the substantive treaty-based and statutory entitlement to relief unless the statute expressly provides disallowance for non-compliance.

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