Late Form 67 filing is a procedural lapse and cannot by itself defeat Foreign Tax Credit under the treaty framework.

Delay in filing Form 67 under Rule 128(9) is treated as a procedural lapse and, by itself, does not extinguish the substantive claim for Foreign Tax Credit under section 90 and the relevant DTAA. The filing deadline is described as a machinery requirement rather than a condition that determines the existence of the credit entitlement. Accordingly, late submission of Form 67 should not, on its own, justify rejection of the Foreign Tax Credit claim where the underlying treaty-based entitlement is otherwise available in law.

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Issues: Whether delay in filing Form 67 under Rule 128(9) of the Income Tax Rules, 1962 could by itself justify denial of Foreign Tax Credit claimed under section 90 of the Income-tax Act, 1961 read with the India-Japan DTAA.

Analysis: The credit mechanism for foreign tax is rooted in section 90 of the Income-tax Act, 1961 and the applicable treaty provisions. Rule 128(9) prescribes the filing of Form 67 within the stipulated time, but the rule is a machinery provision and does not expressly provide that failure to file the form within time extinguishes the substantive entitlement to credit. The delay in filing Form 67 was therefore treated as a procedural lapse, not as a defect going to the existence of the claim itself. Following the view taken in coordinate bench decisions, the claim for Foreign Tax Credit could not be rejected solely because Form 67 was filed late.

Conclusion: Delay in filing Form 67 did not bar the assessee's Foreign Tax Credit claim, and the assessee was entitled to the credit in accordance with law.

Ratio Decidendi: A procedural time limit for filing Form 67 under Rule 128(9) of the Income Tax Rules, 1962 is directory and cannot, by itself, defeat a substantive Foreign Tax Credit claim under section 90 of the Income-tax Act, 1961 and the applicable DTAA.

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