Foreign tax credit cannot be denied solely for late Form 67 filing; substantive treaty entitlement needs verification.

Late filing of Form No. 67, by itself, does not justify denial of foreign tax credit where the taxpayer's substantive entitlement requires verification. The Tribunal noted that the lower authorities had rejected the claim on a purely technical default without examining whether foreign tax had actually been paid in Denmark and whether corresponding relief had been claimed there. It treated treaty relief under the relevant DTAA as dependent on the governing law and factual verification, and therefore sent the matter back to the Assessing Officer for fresh examination of the underlying claim in accordance with law.

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Issues: Whether disallowance of foreign tax credit on the ground that Form No. 67 was filed after the due date under section 139(1) was sustainable, and whether the matter required verification of the foreign tax payment claim before the credit could be denied.

Analysis: The assessee's claim for foreign tax credit was rejected solely because Form No. 67 was not filed within the prescribed time. The Tribunal noted the competing views in coordinate-bench decisions and the CBDT's amendment to rule 128, but confined the immediate controversy to the pre-amendment assessment year. It accepted that the lower authorities had proceeded on a purely technical default without verifying the underlying factual basis of the foreign tax credit claim, namely whether the foreign tax had in fact been paid in Denmark and whether corresponding relief had been claimed there. The Tribunal also noted the relevance of the Double Taxation Avoidance Agreement and the CBDT circular principle that treaty relief is to be given effect in accordance with the agreement and the governing law.

Conclusion: Mere late filing of Form No. 67 did not justify an outright denial of the foreign tax credit claim on the facts of the case. The issue was set aside to the Assessing Officer for verification of the underlying entitlement and for fresh decision in accordance with law, leaving the assessee with partial relief.

Ratio Decidendi: A procedural lapse in filing Form No. 67 within time does not, by itself, justify denial of foreign tax credit where the factual entitlement to treaty relief requires verification and the claim must be examined on its substantive merits.

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