Foreign tax credit cannot be denied for delayed Form No. 67 filing where treaty relief is otherwise available.

ITAT Kolkata held that foreign tax credit under section 90 read with the applicable DTAA cannot be denied merely because Form No. 67 was filed after the return due date under section 139(1). Treating Rule 128(9) as procedural and directory rather than mandatory, the Tribunal followed coordinate bench decisions and the Madras High Court to hold that delay in filing Form No. 67 does not extinguish the substantive entitlement to credit where the treaty is more beneficial. The assessee was therefore entitled to the foreign tax credit for taxes paid in the USA.

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Issues: Whether foreign tax credit could be denied merely because Form No. 67 was filed beyond the due date prescribed for filing the return under section 139(1), and whether Rule 128(9) makes such filing mandatory or only directory.

Analysis: The assessee had claimed foreign tax credit for taxes paid in the USA and had filed Form No. 67 along with the return. The Tribunal followed earlier coordinate bench decisions and the Madras High Court decision holding that Rule 128(9) does not provide for disallowance of foreign tax credit for delay in filing Form No. 67. It held that the right to foreign tax credit flows from section 90 read with the applicable DTAA, and that treaty provisions prevail where they are more beneficial. The rule was treated as procedural in nature, and non-compliance with the time line for filing Form No. 67 was held not to extinguish the substantive entitlement to credit.

Conclusion: Foreign tax credit could not be denied on the ground of delayed filing of Form No. 67, and the assessee was entitled to the credit.

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