Foreign Tax Credit relief cannot be denied solely for delayed filing of Form 67 when treaty entitlement and supporting records exist.

Foreign Tax Credit under section 90 of the Income-tax Act, 1961, read with Article 25(2)(a) of the India-US DTAA, was treated as a substantive treaty-based relief that could not be denied merely because Form No. 67 was filed after the time prescribed in rule 128 of the Income-tax Rules, 1962. The filing deadline in rule 128(9) was regarded as procedural and intended to facilitate implementation of the credit mechanism, not to create a substantive bar where the foreign income was offered to tax in India and the claim was otherwise supported by the record. The credit was therefore to be allowed in accordance with law and the treaty.

---

---

Issues: Whether Foreign Tax Credit could be denied merely because Form No. 67 was filed after the due date prescribed under rule 128 of the Income-tax Rules, 1962.

Analysis: The claim for Foreign Tax Credit arose under section 90 of the Income-tax Act, 1961 read with Article 25(2)(a) of the Double Taxation Avoidance Agreement between India and the United States of America. The filing of Form No. 67 under rule 128(9) was treated as a procedural requirement meant for implementation of the credit mechanism. The Tribunal followed the view that the rule does not create a substantive bar to the allowance of credit when the foreign income has been offered to tax in India and the credit is otherwise supported by the record. The treaty entitlement and the statutory scheme were treated as conferring a substantive relief that could not be defeated only for delay in filing the form.

Conclusion: The delay in filing Form No. 67 did not disentitle the assessee from Foreign Tax Credit, and the credit was directed to be allowed in accordance with law and the treaty.

---