2025 (8) TMI 55 - AT - Income Tax

Delay in Filing Form 67 for Foreign Tax Credit Won't Lead to Denial Under Rule 128(9)

Anubhav Singhal C/o Kapil Goel, Adv. Versus Income Tax Officer, Ward-2 (1) (1), Ghaziabad.

The ITAT Delhi held that delay in filing Form 67 for claiming Foreign Tax Credit (FTC) does not warrant denial of the credit. The tribunal observed that ... Denial of Foreign Tax Credit - Form 67 was not furnished along with the return filed u/s 139(1) of the Act but was filed belatedly - HELD THAT:- We observe that identical issue came up in the case of Neha Kapoor [2023 (9) TMI 31 - ITAT DELHI]as held Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Thus we hereby direct the AO to allow the impugned credit of FTC to the assessee. Assessee appeal allowed. ISSUES: Whether an intimation under section 143(1) of the Income Tax Act, 1961 can be quashed on jurisdictional grounds including violation of natural justice and absence of prior show cause notice.Whether denial of Foreign Tax Credit (FTC) on the ground of belated filing of Form 67 is justified under the Income Tax Act, 1961.Whether filing of Form 67 is a mandatory or directory requirement for claiming FTC under the Income Tax Act, 1961 and allied Rules.Whether the Assessing Officer is bound to allow FTC if Form 67 is filed belatedly but within the relevant assessment year, in light of CBDT notifications and Tribunal precedents. RULINGS / HOLDINGS: The intimation under section 143(1) was not quashed as the grounds raised were not found to violate the mandate of the Act or principles of natural justice in the context presented.The denial of Foreign Tax Credit solely on the ground that Form 67 was filed belatedly is erroneous; the Tribunal held that filing of Form 67 is a 'procedural/directory requirement and is not a mandatory requirement.'Rule 128(9) of the Income Tax Rules does not provide for disallowance of FTC in case of delay in filing Form 67; hence, the claim for FTC cannot be denied on this basis.The Assessing Officer is directed to allow the Foreign Tax Credit after due verification, notwithstanding the belated filing of Form 67, consistent with the CBDT notification and Tribunal precedents. RATIONALE: The Tribunal relied on the statutory framework under section 143(1) and section 139(1) of the Income Tax Act, 1961, and Rule 128(9) of the Income Tax Rules as amended by CBDT Notification No. 100/2022.Precedents from coordinate benches were followed, including decisions holding that Form 67 is a directory requirement, not a mandatory condition for claiming FTC, thereby overriding any contrary view.The Tribunal emphasized that denial of FTC on procedural grounds alone, without substantive non-compliance, is not warranted, and that the Double Taxation Avoidance Agreement (DTAA) provisions override inconsistent domestic rules.No dissenting opinion was recorded; the ruling reflects a consistent doctrinal approach favoring substantive compliance over procedural technicalities in FTC claims.