Denial of Foreign Tax Credit for Non-Filing Form 67 with Original Return Not Justified Under Section 90 or DTAA

ITAT Mumbai held that denial of foreign tax credit (FTC) solely due to non-filing of Form 67 with the original return is not justified under Section 90 or the DTAA. FTC is a vested right under the DTAA and cannot be disallowed for procedural non-compliance. Since the assessee filed Form 67 with the revised return, the AO was directed to verify the form and allow the FTC. The appeal was allowed accordingly.

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The Appellate Tribunal (ITAT Mumbai) allowed the assessee's appeal against the ld. CIT(A)'s denial of foreign tax credit (FTC) of Rs. 47,36,704/- for AY 2019-20. The ld. CIT(A) had denied FTC solely because Form No. 67 was not filed along with the original return of income under Rule 128(9) of the Income Tax Rules, 1962. The assessee had subsequently filed a revised return with Form 67. The Tribunal held that "neither Section 90 of the Act nor the DTAA provides that FTC shall be disallowed for non-compliance with any procedural requirements." It emphasized that FTC is the assessee's "vested right as per articles 24(1)(a) and 23 of the DTAA r.w.s. 90 of the Act" and cannot be denied on procedural grounds. Since the assessee filed Form 67 with the revised return, the Tribunal directed the AO to verify the form and allow the FTC "in the interest of justice and fairplay." The appeal was thus allowed.

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