Foreign tax credit cannot be denied for belated Form 67 filing where the claim was otherwise made in the return.

Delayed filing of Form 67 does not defeat a substantive foreign tax credit claim where the credit was otherwise claimed in the return under section 90 of the Income-tax Act and Article 25 of the India-USA DTAA. The tribunal view treated Form 67 as directory, not mandatory, so a procedural delay could not justify denial of credit in processing under section 143(1). On that basis, disallowance of foreign tax credit was found unsustainable and the credit was allowed despite belated compliance.

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Issues: Whether the assessee was entitled to foreign tax credit despite delayed filing of Form 67, and whether denial of such credit could be sustained in processing under section 143(1).

Analysis: The claim arose from foreign tax credit under section 90 of the Income-tax Act, 1961 and Article 25 of the India-USA Double Taxation Avoidance Agreement. The only objection was that Form 67 was filed after the time prescribed under section 139(1). Relying on consistent tribunal decisions, the order held that filing Form 67 is only directory and not mandatory in a manner that defeats the substantive credit claim. Since the credit had been claimed in the return and the delay was only procedural, denial of credit was not justified.

Conclusion: The assessee was held entitled to foreign tax credit of Rs. 3,52,291 notwithstanding belated filing of Form 67, and the disallowance was directed to be deleted.

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