Foreign Tax Credit cannot be denied for delayed Form 67 filing where treaty relief remains substantively available.

Foreign Tax Credit could not be denied merely because Form No. 67 was filed after the Rule 128(9) deadline, as the filing deadline was treated as procedural rather than mandatory. The underlying credit arose from section 90 and the relevant DTAA, so the delayed form did not extinguish the substantive treaty-based entitlement. Interest under sections 234A, 234B and 234C, being consequential to the denied credit, also could not survive once the credit was allowed. Relief was therefore granted on the Foreign Tax Credit claim with corresponding adjustment to the tax computation.

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Issues: Whether Foreign Tax Credit could be denied merely because Form No. 67 was filed after the due date prescribed under Rule 128(9) of the Income-tax Rules, 1962, and whether the consequential interest levied under sections 234A, 234B and 234C could survive.

Analysis: The assessee had claimed Foreign Tax Credit for tax paid outside India and had filed Form No. 67 belatedly. The dispute turned on whether the time-limit in Rule 128(9) was mandatory or only directory. The decision relied on the scheme of section 90 of the Income-tax Act, 1961 and the applicable DTAA, under which relief for foreign taxes is a substantive treaty-based entitlement. The delay in filing Form No. 67 was treated as a procedural lapse that did not extinguish the underlying right to credit. The levy of interest was linked to the denial of Foreign Tax Credit and therefore depended on the same determination.

Conclusion: The delayed filing of Form No. 67 did not justify denial of Foreign Tax Credit, and the assessee was entitled to the credit in accordance with law and the treaty. The consequential interest adjustments also could not stand on the denied credit.

Final Conclusion: The appeal succeeded, and the assessee obtained relief on the Foreign Tax Credit claim with corresponding effect on the tax computation.

Ratio Decidendi: A procedural time-limit for filing Form No. 67 does not defeat the substantive entitlement to Foreign Tax Credit where the treaty and section 90 otherwise permit the credit.

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