Foreign Tax Credit must not be denied solely for delayed Form-67; claim to be considered on merits after verification.

Foreign tax credit (FTC) denial based solely on delayed filing of Form-67 was rejected; the controlling legal principle is that DTAA provisions and statutory scheme (Sections 90/91 and Article 25(2)(a) of the India US DTAA) require consideration of FTC where substantive compliance and supporting evidence exist. Rule 128(9) was treated as directory by reference to precedents, and inconsistent decisions were distinguished. Outcome: matter remitted to Assessing Officer to verify submitted documents and decide the FTC claim on merits rather than refuse it solely for delay.

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Issues: Whether the claim for foreign tax credit (FTC) can be denied solely on the ground of delay in filing Form-67 and whether the FTC must be allowed in view of the DTAA and related statutory provisions.

Analysis: The Tribunal examined the facts where the assessee declared foreign salary and filed Form-67 after the due date but before completion of assessment and challenged denial of FTC by CPC under intimation u/s 143(1) and rejection of rectification u/s 154. The legal framework considered includes Article 25(2)(a) of the India-US DTAA, Section 90 and Section 91 of the Income-tax Act, 1961, and Rule 128(9) of the Income-tax Rules, 1962. The Tribunal surveyed coordinate bench decisions holding that DTAA provisions override conflicting domestic rules and that Rule 128(9) is a directory requirement; it also noted contrary decisions but applied the rule of consistency in favour of decisions allowing FTC where substantial compliance was shown. Having regard to the precedents and the requirement to verify supporting evidence, the Tribunal remanded the matter to the Assessing Officer to consider the FTC claim on merits and verify supporting documents already filed by the assessee.

Conclusion: The claim for foreign tax credit cannot be denied solely for delay in filing Form-67; the Assessing Officer is directed to allow the FTC after verification of the supporting documents filed by the assessee.

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