Belated Form 67 filing does not defeat Foreign Tax Credit where treaty entitlement remains otherwise verifiable.

Belated filing of Form 67 under Rule 128 is a directory procedural requirement and does not, by itself, defeat a substantive Foreign Tax Credit claim under section 90 and the applicable DTAA where foreign tax has actually been paid and the claim is otherwise verifiable in law. The remaining additions for the assessment year were found insufficiently reasoned and were set aside for fresh examination by the Assessing Officer after giving the assessee an opportunity of being heard. The article therefore states that procedural delay in Form 67 does not extinguish treaty-based credit entitlement, while the other disputed matters were remanded for de novo consideration.

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Issues: (i) Whether belated filing of Form 67 under the Income-tax Rules, 1962 disentitles the assessee from claiming Foreign Tax Credit under section 90 of the Income-tax Act, 1961 read with the applicable DTAA. (ii) Whether the remaining additions for the relevant assessment year required interference and remand for fresh consideration.

Issue (i): Whether belated filing of Form 67 under the Income-tax Rules, 1962 disentitles the assessee from claiming Foreign Tax Credit under section 90 of the Income-tax Act, 1961 read with the applicable DTAA.

Analysis: The governing framework recognised that Foreign Tax Credit flows from section 90 and the treaty mechanism, while Rule 128 of the Income-tax Rules, 1962 prescribes the manner of claim. The requirement of filing Form 67 within the due date was treated as procedural in nature. The reasoning proceeded on the basis that a procedural lapse does not extinguish the substantive entitlement to credit where the foreign tax has in fact been paid and the claim is otherwise verifiable in law.

Conclusion: Belated filing of Form 67 does not, by itself, bar the assessee from claiming Foreign Tax Credit. The issue is answered in favour of the assessee, subject to verification in accordance with law.

Issue (ii): Whether the remaining additions for the relevant assessment year required interference and remand for fresh consideration.

Analysis: The appellate orders on the remaining issues were found insufficiently reasoned, and the matters were considered appropriate for fresh examination by the Assessing Officer after giving the assessee an opportunity of being heard. The disposal was therefore not on a final merits adjudication of the additions but by directing reconsideration.

Conclusion: The remaining additions were set aside and remanded for fresh assessment after granting opportunity to the assessee.

Final Conclusion: The assessee obtained relief on the Foreign Tax Credit issue, while the other disputed additions were sent back for de novo consideration, leaving the controversy unresolved on those points.

Ratio Decidendi: The time prescribed for filing Form 67 is a directory procedural requirement, and delay in filing it does not by itself defeat a substantive claim for Foreign Tax Credit under section 90 where the claim is otherwise allowable in law.

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