Foreign Tax Credit cannot be denied for delayed Form 67 filing when the claim is otherwise valid and record-based.

Belated filing of Form 67 did not justify denial of Foreign Tax Credit where the credit was already claimed in the return and the delay was explained by pandemic-related disruption. The Tribunal treated Rule 128 as directory, not mandatory, and held that DTAA benefits cannot be defeated by a procedural lapse. Rectification under section 154 was also maintainable because the credit was otherwise apparent from the record and the denial rested only on an unsustainable procedural objection. The assessee was therefore entitled to the credit, and the assessing authority was directed to grant it.

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Issues: (i) Whether belated filing of Form 67 could justify denial of Foreign Tax Credit. (ii) Whether rectification under section 154 of the Income-tax Act, 1961 was available for grant of the claimed Foreign Tax Credit.

Issue (i): Whether belated filing of Form 67 could justify denial of Foreign Tax Credit.

Analysis: The assessee had claimed Foreign Tax Credit in the original return, and the only objection was that Form 67 was filed after the prescribed date. The delay was explained by the pandemic-related disruption and inability to complete travel and formalities. The legal issue was treated as covered by earlier Tribunal decisions holding that Rule 128 does not create a disallowance consequence for delayed filing of Form 67 and that the filing requirement is directory, not mandatory. It was also noted that DTAA benefits cannot be defeated by a procedural lapse of this nature.

Conclusion: Belated filing of Form 67 did not warrant denial of Foreign Tax Credit, and the assessee was entitled to the credit.

Issue (ii): Whether rectification under section 154 of the Income-tax Act, 1961 was available for grant of the claimed Foreign Tax Credit.

Analysis: The assessee had already claimed the credit in the original return, and the dispute arose only from the non-consideration of that claim due to delayed Form 67. Earlier Tribunal rulings were followed to hold that the issue could be corrected through rectification because the claim was otherwise available on the record and the denial was not sustainable merely on procedural grounds. The objection that the appeal should have been filed only against the intimation under section 143(1) was not accepted.

Conclusion: Rectification under section 154 was held to be maintainable for granting the Foreign Tax Credit.

Final Conclusion: The assessee's claim for Foreign Tax Credit was allowed, the appellate order was set aside, and the assessing authority was directed to grant the credit.

Ratio Decidendi: A procedural delay in filing Form 67 does not, by itself, extinguish a substantively admissible Foreign Tax Credit where the claim is reflected in the return and the governing rule is directory rather than mandatory; such denial can be corrected in rectification proceedings.

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