Foreign tax credit cannot be denied solely for delayed Form 67 filing where treaty-based substantive relief remains available

Foreign tax credit under Sections 90/90A of the Income-tax Act, 1961 should not be denied during processing under Section 143(1) merely because Form No. 67 was filed after the prescribed date. The approach discussed treats Rule 128(9) of the Income-tax Rules, 1962 as directory rather than mandatory, making the filing requirement procedural. Where the applicable DTAA grants credit for taxes paid overseas, that substantive relief should not be defeated solely by delayed procedural compliance. Accordingly, denial of the credit on this ground was considered unsustainable, and the credit was to be granted.

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Issues: Whether foreign tax credit could be denied in processing under Section 143(1) of the Income-tax Act, 1961 solely because Form No. 67 was filed after the due date.

Analysis: The dispute concerned disallowance of foreign tax credit claimed under Sections 90/90A of the Income-tax Act, 1961 on the ground that Form No. 67 was filed belatedly. The reasoning adopted followed earlier coordinate and other tribunal decisions treating the filing requirement under Rule 128(9) of the Income-tax Rules, 1962 as directory and not mandatory. It was further accepted that where the applicable DTAA grants credit for tax paid in the foreign jurisdiction, such substantive relief cannot be defeated by a procedural delay in filing Form No. 67.

Conclusion: Denial of foreign tax credit on account of delayed filing of Form No. 67 was not sustainable; the assessee was entitled to the foreign tax credit, and the tax authorities were directed to grant the credit.

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