TaxTMI 
TaxTMI 
2026 (8) TMI 1244
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....arties, our decision therein shall apply mutatis mutandis to Assessment Year 2020-21. The grounds raised in assessment year 2019-20 accordingly reproduced as under: i. The Learned CIT(A) erred in law and on facts in dismissing the appeal and upholding the disallowance of Foreign Tax Credit (FTC) of Rs. 43,69,076/- claimed under section 90/90A of the Act. ii. The Learned CIT(A) erred in holding that Rule 128(9) is mandatory merely because the word "shall" is used, without appreciating that the requirement of filing Form 67 is procedural and directory in nature. iii. The Learned CIT(A) failed to appreciate that procedural requirements under the Rules cannot override substantive relief granted under section 90/90A read with applicable DTAA. iv. The Learned CIT(A) erred in holding that FTC cannot be allowed in absence of condonation u/s 119(2)(b), despite settled judicial precedents holding that appellate authorities are empowered to grant relief where substantive conditions are satisfied. v. The adjustment under section 143(1) was bad in law as no prior intimation under first proviso to section 143(1)(a) was issued before making the adjustm....
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....wever, rejected the contention. According to him, Rule 128(9) employs the expression "shall" and, therefore, filing of Form No.67 on or before the due date prescribed under section 139(1) of the Act was mandatory. He further held that, in the absence of condonation of delay under section 119(2)(b) of the Act, the appellate authority lacked jurisdiction to grant the benefit of FTC. The Ld. CIT(A) rejected the claim of the assessee of observing as under: "5.6 The grant of Foreign Tax Credit is governed by Rule 128 of the Income Tax Rules, 1962 (Rules) which is extracted as under: "Foreign Tax Credit. 128. (1) An assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule: Provided that in a case where income on which foreign tax has been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same propo....
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....doning the delay in filing Form No. 67 by the PCIT under Section 119(2)(b), such Form No. 67 can't be taken into consideration and the relief u/s. 90/90A cannot be allowed by the Appellate Authority even if other conditions are fulfilled." 3. Before us, the learned counsel for the assessee filed a paper book comprising of pages 1-94 and addressing ground Nos. 1 to 4 of the appeal reiterated that the assessee had duly disclosed the foreign income in the return of income and had actually suffered taxes in the foreign jurisdictions. It was submitted that there is no dispute regarding the assessee's substantive eligibility for FTC under section 90 of the Act or under the applicable DTAAs. The only basis for denial of the claim is the delayed filing of Form No.67, which was admittedly furnished on 05.12.2025 during the appellate proceedings. It was argued that Rule 128 merely prescribes the procedural mechanism for claiming FTC and cannot curtail the substantive statutory right conferred by section 90 of the Act. Reliance was placed upon the decisions of the Hon'ble Madras High Court and various Coordinate Benches of the Tribunal. 3.1 The ld. Counsel further submitted ....
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....terial available on record. The short question requiring adjudication is whether the assessee's otherwise admissible claim of Foreign Tax Credit can be denied solely on account of delay in furnishing Form No.67 prescribed under Rule 128 of the Rules. 4.1 There is no dispute that the foreign income in question has been offered to tax in India. Equally, there is no dispute that foreign taxes were actually paid in Malaysia, Singapore and Sri Lanka. The Revenue has not disputed either the genuineness of the foreign taxes paid or the assessee's substantive entitlement to claim FTC under section 90 of the Act. The claim has been denied exclusively on the ground that Form No.67 was not furnished within the time stipulated under Rule 128(9). 4.2 This issue is no longer res integra. The Coordinate Bench of this Tribunal in Nirmala Murli Relwani v. ACIT (ITA No. 2094/Mum/2022), after considering the scheme of section 90, Rule 128 and the amendment brought into Rule 128(9) with effect from 01.04.2022, held that the requirement of filing Form No.67 is procedural in nature and that mere delay in filing the prescribed form cannot defeat an assessee's substantive entitlement to ....
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....e assessee under section 91 of the Act. In the impugned order it has been held that Form no.67 was filed by the assessee after the due date of filing the return of income under section 139(1) of the Act and thus the assessee is not entitled to the claim of the foreign tax credit. 8. We find that under Rule 128(9), as it stood during the year under consideration, provided that the statement in Form No.67, referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139, in the manner specified for furnishing such return of income. Thus, during the year under consideration, the assessee was required to furnish Form No. 67 on or before the due date of filing the return of income under section 139(1) of the Act, as per the provisions of Rule 128(9). In the present case, the assessee though filed her original return of income within the extended time granted vide order dated 23/07/2019, passed by the CBDT under section 119 of the Act, however, furnished Form No.67 along with her revised return of....
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....come under sub-section (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalore - Trib.) wherein following its earlier order in the case of Ms. Brinda Rama Krishna v.ITO [2022] 135 taxmann.com 358 (Bang Trib) it was held that "one of the requirements of Rule128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67. Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi V CIT(A) NFAC ITA No.680/Bang./2022 06.09.2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for nonadherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not ....
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....tio of judicial decisions. Further the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of appeal and allow the grounds of appeal of the assessee for statistical purposes. 12. Thus, respectfully following the aforesaid decisions of the coordinate bench of the Tribunal, we are of the considered opinion that mere delay in filing Form No. 67 as per the provisions of Rule 128(9), as they stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India. Since in the present case, the claim of the assessee was denied on this technical aspect without going into the merits, therefore, we deem it appropriate to direct the jurisdictional Assessing Officer to decide the claim of the foreign tax credit on merits, after accepting the Form No. 67 and other related documents filed by the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purposes." 4.3 Further, the Tribunal in the case of Aparna Girish Hebbani in ITA No. 5061/MUM/2025 held as under: "5.3. The Coordinate Benc....
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....rictions for travelling to India. The technical glitches relating to OTP could not be resolved by the assessee until she visited India in December, 2021 where upon all the required steps were taken on priority basis. Thus, assessee has substantively complied with the requirements in filing Form-67 for claim of FTC which cannot be denied on account of technical glitches/grounds, more particularly when DTAA provisions and section 90 would overrule such procedural requirement for lapses when substantive compliance has been made. 6. Considering holistically the factual matrix and the provisions of the Act u/s. 90/91 r.w. India-Australia DTAA and the judicial precedents discussed above, Id. Assessing Officer is directed to give credit for the foreign taxes paid by the assessee and claimed in her return. Accordingly, grounds raised by the assessee in this respect are allowed." 4.4 The Tribunal in above cases has followed decision of Coordinate Benches in Sonakshi Sinha vs CIT, in ITA No. 1704/Mum./2022, vide order dated 08/09/2022, Ms. Brinda Rama Krishna v.ITO [2022] 135 taxmann.com 358 (Bang Trib) 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalor....