TaxTMI 
TaxTMI 
2026 (8) TMI 1422
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....ng Foreign Tax Credit (FTC) of Rs.1,64,427, despite the credit being allowable u/s 90 of the Income-tax Act read with Article 25 of the India-USA DTAA 2. The CIT(A) failed to appreciate that FTC was disclosed in the original return and consistently reflected in revised returns, showing full compliance and bona fide conduct. 3. The learned CIT(A) failed to consider that Form 67 was filed on 18.03.2019, i.e., before the processing of the revised return (12.04.2019), thus meeting the requirement in substance. 4. The appellant is entitled to claim Foreign Tax Credit (FTC) under Section 90 of the Income tax Act, 1961, read with Article 25 of the India-USA DTAA, in respect of taxes paid in the USA. 5. The appellant had disclosed the FTC claim in the original return and consistently reflected the same in subsequent revised returns. Form 67 was filed on 18/03/2019, prior to processing of revised intimation, showing bona fide intent to claim FTC 6. The denial of FTC by CPC and subsequent dismissal by CIT(A) on procedural grounds is unjustified, as the appellant's claim is substantive in nature and supported by law and facts. 7. Judicial ....
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....smissed the appeal filed by the assessee on technical grounds without going into the merits of the case. 7. In the appeal before us, the assessee has placed on record Form No. 67, which forms part of the paper book on pages 85 - 86. Further, the assessee has also placed on record Form W - 2 in respect of taxes paid in the USA, which forms part of the paper book from pages 85 - 89. Thus, it is evident that Form No. 67 was available for consideration before the AO - CPC. 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). We further find that Rule 128(9) has been substituted by the....
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....come. 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 non-adherence 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 prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further ....
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.... on 20.05.2020 and the same was rejected by the 3rd respondent on the ground that Form 67 was not filed in time. 7. As rightly contended by the learned counsel for the petitioner the delay in filing the Form 67 is only the procedural lapse. That apart, this Court in the decision cited by the learned counsel for the petitioner has observed that Rule 128 is not mandatory but to be considered as directory in nature. The relevant portion of the said decision is extracted hereunder: "9. In the present case, the petitioner initially worked at Kenya and subsequently, he became the resident of Indian from the assessment year 2018-2019 and 20192020. The petitioner admitted the fact that he has filed his return in India on 10.08.2019. The intimation under Section 143(1) was issued on 26.03.2020. However, he has filed the return without Form-67 which is required to be filed under Rule 128 to claim the benefit of FTC and the same came to be filed on 02.02.2021 which was well before the completion of the assessment year. The intimation under Section 143(1) was issued from the CPC only on 26.03.2021. 10. According to the learned counsel appearing for the respondent, th....