SUBRAMANIAN SWAMINATHAN,CHENNAI vs. ACIT, NON CORP. CIRCLE-4(10, CHENNAI

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ITA 1710/CHNY/2026Status: DisposedITAT Chennai05 August 2026AY 2021-227 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the delay in filing Form-67 is a technical or venial breach and not a mandatory requirement. Denying FTC solely on this ground would amount to unjust enrichment.

What were the facts?

The assessee claimed Foreign Tax Credit (FTC) in their return of income. However, Form-67, required for claiming FTC, was filed belatedly during appellate proceedings. The CIT(A) dismissed the appeal, holding that the delay in filing Form-67 was not condonable.

What were the issues?

Whether the delay in filing Form-67 makes the assessee ineligible for Foreign Tax Credit (FTC).

Which sections of the Income-tax Act were involved?

Section 90,Section 90A,Section 91

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY.S

For Respondent: Ms. D. Nithya, Addl. CIT

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Addl./JCIT(A)-1, Nasik (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 30.01.2026 for Assessment Year (AY) 2021-22.

2.

The assessee is an individual and filed the return of income for AY 2021-22 on 28.12.2021 declaring a total income of Rs. 57,61,740/-. The assessee in the return of income has claimed Foreign Tax Credit (FTC) u/s.

ITA No1710/Chny/2026 Subramanian Swaminathan :- 2 -: 90/90A of the Act to the tune of Rs. 1,38,138/-. The return was processed u/s. 143(1) of the Act where the FTC credit has been denied to the assessee. The assessee filed a rectification petition u/s. 154 of the Act which also came to be rejected by the CPC. Aggrieved, the assessee filed further appeal before the CIT(A). The assessee during the course of appellate proceedings filed Form- 67 on 02.07.2024 and submitted that the same be considered to give credit of FTC. However, the CIT(A) rejected the submissions of the assessee stating that he does not have the power to condone the delay in filing the Form-67 and that the conditions for FTC credit has to be strictly complied with. Accordingly, the CIT(A) dismissed the appeal of the assessee. The assessee is in appeal before the Tribunal against the order of the CIT(A).

3.

We have heard the parties, and perused the material available on record. We noticed that the due date for filing the return of income for the year under consideration was extended after 31.12.2021 and the assessee has filed the return of income on 28.12.2021. It is further noticed that the assessee during the course of appellate proceedings filed Form-67 on 02.07.2024 in support of the claim towards FTC. The issue for our consideration is that whether the delay in filing Form-67 will make the assessee ineligible for FTC. In this regard, we notice that in a recent decision the Hon'ble Delhi High Court in the case of M/S Real Time Data Services Private Ltd vs PCIT [W.P.(C) 959/2024 & CM APPL. 3939/2024 dated 13.02.2026] while considering a similar issue has held that – 7. Admittedly, the petitioner has not furnished Form No. 67 up to the due date of filing return and it realised such fault only when its return was processed and when its Foreign Tax Credit of Rs.1,01,34,300/- being TDS on foreign receipts was not allowed by the AO. On inquiry, it found that the same had been rejected because Form No. 67 was not uploaded within the time prescribed.

ITA No1710/Chny/2026 Subramanian Swaminathan :- 3 -: 8. We are of the view that may be the petitioner omitted or failed to upload Form No. 67 by the due date of return but simply because of this technical or venial breach, its substantial right of getting Foreign Tax Credit of Rs.1,01,34,300/-, deducted from its receipt cannot be denied. If that be so, it would amount to withholding of a substantial amount of an assessee without there being any authority of law which would amount to unjust enrichment in turn.

9.

In the case of Vijay Gupta v. Commissioner of Income Tax and Anr. reported in 2016 SCC OnLine Del 1961, wherein it had been held that the Principal Commissioner of Income Tax has enough powers to consider application under Section 264 of the Act of 1961, in the event of default by the assessee. In the instant case also, it is the default of the petitioner and the same could have been, rather should have been condoned by the Commissioner, while exercising powers under Section 264 of the Act of 1961. If Section 119 of the Act of 1961 confers a power upon the Commissioner, he could have invoked such powers. We could have simply quashed the order and remanded the matter back to the Commissioner for deciding the application under Section 264 of the Act of 1961 afresh, but the same would be an empty formality.

10.

Concededly, the petitioner has subsequently furnished Form No. 67 on 14.09.2022. While exercising writ jurisdiction, we hereby direct the AO that in case the same has been furnished, he shall allow Foreign Tax Credit after verifying the facts in accordance with law. However, in case the AO is of the view that the Foreign Tax Credit cannot be allowed to the petitioner, he shall pass a speaking order, against which the petitioner's right to take remedies in accordance with law shall remain reserved.

11.

The necessary exercise as directed above shall be done by the AO within a period of 2 (two) months from today.

12.

The Writ Petition stands allowed. All the pending application(s) stand disposed of

4.

The ratio laid down in the above decision is that the delay in filing Form 67 is a technical or venial breach and denying the FTC on the said ground would amount to unjust enrichment. We further notice that the Coordinate Bench of the Tribunal in the case of Shri Balasubramanian

ITA No1710/Chny/2026 Subramanian Swaminathan :- 4 -: Sarvanan vs. ITO [ITA No.1498/Chny/2025 dated 21.07.2025] has considered an identical issue where it has been held that:

7.

We have heard rival submissions and perused the material on record. The assessee had filed the Form 67 only on 08.02.2022. The claim of FTC in Form 67 was denied for the reason that it was filed belatedly (not within the due date prescribed u/s.139(1) of the Act). On identical facts, the Hon’ble Madras High Court in the case of Shri Kuthoore Natarajan Venkatasubramanian, supra had held that filing of Form 67 is directory in nature and it is not a mandatory requirement. The relevant finding of the Hon’ble Jurisdictional High Court in the case of Vinodkumar Lakshmipathi, supra reads as under:-

“3. Learned Senior Standing Counsel for the respondents would strongly oppose stating that the petitioner should have filed Form-67 along with ROI, which was filed on 21.09.2020, whereas, the petitioner filed Form~67 only on 08.10.22 after the lapse of a period of two years. Therefore the revisionsal authority has rightly rejected the claim of the petitioner and the writ petition is liable to be dismissed.

4.

I have considered the rival submissions made on either side and perused the materials available on record.

5 In the present case, the petitioner, who was working in foreign country, had filed his ROI for the assessment year 2020~21 on 21.09.2020 in India, but due to Covid out break he could not get necessary documents from foreign country and file Form~67 along with ROI. But, the petitioner uploaded the Form~67 on 08.10.2022. The reasons stated by the petitioner appears to be reasonable and genuine and further this Court in a similar case reported in (2024) 460 ITR 615 (Duraiswamy Kumaraswamy vs. Principal Commissioner of Income Tax and Other) passed the following order.

“9. In the present case, the petitioner initially worked at Kenya and subsequently, he became the resident of India from the assessment years 2018- 2019 and 2019-2020. The petitioner admitted the fact that he has filed his return in India on August 10, 2019. The intimation under Section 143(1) was issued on March 26, 2020. However, he has filed the return without Form 67 which is required to be filed under Rule 128 to claim the benefit of foreign tax credit and the same came to be filed on February 2, 2021 which was well before the completion of the assessment year. The intimation under Section 143(1) was issued from the Centralized Processing Centre only on March 26, 2021. 10. According to the learned counsel appearing for the respondent, the procedure under rule 128 is mandatory and cannot be considered as directory in nature. The petitioner has filed his return including his Kenya income along with his Indian Income-tax and claimed the benefits of foreign tax

ITA No1710/Chny/2026 Subramanian Swaminathan :- 5 -: credit. However, the petitioner would submit that it is not mandatory. The rule cannot make anything mandatory and it can be directory in nature, that too before the assessment, the claim to avail the benefits of foreign tax credit is filed. Therefore, it would amount to due compliance under the Act. The petitioner referred to the Judgment of the hon-ble Supreme Court in the case of CIT v. G.M.Knitting Industries (P.) Ltd. in Civil Appeal Nos.10782 of 2013 and 4048 of 2014 dated July 24, 2015, wherein it was held that Form 3AA is required to be filed along with the return of income to avail the benefit and even if it is not filed, but the same is filed during assessment proceedings but before the final order of assessment is made that would amount to sufficient compliance. 11. The law laid down by the hon-ble apex court in CIT v. G.M.Knitting Industries (P.) Ltd. in Civil Appeal Nos.10782 of 2013 and 4048 of 2014 dated July 24, 2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without foreign tax credit, however the same was filed before passing of the final assessment order. The filing of foreign tax credit in terms of the rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature. This is what the hon-ble Supreme Court had held in the above cases when the returns were filed without furnishing Form 3AA and the same can be filed subsequent to the passing of the assessment order. 12. Further, in the present case, the intimation under Section 143(1) was issued on March 26, 2021, but the foreign tax credit was filed on February 2, 2021. Thus, the respondent is supposed to have provided the due credit to the foreign tax credit of the petitioner. However, the foreign tax credit was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore the impugned order is liable to be set aside. 13. Accordingly the impugned order dated January 25, 2022 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the foreign tax credit filed by the petitioner on February 2, 2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set aside only to the extent of disallowing of foreign tax credit claim made by the petitioner and hence, the first respondent is directed to consider only on the aspect of rejection of foreign tax credit claim within a period of 8 weeks from the date of receipt of copy of this order.

6.

This Court, by following the judgment of the Hon-ble Supreme Court, held that filing of foreign tax credit in terms of Rule 128 is only directory in nature and not mandatory. In the present case the petitioner was working in United Kingdom and earned Rs.43,06,224/~. The petitioner filed return of income in India for the assessment year 2020~2021 on 21.09.2020 showing the income earned in the foreign country, in which he claimed Rs.6,27,023/~ being TDS credit before United Kingdom, as FTC under Section 90 of the Income Tax Act. But the petitioner uploaded Form 67 with delay, which he suppose to upload while filing the return of income. It is to be noted that Section 90, Section 90A

ITA No1710/Chny/2026 Subramanian Swaminathan :- 6 -: and Section 91 of the Income Tax Act of 1961 have been drafted specifically to avoid the burden of double taxation.

7.

In the present case, even though the petitioner had not uploaded Form~67 while filing return of tax, later he uploaded the same with delay and that too due to Covid out break he was not able to get necessary documents from the foreign country, which appears to be genuine. Therefore this Court is inclined to condone the delay in filing Form 67 and the impugned order is liable to be set aside.

8.

On identical facts, the Chennai Bench of the Tribunal in the case of Smt. Chengam Durga, in ITA No.1491/CHNY/2023 by following the judgment of the Hon’ble Jurisdictional High Court in the case of Duraiswamy Kumaraswamy vs. PCIT [2024] 460 ITR 615 (Madras) decided the issue in favour of the assessee. The relevant finding of the Chennai Bench of Tribunal reads as follows:-

“2. The assessee filed return of income on 09.09.2021 and claimed relief u/s 90 for Rs.1.51 Lacs. The return was processed by CPC u/s 143(1) on 05.07.2022 wherein this credit was denied since the assessee did not file applicable Form No.67 to claim the said relief. The assessee filed Form No.67 along with rectification application u/s 154 on 18.07.2022 in respect of her claim. However, CPC again denied the same in an intimation issued u/s 154. Upon further appeal, Ld. CIT(A), relying on the decision of Bangalore Tribunal in the case of Brinda Ramakrishna vs ITO (ITA No.454/Bang/2021 dated 17.11.2021), directed Ld. AO to grant the credit as per Form No.67. Aggrieved, the revenue is in further appeal before us. 3. We find that this issue is squarely covered by the cited decision of Bangalore Tribunal. Recently, Hon’ble High Court of Madras in the case of Duraiswamy Kumaraswamy (WP No.5834 of 2022 & ors. order dated 06.10.2023) held that filing of aforesaid form in terms of Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the act and it will always be directory in nature. Respectfully following the same, we dismiss the appeal.”

9.

In light of the aforesaid judicial pronouncements, we hold that filing of Form 67 under Rule 128 of the Income Tax Rules, 1962 is directory in nature and not mandatory. Hence, we direct the AO to grant Foreign Tax Credit amounting to Rs.2,34,995/-. It is ordered accordingly.”

5.

Respectfully following the above judicial precedence we hold that the AO is not correct in denying the FTC credit to the assessee on the ground of delay in filing Form 67. According, we direct the AO to examine the merits of the FTC claim made by the assessee and allow the same in accordance with

ITA No1710/Chny/2026 Subramanian Swaminathan :- 7 -: law. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly.

5.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 05th day of August, 2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (पदमावती यस) (Padmavathy.S) (George George K) उपा�� / Vice President लेखा सद�य लेखा सद�य सद�य /Accountant Member सद�य लेखा लेखा चे�नई/Chennai, �दनांक/Dated: 05th August, 2026. EDN, Sr. P.S EJTADA Digitally signed by EJTADA DURGA NARESH DURGA आदेश क� �ितिल�प अ�े�षत/Copy to: Date: 2026.08.10 NARESH 1. अपीलाथ�/Appellant 11:48:11 +05'30' 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

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