RAMACHANRAN PRASANNA,CHENNAI vs. NON CORP CRICLE 17(2), CHENNAI

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ITA 644/CHNY/2026Status: DisposedITAT Chennai06 May 2026AY 2021-228 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that filing Form 67 within the prescribed time is directory, not mandatory, and relied on various judicial pronouncements. The matter was restored to the AO for examination of Form 67.

What were the facts?

The assessee claimed Foreign Tax Credit (FTC) of Rs. 14,05,515/- but did not file Form 67 by the due date. The FTC was disallowed by the AO and upheld by the FAA on the grounds that filing Form 67 is mandatory.

What were the issues?

Whether the delay in filing Form 67 bars the assessee from claiming Foreign Tax Credit, and if the requirement to file Form 67 is mandatory or directory.

Which sections of the Income-tax Act were involved?

Section 90,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 05.05.2026Pronounced: 06.05.2026

आयकर अपील�य अ�धकरण, ‘ए’ �यायपीठ, चे�नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी जॉज� जॉज� के, उपा�य� एवं �ी एस.आर.रघुनाथा, लेखा सद�य के सम� BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No.:644/CHNY/2026 िनधा�रण वष�/Assessment Year: 2021-22 Shri Ramachandran The Income Tax Officer, Prasanna, Vs. Non-Corporate Circle 17(2), G2, Sabari Nivas No.17, Chennai Lady Road, Mahalingapuram, Chennai – 600 034. PAN: AMIPP 9172C (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri J. Vignesh, CA ��यथ� क� ओर से/Respondent by : Shri D. Balachandar, JCIT सुनवाई क� तारीख/Date of Hearing : 05.05.2026 घोषणा क� तारीख/Date of Pronouncement : 06.05.2026 आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Addl/JCIT(A), Gwalior, dated 17.12.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2021-22.

ITA No.644/CHNY/2026 :- 2 -:

2.

The solitary issue that is raised is whether the First Appellate Authority (FAA) had erred in law and on facts in not granting Foreign Tax Credit (FTC) of Rs.14,05,515/-.

3.

Brief facts of the case are as follows: The assessee is a resident of India for the relevant assessment year. During the relevant assessment year, the assessee was temporarily employed in United Kingdon with “Cognizant Worldwide Ltd.”. For the assessment year 2021-22, return of income was filed on 05.10.2021 admitting total income of Rs.60,41,480/-. The assessee had claimed Foreign Tax Credit (FTC) of Rs.14,05,515/- u/s. 90 of the Act. The return of income was processed u/s.143(1) of the Act on 13.10.2022. In the said intimation issued u/s.143(1) of the Act, the FTC claimed amounting to Rs.14,05,515/- was not granted. The reason for not granting the benefit of FTC was on account of assessee not filing Form 67 on or before the due date of furnishing the return of income as prescribed u/s.139(1) of the Act. On receipt of intimation issued u/s.143(1) of the Act, assessee filed rectification request on 23.03.2024 along with copy of Form 67. However, the rectification request was rejected vide order dated 29.05.2024 by the CPC without allowing the grant of FTC claimed u/s.90 of the Act.

ITA No.644/CHNY/2026 :- 3 -: 4. Aggrieved by the rectification order dated 23.03.2024 passed u/s.154 of the Act, assessee filed appeal before the FAA. The FAA held the word ‘shall’ has been used in Rule 128(9) of the Income Tax Rules, 1962 and assessee having not filed Form 67 within the prescribed time under the Act, assessee is not entitled to the benefit of FTC (Form 67 has to be filed along with return of income u/s.139(1) of the Act). The relevant finding of the FAA reads as follows:- “ 5.7 The Appellant has filed Return of Income FOR A.Y. 2021-22 on 05.10.2021. The Appellant has claimed FTC of Rs. 14,05,515/- u/s. 90 of the Act in the return of income. The Appellant had filed the Form 67 on 23.03.2024. However, it is pertinent to note that the extended due date of filing of Return of Income was 31.12.2021. The Appellant has failed to furnish Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act which is mandatory according to Rule 128(9) of the Rules. Therefore, the return of income was processed by Centralized Processing Centre (CPC) electronically and intimation u/s 143(1) of the Act on 04.03.2024 was passed disallowing the claim of FTC. The word "shall" has been used in the rule 128(9) therefore the provisions of rule 128 are mandatory in nature and not directory. From the above, it is apparent that unless there is an order condoning the delay in filing Form 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.

5.8 In view of the above, the appellant is not eligible for relief under section 90/90A and these grounds of appeal are dismissed.”

ITA No.644/CHNY/2026 :- 4 -: 5. Aggrieved by the order of the FAA, assessee has filed the present appeal before the Tribunal. The Ld.AR submitted that uploading Form 67 belatedly is only a technical / venial breach and cannot affect substantive right for granting FTC. In other words, it was submitted that filing of Form 67 within the time prescribed u/s.139(1) of the Act is only directory and not mandatory. In support of his submission, the Ld.AR relied on the judgment of the Hon’ble Delhi High Court in the case of Real Time Data Services Pvt. Ltd., vs. PCIT in WP© No.959/2024 (judgment dated 13.02.2026) and the order of the Mumbai Bench of the Tribunal in the case of Tabassum Abdulla Inamdar vs. DCIT in ITA No.6561/Mum/2025 (order dated 16.02.2026).

6.

The Ld.DR supported the order of the FAA.

7.

We have heard rival submissions and perused the material on record. Admittedly, assessee has not filed Form 67 along with return of income within the due date prescribed u/s.139(1) of the Act. The return was processed u/s.143(1) of the Act on 13.10.2022. The assessee on receipt of intimation u/s.143(1) of the Act and realizing the mistake that Form 67 was not filed, filed application for rectification u/s.154 of the Act on 23.03.2024 enclosing therein Form 67.

ITA No.644/CHNY/2026 :- 5 -:

8.

The Hon’ble Delhi High Court in the case of Real Time Data Services Pvt. Ltd., (supra), had held that when petitioner had failed to upload Form 67 within due date of filing of the return, it is only a technical or venial breach. It was further held by the Hon’ble Delhi High Court that the petitioner has substantial right of getting FTC and withholding the same is without any authority and would tantamount to unjust enrichment. The Hon’ble Court in the said case directed the AO to examine the Form 67 (which was admittedly filed subsequent to the intimation issued u/s.143(1) of the Act) and pass a speaking order in accordance with law.

9.

The Mumbai Bench of the Tribunal in the case of Tabassum Abdulla Inamdar, (supra) had held that filing of Form 67 within the due date prescribed is not mandatory but only directory requirement. It was further held by the Mumbai Bench of the Tribunal, the DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. The relevant finding of the Mumbai Bench of the Tribunal reads as follows:- “5. We have perused the records and material placed before us. We take note of the provisions contained in Rule 128. From the reading of Rule 128 of the Rules, we find that sub-rule (9) of Rule 128 does not provide for disallowance of foreign tax credit in case of delay in filing Form No. 67. It is noted that filing of Form No. 67 is not mandatory but a directory requirement. Further, DTAA overrides the provisions of the Act and the

ITA No.644/CHNY/2026 :- 6 -: Rules cannot be contrary to the Act. In reference to Rule 128, it is a well- settled position 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 foreign tax credit. Also, under the Act, provisions of Section 90 and 91 do not prescribe timeline for filing of such declaration on or before the due date of filing of return. Also, Rule 128(4) clearly provides the condition where the foreign tax credit would not be allowed. Thus, present case is not a case of violation of any of the provisions of the Act but of the Rule which does not provide for any consequence, if not complied with. 5.1. The issue before us is no longer res integra as held by various Coordinate Benches of ITAT, few of which are listed below: i. Sonakshi Sinha vs. CIT [2022] 142 taxmann.com 414 (Mum) ii. Deepak Shimoga Parmaraju vs. ADIT [2024] 162 taxmann.com 96 (Bang) iii. Brinda Ramakrishna vs. ITO [2022] 135 taxmann.com 358 (Bang)

6.

Considering the factual matrix on record as well as pending application before the ld. JAO u/s. 154, and the judicial pronouncements listed above read with Rule 128 of the Rules, we remit the matter back to the file of ld. JAO for a limited purpose of verification of the records and allow the credit for foreign taxes paid by the assessee as duly claimed in her return along with Form 67 already on record. Accordingly, ground raised by the assessee is allowed.”

10.

In the case considered by the Mumbai Bench of the Tribunal, it is abundantly clear that Form 67 was filed only subsequent to the intimation issued u/s.143(1) of the Act (refer para 3.1 of the said order of the Tribunal).

11.

The Chennai Bench of the Tribunal in the case of Ms.Chathadi Krishnan Parvathi vs. ITO in ITA No.932/CHNY/2025 (order dated

ITA No.644/CHNY/2026 :- 7 -: 18.06.2025) by following the earlier judicial pronouncement had directed the AO to examine the Form 67 which was filed subsequent to the intimation issued u/s.143(1) of the Act.

12.

Since various judicial pronouncements have held filing of Form 67 under Rule 128 of the Income Tax Rules, 1962 within the prescribed time is only directory in nature and not mandatory, we hold the FAA is not justified in not examining whether Form 67 filed by the assessee is in accordance with the rules prescribed. Since there has not been examination whether assessee is entitled to FTC, we deem it appropriate to restore the matter to the files of the AO. The AO is directed to examine the Form 67 filed by the assessee (which is already on record) and take a decision in accordance with law. It is ordered accordingly.

13.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 6th May, 2026 at Chennai.

Sd/- Sd/- (एस.आर. रघुनाथा) (जॉज� जॉज� के) (S.R. RAGHUNATHA) (GEORGE GEORGE K) उपा�य� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER चे�ई/Chennai, �दनांक/Dated, the 6th May, 2026

ITA No.644/CHNY/2026 :- 8 -:

RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order

Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.05.08 12:01:06 +05'30'

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