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Facts
The assessee claimed foreign tax credit (FTC) for tax paid abroad, but the CPC denied it because Form 67 was filed late. The CIT(A) dismissed the assessee's appeal, upholding the denial due to a delay of 7 months and the belated Form 67.
Held
The Tribunal condoned the 7-month delay in filing the appeal before the CIT(A) due to Covid-19, citing the Supreme Court's judgment. On merits, the Tribunal held that filing Form 67 is procedural and not mandatory, and denial of FTC for a late filing is unjustified, especially when sections 90 and 91 grant a substantive right.
Key Issues
Whether the denial of foreign tax credit (FTC) for belated filing of Form 67 is justified, and whether the delay in filing the appeal before the CIT(A) should be condoned.
Sections Cited
143(1), 154, 90, 91, 128
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 15/02/2025 in DIN No. ITBA/NFAC/S/250/2024-25/1073317579(1) for the assessment year 2019-20.
The assessee is a resident taxpayer. The return of income was processed u/s 143(1) of the Act. The assessee had claimed foreign tax credit (FTC) in respect of tax paid abroad. The CPC denied the credit because Form 67 was filed late.
The assessee filed appeal before the learned CIT(A). The appeal was filed with a delay of about 7 months. The learned CIT(A) dismissed the appeal holding that sufficient cause for delay was not shown, and also confirmed denial of FTC on account of belated Form 67.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us argued that the delay was not deliberate. The assessee first believed that rectification u/s 154 would cure the issue. The learned AR further submitted that the delay in filing the appeal before the learned CIT(A) is attributable to Covid and therefore the same should be condoned based on the judgment of the Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 2020 dated 10 January 2022.
On merits, the assessee has paid foreign taxes and offered the corresponding income in India. Credit cannot be denied merely because Form 67 was filed late. Rule 128 requires Form 67, but filing it within time is directory and not mandatory. Sections 90 and 91 grant a substantive right. Procedural lapses should not take away that right.
On the other hand, the learned DR submitted that the appeal was time-barred. The assessee did not show sufficient cause. On merits, the .
DR argued that Rule 128 is clear that Form 67 has to be filed. Since the assessee did not comply, denial of FTC was justified.
We have heard the rival submissions of both parties and perused the material available on record. Regarding the delay, we note that the appeal before the learned CIT(A) was delayed by about 7 months. Admittedly, the delay is attributable to Covid. We are of the view that the same is to be condoned in view of the judgment of the Hon’ble Supreme Court cited above. Hence, we condone the delay and proceed to adjudicate the issue on merits.
8.1 On merits of the case, we note that sections 90 and 91 of the Act confer a substantive right to claim FTC where income is doubly taxed. Rule 128 prescribes the procedure including filing of Form 67. However, neither the section nor the rule provides that failure to file Form 67 within time would extinguish the claim. The ITAT Bangalore in Brinda Rama Krishna v. ITO in has also held that FTC cannot be denied only for delay in filing Form 67.
8.2 In the present case, the fact that the assessee paid foreign tax and offered the income in India is not disputed. Denying FTC would lead to double taxation, which is contrary to the purpose of sections 90 and 91 and the Double Tax Avoidance Agreements. Accordingly, we hold that the assessee is entitled to FTC. The delay in filing Form 67 is only procedural. It does not defeat the claim. Hence, on merits, the assessee is entitled to FTC. The AO is directed to grant credit of foreign taxes paid, after verification, in accordance with section 90/91 read with Rule .
128 of the Income Tax Rules. Hence the ground of appeal of the assessee is allowed in terms of the above direction.
In the result, the appeal of the assessee is allowed.
Order pronounced in court on 16th day of September, 2025