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Facts
The assessee claimed Foreign Tax Credit (FTC) of Rs. 2,39,316 under Section 90 of the Income Tax Act. This was denied by the CPC because Form-67 was not filed along with the original return under Section 139(1), but was filed later. The assessee argued that filing Form-67 is directory, not mandatory.
Held
The Tribunal held that filing of Form-67 is directory and not mandatory, as Rule 128(9) does not prescribe disallowance of FTC for delayed filing. The assessee is eligible for FTC as Form-67 was filed before the completion of assessment.
Key Issues
Whether filing of Form-67 is a mandatory or directory requirement for claiming Foreign Tax Credit under Section 90 of the Income Tax Act.
Sections Cited
90, 139(1), 139(5), 128, 91
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI AMITABH SHUKLA
Assessment Years: 2019-20 Shri Giridhar Chidanamarri Income Tax Officer, No.21/32 Sri Kara Flats, Non-Corporate Ward-17(6), Kaveri Street, Villivakkam, Chennai. Tamil Nadu – 600 049. [PAN: ADSPG2451L] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Ms.Sonali, Advocate प्रत्यर्थी की ओर से /Revenue by : Shri Veeramany K, IRS सुनवाई की तारीख/Date of Hearing : 25.08.2025 घोषणा की तारीख /Date of Pronouncement : 03.09.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :
This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / APL / S / 250 / 2024-25 / 1074400284(1) dated 12.03.2025 of the Learned Commissioner of Income Tax [herein after “CIT(A), Addl/JCIT(A)-1 Lucknow for the assessment year 2019-20. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time.
2.0 The only issue raised by the assessee through the present appeal is the denial of Foreign Tax Credit (FTC) to it of Rs.2,39,316/- claimed u/s 90 of the Act. The Ld.Counsel of the assessee submitted that the same has been denied by the CPC in its order dated 16.02.2021 as the Form-67 could not be filed by it along with the original return under section 139(1). It has been argued that Rule-128 of the Income Tax Rules nowhere provides that deduction u/s 90 will not be available if Form-67 is not filed along with the original return under section 139(1). 3.0 Per contra the Ld.DR relied upon the orders of lower authorities. 4.0 We have heard the rival submissions in the light of material available on records. The only issue for consideration is as to whether filing of Form-67 is directory or mandatory in nature. In support of its arguments the Ld.Counsel for the assessee placed reliance upon the order of Hon’ble Coordinate Bench of this tribunal in the case of Shri Ariyalur Deva Senathipathy, dated 16.02.2023 holding that filing of Form-67 is merely directory in nature. Thus, the Hon’ble Bench has held as under:- “……3. Upon perusal of case records, it could be seen that the assessee claimed foreign tax credit of Rs.25.08 Lacs in return of income filed u/s 139(1) on 30-10- 2020. The assessee revised the income u/s 139(5) on 28-05-2021 and again claimed foreign tax credit of Rs.25.08 Lacs. However, the assessee did not file Form No.67 along with original return of income filed on 30-10-2020 but filed the same along with return of income filed on 28-05-2021. Since foreign tax credit was denied, the assessee preferred further appeal before Ld. CIT(A) who upheld
Page - 2 - of 5 the denial on the ground that Form No. 67 was filed beyond due date as specified u/s 139(1). Aggrieved, the assessee is in further appeal before us.
We find that filing of Form 67 has been held to be directory and not mandatory in many decisions of the Tribunal. The Mumbai Tribunal, in its recent decision, titled as Sonakshi Sinha vs. CIT (142 Taxmann.com 414), held as under: - 12. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income-tax Rules, 1962 provides 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. We find that coordinate bench in 42 Hertz Software India (P.) Ltd. (Supra) wherein following its earlier order in the case of Ms. Brinda Rama Krishna (supra) it was held that "one of the requirements of rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement - 3 - 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.
Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi v. CIT(A) [IT Appeal No. 680/Bang/2022, 6-9-2022. 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 rule 128 (4) clearly provides the condition where the foreign tax credit Page - 3 - of 5 would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further, the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the 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. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income-tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed. In the absence of any contrary decision on record and respectfully following the consistent view of Tribunal on this issue, we direct lower authorities to grant the foreign tax credit as claimed by the assessee…..”
5.0 As the facts of the present case are identical to the decision extracted hereinabove, in respectful compliance thereof as well as for the purposes of consistency, we are of the considered view that the appellant assessee is eligible for claim of its deduction u/s 90 on account of FTC. Accordingly, we set aside the order of lower authorities and direct the Ld.AO to grant the foreign tax credit as claimed by the assessee. Accordingly all the grounds of appeal raised by the assessee are therefore allowed.
Page - 4 - of 5 6.0 In the result, the appeal of the assessee is allowed. Order pronounced on 3rd , Sept-2025 at Chennai.