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Facts
The assessee, an individual salaried employee, claimed Foreign Tax Credit (FTC) for taxes paid in the USA. The return of income and Form No.67 were filed belatedly, leading to the disallowance of FTC by the CPC. The CIT(A) confirmed this disallowance.
Held
The Tribunal held that the filing of Form No.67 is directory and not mandatory, citing various High Court and Tribunal decisions. Therefore, the belated filing of Form No.67 should not be a ground for disallowing FTC, especially when it was available before the processing of the return.
Key Issues
Whether the disallowance of Foreign Tax Credit (FTC) is justified solely on the grounds of belated filing of Form No. 67, when the form was available before the processing of the income tax return.
Sections Cited
143(1), 90, 91, 139(1), 119(2)(b)
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
Assessment Year : 2021-22 Saumitra Kumar, Vs. DCIT, Circle-12, Pune. HIG 111, Sector E, Aliganj, Lucknow- 226024. PAN : BCMPK7370J Appellant Respondent Assessee by : Shri Naman Maloo (Virtual) Revenue by : Shri Amit Bobde Date of hearing : 23.07.2025 Date of pronouncement 14.08.2025 : आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 23.04.2025 passed by Ld. Addl./JCIT(A), Indore [‘Ld. CIT(A)’] for the assessment year 2021-22.
The assessee has raised the following grounds of appeal :-
1. In the facts and circumstances of the case, ld. CIT(A) has erred in, confirming the action of ld. AO(CPC) in disallowing the credit of taxes paid outside India while processing the return of income (Foreign Tax Credit, "FTC") under Section 143(1) of the Income Tax Act, 1961. Such rejection is beyond the purview of Section 143(1). The action of the ld. CIT(A) is illegal and arbitrary, and against the facts of the case. Relief may please Section 143(1).
2. In the facts and circumstances of the case ld. CIT(A) has erred in, confirming the action of ld. AO(CPC) in disallowing Foreign Tax Credit (FTC) of federal tax against the total tax liability in India under section 90 of the Income-tax Act, 1961, read with Article 25 of the India-USA DTAA. The action of the ld. CIT(A) is unjustified, erroneous, and not in accordance with the provisions of the Act and the Treaty. Relief may please be granted by allowing the FTC as claimed.
3. In the facts and circumstances of the case, the ld. CIT(A) has erred in, confirming the action of ld. AO(CPC) in disallowing Foreign Tax Credit (FTC) of state tax against the total tax liability in India under section 91 of the Income-tax Act, 1961. The action of the ld. CIT(A) is illegal, arbitrary, and against the facts of the case. Relief may please be granted by allowing the Foreign Tax Credit as claimed.
4. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in, confirming the action of ld. AO(CPC) in disallowing the Foreign Tax Credit (FTC) claimed by the assessee even though the Form 67 was already available on record with the ld. AO/CIT(A).
5. The assessee craves his right to add, amend or alter any of the grounds on or before the hearing.”
Facts of the case, in brief, are that the assessee is an individual salaried employee and earned certain income out of India i.e. USA and claimed Foreign Tax Credit i.e. FTC by furnishing Form No.67. However, the return of income and Form No.67 was furnished belatedly therefore, CPC disallowed the claim of FTC.
Being aggrieved assessee furnished appeal before first appellate authority, who after considering the reply of the assessee dismissed the appeal filed by the assessee by observing as under :-
“4.7 One of the requirements of Rule 128 for claiming FTC is provided by Rule 128 (8) & (9) of the Rules and the same reads thus: "(8) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee, namely: - (1) a statement of income from the country or specified territory outside India offered for tax for the previous year and of foreign tax deducted or paid on such income in Form No.67 and verified in the manner specified therein, (ii) certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee,- (a) from the tax authority of the country or the specified territory outside India, or (b) from the person responsible for deduction of such tax; or (c) signed by the assessee: Provided that the statement furnished by the assessee in clause (c) shall be valid if it is accompanied by. (A) an acknowledgement of online payment or bank counter foil or challan for payment of tax where the payment has been made by the assessee; (B) proof of deduction where the tax has been deducted. (9) The statement in Form No. 67 referred to in clause (1) 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 subsection (1) of section 139, in the manner specified for furnishing such return of income." 4.8 The Appellant has filed Return of Income on 28.02.2022. The Appellant has claimed FTC of Rs. 27,27,978/- u/s. 90 of the Act in the return of income. The Appellant had filed the Form 67 along with the return of income on 28.02.2022. 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 13.10.2022 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 No. 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. In view of the above, the appellant is not eligible for relief under section 90/90A and these ground No. 1 to 3 are dismissed.”
It is this order against which the assessee is in appeal before this Tribunal.
Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) is unjustified. It was contended before us that there are plethora of decisions in favour of assessee wherein coordinate benches of this Tribunal has already held that the Foreign Tax Credit i.e. FTC needs to be allowed even if Form No.67 is furnished belatedly but before processing of income tax return by CPC. Ld. AR submitted before us that the return of income was furnished on 28.02.2022 and Form No.67 was also furnished on 28.02.2022 and CPC processed the return of income on 13.10.2022, therefore on date of processing Form No.67 was very well available before CPC. Accordingly, Ld. AR requested before the Bench to allow the credit of FTC. In support of its contentions, Ld. AR relied on following decisions :- (i) Vipul Chandrakant Sawalwade vs. ITO, 174 taxmann.com 594 (Pune – Trib.). (ii) Nirmala Murli Relwani vs. ADIT, 145 taxmann.com 293 (Mumbai – Trib.). (iii) NICDC Neemrana Solar Power. Ltd. vs. DCIT, 171 taxman.com 653 (Delhi – Trib.).
(iv) DCIT vs. Shri Devesh M. Nayel, order dated 05.12.2023. (v) Wipro Ltd. vs. DCIT, 62 taxmann.com 26 (Karnataka). (vi) Dr. Rajiv I. Modi vs. DCIT, 86 taxmann.com 253 Ahmedabad – Trib.).
Ld. DR appearing from side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record including the various case laws filed in the paper book by the assessee. In this regard, we find that admittedly Form No.67 and income tax return was furnished belatedly and due to this reason alone the Foreign Tax Credit claimed by the assessee was disallowed by CPC. We also find, that, before Ld. CIT(A) it was contended with the help of ground no.2 that the assessee has inadvertently claimed FTC @ of 18.57% instead of 18.71% in Form No.67, however, this fact has not been brought before the Bench. Accordingly, we find that admittedly the amount claimed by the assessee as FTC is not accurate. However, in principle we agree with the contention of the assessee that the filing of Form No.67 is directory and not mandatory. In this regard, we find that in various decisions of the Coordinate Benches of the Tribunal relied on by the counsel of the assessee it has been held that filing of Form No.67 is directory and not mandatory. We find the Tribunal in the case of Vipul Chandrakant Sawalwade vs. ITO vide order dated 13.05.2025 has allowed the appeal of the assessee by observing as under :- “6. We have considered the rival submissions and perused the record placed before us. We observe that the first issue for our consideration is regarding the claim of FTC of Rs.2,15,252/-. Assessee is an individual who furnished the income-tax return for A.Y. 2021-22 on 14.11.2022. In the said return, assessee claimed FTC of Rs.2,15,252/-. Due date of filing return of income for A.Y. 2021-22 was 15.03.2022 however, in support of claim of FTC assessee filed Form No.67 on 24.07.2022 which was beyond the due date for filing the return u/s.139(1) of the Act. Assessee was denied FTC solely on the ground of filing of Form No.67 belatedly. We observe that Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy v. PCIT (2024) 336 CTR 108 (Madras) has held that filing of Form No.67 read with Rule 128 of the Income-tax Rules, 1962 is only directory in nature and not mandatory. Similar view has also been followed by this Tribunal in the case of Preeti Das (supra) placing reliance of the judgment of Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy (supra) Finding of this Tribunal in the case of Preeti Das (supra) is reproduced below : “7. We have heard both the parties and perused the material on record. The issue in the present appeal is that whether or not the CPC, Bangalore is justified in denying the credit for Foreign Tax paid for the reason that the Form No.67 was not filed within the due date for filing of the return of income as specified under the provisions of section 139(1) of the Income Tax Act, 1961 (‘the Act’). Admittedly, in the present case, Form No.67 was not filed within the due date for filing of the return of income under the provisions of section 139(1), but Form No.67 was filed on 23.03.2020. The CPC, Bangalore had processed the return of income as on 18.02.2021, which means that Form No.67 was very much available with the CPC, Bangalore. Therefore, the CPC, Bangalore cannot deny the claim for credit for foreign tax paid merely because Form No.67 was not filed within the due date specified for filing the return of income 139(1) of the Act, as it is merely directory in nature. Our view is fortified by the judgment of Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The PCIT and others in W.P.No.5834/2022 dated 06.10.2023 wherein it has been held that filing of FTC 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. We further find support from the decision of this Tribunal in the case of Samiran Arunkumar Dutta Vs. DCIT – dated 14.08.2024 where also assessee was employed with same employer but Foreign Tax Credit was allowed even when Form No.67 was filed belatedly observing as follows : “7. I heard the ld. Sr. DR and perused the material on record. The issue in the present appeal is that whether or not the CPC, Bangalore is justified in denying the credit for Foreign Tax paid for the reason that the Form No.67 was not filed within the due date for filing of the return of income as specified under the provisions of section 139(1) of the Income Tax Act, 1961 (‘the Act’). Admittedly, in the present case, Form No.67 was not filed within the due date for filing of the return of income under the provisions of section 139(1), but Form No.67 was filed on 30.03.2021. The CPC, Bangalore had processed the return of income as on 24.12.2021, which means that Form No.67 was very much available with the CPC, Bangalore. Therefore, the CPC, Bangalore cannot deny the claim for credit for foreign tax paid merely because Form No.67 was not filed within the due date specified for filing the return of income under the provisions of section 139(1) of the Act, as it is merely a directory. Therefore, I direct the CPC, Bangalore to amend the Intimation u/s 143(1) of the Act by taking into consideration the Form No.67 filed by the appellant. Accordingly, the grounds of appeal
filed by the assessee stands partly allowed.”
8. In light of above, we direct the Jurisdictional Assessing Officer to allow the alleged Tax Credit by taking into consideration the Form No.67 filed by the appellant but after due verification. Accordingly, the grounds of appeal raised by the assessee stands allowed.
7. Respectfully following the above decision and that the same being squarely applicable on the facts of the instant case, we allow the claim of FTC of Rs.2,15,252/- claimed by the assessee in Form No.67 and allow the Grounds of appeal Nos. 1, 2 and 3 raised by the assessee.”