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Facts
The assessee claimed foreign tax credit (FTC) under section 90/90A of the Income Tax Act, 1961, for taxes paid in Canada. However, Form 67 was filed belatedly by 9 days. The CPC disallowed the FTC, and this was upheld by the CIT(A).
Held
The Tribunal held that a procedural defect like belatedly filing Form 67 should not extinguish the substantive right to claim FTC. The delay of 9 days was condoned, and the matter was restored to the AO for verification and allowance of the FTC.
Key Issues
Whether belated filing of Form 67 beyond the prescribed due date can lead to disallowance of the substantial right to claim foreign tax credit, despite the delay being curable or condonable.
Sections Cited
154, 143(1), 90, 90A, 250, 139(1), 128, 234B, 234C, 119, 264
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: SHRI RAJ KUMAR CHAUHAN, HON’BLE JUDICIAL & MRS. RENU JAUHRI, HON’BLE
Nitin Khurana Vs ITO Circle 52(1) S 252 Part 2 Greater Kailash New Delhi- 48 (APPELLANT) (RESPONDENT) PAN No. AASPK5554F Assessee by : Shri Suresh Kumar Gupta, CA. Revenue by : Shri Ankush Kalra, Sr. DR Date of Hearing: 10.03.2026 Date of Pronouncement: 18.03.2026 ORDER PER RENU JAUHRI :
The above captioned appeal is preferred against the order dated 30.06.2025, passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as, “Act”) by Commissioner Income Tax (Appeal), Coimbatore [for short, Ld. CIT(A)].
The assessee has raised following grounds of appeal:
1. That the Central Processing Center (CPC) passed the rectification order under section 154 of the Income tax Act,1961 confirming following additions / adjustments made in the tax liability of the appellant while processing the income tax return u/s 143 (1) of the Income Tax Act, 1961:
1 | P a g e 5264_Del_2025_Nitin Khurana Addition Amount (Rs.) Tax liability in Return 0 Addition on account 47,309 of disallowance of foreign tax credit claimed u/s 90 of DTAA due to delay in filing of Form 67 Addition on account 8,351 of Interest on above Net Tax Liability 55,660
2. That the Learned ADDL / JCIT (A) -2, Office of the Commissioner of Income Tax Appeal has erred both on facts and law in confirming disallowance of the Foreign Tax credit claimed under section 90/90A to the extent of Rs. 47,309/- by passing the Order u/s 250 of the Income Tax Act, 1961 dated 30.06.2025 DIN & Order No. ITBA/APL/S/250/2025- 26/1078027661(1).
That the Learned Commissioner of Income Tax, Appeal while observing so, totally ignored the settled principle that the requirement of filing of Form (Form No.67) before end of Assessment year 'is 'directory' and not mandatory, as was held by various legal fora, including the Apex Court, particularly in the light of the fact that DTAA should take precedence over domestic laws.
4. That the Learned Commissioner of Income Tax, Appeal ought to have appreciated that it is not mandatory to file Form 67 before filing return of income under section 139(1) to claim foreign tax credit as Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67.
5. That the Learned Commissioner of Income Tax, Appeal has not condoned the delay of 9 days in filing of Form 67 for the AY 2023-24 (Filed on 09.04.24) .
6. That the Learned Commissioner of Income Tax, Appeal has erred in confirming charging interest under section 234B and 234C on the Assessed tax.
7. That the appellant may be allowed to add, alter, delete or amend any grounds of appeal if considered necessary before or at the time of hearing of appeal.”
2 | P a g e 5264_Del_2025_Nitin Khurana 3. Although several grounds have been raised by the assessee, sole substantive issue pertains to the denial of Foreign Tax Credit (for short, FTC) due to delay in filing of Form 67 by the assessee.
3.1 Brief facts are that the assessee filed his return for A.Y. 2023-24 on 31.10.2023, declaring global taxable income of Rs. 43,67,660/-. This included salary income of Rs. 2,11,717/- earned in Canada besides interest and dividend. Total Foreign Income of Rs. 2,25,209/- was duly declared and under DTAA between India and Canada, the assessee claimed relief u/s 90/90A of Rs. 47,309/- being tax paid on such foreign income. However, Form No. 67 was not submitted within the prescribed time limit as a result of which the claim for FTC was disallowed by the CPC. After the rejection of rectification application by the CPC, the assessee filed an appeal before the Ld. CIT(A). The appeal was dismissed vide order dated 30.06.2025. Further aggrieved, the assessee has filed the present appeal before the Tribunal.
Before us, Ld. AR has submitted that Form 67 was submitted on 09.04.2024 which was delayed but the delay in filing should not affect the eligibility for FTC as the tax was paid duly paid in Canada. Ld. AR has placed reliance on several judicial pronouncements in support of his contentions. In particular, he has relied on the recent decision of the Hon’ble Jurisdictional High Court dated 13.02.2026 in W.P (C) 959/2024 & CM Appl. 3939/2024, and other cases in the case of M/s Real Time Data Services Private Limited wherein under similar facts and circumstances, the Hon’ble Delhi High Court has held as under: 3 | P a g e 5264_Del_2025_Nitin Khurana “4. Learned counsel for the petitioner argued that the Commissioner has erred in rejecting the application. He argued that Section 119 of the Act of 1961 confers wide powers on the Commissioner, including the power to condone the delay in filing Form No. 67, while contending that Rule 128 is not mandatory.
5. Mr. Puneet Rai, learned Senior Standing Counsel for the Income Tax Department, on the other hand, submitted that the petitioner has failed to adhere to the mandate of law and since there is no provision granting relaxation under Rule 128 of the Rules of 1962, the Commissioner has rightly rejected the application for revision. He further submitted that the power to relax the Rule may be exercised by the Central Board of Direct Taxes or a competent authority under Section 119 of the Act of 1961, that too in a case when such power is invoked.
6. Heard learned counsel for the parties.
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.
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.
4 | P a g e 5264_Del_2025_Nitin Khurana 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.
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.”
We have heard the rival submissions and perused the material placed on record. Admittedly, the assessee has filed Form No. 67 belatedly which is a procedural defect. It is the settled legal position that breach of procedural requirement does not extinguish the substantive right. Thus, respectfully following the decision of the Hon’ble Jurisdictional High Court, reproduced hereinabove, we hereby, direct the Ld. AO to consider the Form 67 filed by the 5 | P a g e 5264_Del_2025_Nitin Khurana assessee with delay of 9 days and allow the claim of FTC after requisite verification. The matter is accordingly, restored to the Ld. AO for the limited purpose of verification of the FTC claimed by the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 18-03-2026.