NITIN KHURANA,DELHI vs. ITO, DELHI

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:

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). 3. 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.”

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. 4. 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 Juri ictional 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:

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 juri iction, 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 Juri ictional High Court, reproduced hereinabove, we hereby, direct the Ld. AO to consider the Form 67 filed by the 5264_Del_2025_Nitin Khurana 6 | P a g e 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. 6. In the result, the appeal of the assessee is allowed.