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Facts
The assessee claimed foreign tax credit of Rs. 90,208/- on dividend income from foreign shares. The claim was denied by the CPC due to the delay in filing Form 67. The assessee filed a rectification application which was rejected, and an appeal before the CIT(A) was also dismissed.
Held
The Tribunal noted that Form 67 is a directory requirement, not mandatory, and its delayed filing does not automatically lead to the disallowance of foreign tax credit. The Double Taxation Avoidance Agreement (DTAA) overrides the Act and Rules, and Rule 128 does not prescribe denial of credit for delayed filing.
Key Issues
Whether the delay in filing Form 67 for claiming foreign tax credit leads to its disallowance.
Sections Cited
90, 91, 139(1), 143(1), 154, Rule 128 of the Income-tax Rules, 1962
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI GIRISH AGRAWAL
Present for: Assessee : Shri Sunil Hirawat, CA Revenue : Shri Hemanshu Joshi, Sr. DR Date of Hearing : 08.12.2025 Date of Pronouncement : 16.02.2026 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2025-26/1081126257(1), dated 24.09.2025, passed against the order by Assessing Officer, u/s. 154 of the Income- tax Act (hereinafter referred to as the “Act”), dated 25.03.2025 for Assessment Year 2018-19.
Grounds taken by assessee are reproduced as under: 1. On facts and in law, the Ld. Commissioner of Income Tax (Appeals) had erred in not allowing the credit of foreign tax credit claimed of Rs. 90,208/-Under the facts and circumstances of the matter, the claim of the appellant ought to have been allowed.
Tabassum Abdulla Inamdar AY 2018-19 2. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble ITAT to decide this appeal according to law.
The only issue involved in the present appeal is in respect of grant of credit for foreign taxes paid by the assessee but denied owing to delay in filing of form 67 for claiming such credit. Facts of the case are that assessee filed her return of income on 29.08.2018, reporting total income at Rs. 1,43,43,890/-. In the year under consideration, assessee had received dividend income from foreign shares amounting to Rs. 3,58,649/- duly reported in her return in ‘Schedule OS: Income from Other Sources.’ Claim for taxes paid outside India was also furnished in ‘Schedule TR’ and also details of income from outside India and tax relief thereon were duly reported in ‘Schedule FSI’ of the return filed by the assessee. All of these are placed on record in the paper book and stand uncontroverted.
3.1. On the dividend income so received by the assessee, tax paid outside India amounts to Rs. 90,208/- for which relief has been claimed under the provisions of section 90 of the Act. Assessee has claimed relief, also taking into account Article 25 of India-US Double Taxation Avoidance Agreement (DTAA) as reported in her return. The said return was processed by CPC, Bengaluru u/s. 143(1) by issuing intimation dated 14.06.2020, raising a demand of Rs. 1,18,190/- which arose on account of denial of foreign tax credit claimed by the assessee amounting to Rs. 90,208/-.
3.2. Assessee had moved an application of rectification u/s. 154 of the Act dated 03.03.2025 along with filing of Form 67 on the Income-tax portal. The said rectification application was rejected by observing that rectification rights have already been transferred to the Assessing
Tabassum Abdulla Inamdar AY 2018-19 Officer and therefore assessee was required to contact the Jurisdictional Assessing Officer for the same. This order was passed on 25.03.2025, intimated to the assessee by way of an email. Pursuant to this order, assessee moved another application before the Jurisdictional Assessing Officer filed on 01.04.2025 explaining her case. Application so filed u/s.154 on 01.04.2025 is pending for disposal by the ld. JAO.
3.3. In the meanwhile, assessee moved an appeal before the ld. CIT(A), who dismissed the same by resorting to the provisions of Rule 128 of the Income-tax Rules, 1962 (the Rules), to note that assessee has failed to furnish Form 67 on or before the due date specified for furnishing the return of income u/s. 139(1) to claim credit of the foreign taxes paid in a country outside India, by way of deduction. The first appeal was dismissed against which assessee is in appeal before the Tribunal.
Before us, ld. Counsel for the assessee submitted that return of income was filed within the due date for filing of return u/s. 139(1), i.e., on 29.08.2018. The due date for filing of the return for the year under consideration was 31.08.2018. The intimation was issued u/s.143(1) on 14.06.2020. Subsequent to this, assessee moved a rectification application within the limitation of four years prescribed u/s.154 along with filing of Form No. 67 claiming credit for the foreign taxes which were duly reported in her original return. CPC, Bengaluru without taking into account Form No.67, available before it, rejected the application made u/s.154 by merely stating that the jurisdiction has now been transferred to the ld. JAO, against which assessee may take up her case. Assessee moved another application before the ld. JAO and is pending for disposal.
Tabassum Abdulla Inamdar AY 2018-19 5. We have perused the records and material placed before us. We take note of the provisions contained in Rule 128. From the reading of Rule 128 of the Rules, we find that sub-rule (9) of Rule 128 does not provide for disallowance of foreign tax credit in case of delay in filing Form No.
It is noted that filing of Form No. 67 is not mandatory but a directory requirement. Further, DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. In reference to Rule 128, it is a well-settled position 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 foreign tax credit. Also, under the Act, provisions of Section 90 and 91 do not prescribe timeline for filing of such declaration on or before the due date of filing of return. Also, Rule 128(4) clearly provides the condition where the foreign tax credit would not be allowed. Thus, present case is not a 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.
5.1. The issue before us is no longer res integra as held by various Co- ordinate Benches of ITAT, few of which are listed below: i. Sonakshi Sinha vs. CIT [2022] 142 taxmann.com 414 (Mum) ii. Deepak Shimoga Parmaraju vs. ADIT [2024] 162 taxmann.com 96 (Bang) iii. Brinda Ramakrishna vs. ITO [2022] 135 taxmann.com 358 (Bang)
Considering the factual matrix on record as well as pending application before the ld. JAO u/s. 154, and the judicial pronouncements listed above read with Rule 128 of the Rules, we remit
Tabassum Abdulla Inamdar AY 2018-19 the matter back to the file of ld. JAO for a limited purpose of verification of the records and allow the credit for foreign taxes paid by the assessee as duly claimed in her return along with Form 67 already on record. Accordingly, ground raised by the assessee is allowed.
In the result, appeal of the assessee is allowed.
Order is pronounced in the open court on 16 February, 2026 Sd/- Sd/- (Anikesh Banarjee) (Girish Agrawal) Judicial Member Accountant Member
Dated: 16 February, 2026 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai