Loading judgment…
Facts
The assessee, an individual resident in India, claimed a Foreign Tax Credit (FTC) of Rs. 6,35,346/- for tax paid in Germany for Assessment Year 2021-22, under sections 90/91 of the Income-tax Act. The FTC was disallowed under section 143(1) as Form No. 67, required for claiming FTC, was not filed with the original return but uploaded belatedly. The CIT(A) dismissed the assessee's first appeal, leading to this second round of litigation before the Tribunal.
Held
The Tribunal held that the requirement to file Form No. 67 is directory and not mandatory, and a delay in its submission should not be the sole ground for denying the FTC. Relying on High Court precedents, the Tribunal condoned the delay in filing Form No. 67 and directed the Jurisdictional Assessing Officer to allow the FTC claim after due verification. Consequently, the impugned order denying the FTC was set aside.
Key Issues
Whether Foreign Tax Credit can be denied solely due to belated filing of Form No. 67, and if the requirement to file Form No. 67 is directory or mandatory in nature.
Sections Cited
Section 250, Section 143(1), Section 90, Section 91, Section 139(1), Rule 128
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
The captioned appeal at the instance of assessee pertaining to the Assessment Year 2021-22 is directed against the order dated 27.10.2025 of Addl/JCIT(A), Gwalior passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Intimation Order dated 05.07.2022 passed u/s.143(1) of the Act.
This is the second round of litigation before this Tribunal in as much as vide earlier order dated 29.04.2025 in the matter was remitted back to the file of ld.CIT(A) for denovo adjudication. The Tribunal also gave direction to ld.CIT(A) to condone the delay and decide the appeals on merits. However, ld.CIT(A) has dismissed the appeal of the assessee. Now the assessee is in appeal before this Tribunal.
Assessee has raised following grounds of appeal :
“1. On the facts and the circumstances of the case and in law, it be held that the ld.CIT(A) erred in denying the FTC to the appellant merely because Form 67 was filed late. It be held that delay in filing of Form 67 procedural and not mandatory. Delay in filing Form 67 should not lead to denial of FTC. Accordingly, the relief so denied be restored and just & due relief be given to the appellant. 2. The appellant craves to add, amend, alter or leave any of the above grounds of appeal."
4. The sole grievance of the assessee in the instant appeal is that ld.CIT(A) erred in not granting the credit for Foreign Tax to the extent of Rs.6,35,346/-.
Brief facts of the case are that the assessee is an individual and an ordinary resident of India. During the period relevant to the assessment year under consideration the assessee worked in Germany and claimed Foreign Tax Credit (FTC) of Rs.6,35,346/- in the original return of income filed on 29.10.2021 u/s.90/91 of the Act read with Article 23 of the Double Taxation Avoidance Agreement between India and Germany. However, assessee has not filed Form No.67. Return processed u/s.143(1) of the Act on 05.07.2022 disallowing the FTC claimed by the assessee. Assessee preferred appeal before ld.CIT(A) but failed to succeed. Now the assessee is in appeal before this Tribunal.
Ld. Counsel for the assessee submitted that assessee filed Form No.67 belatedly on 16.04.2024 but before the completion of Appellate Proceedings and filing of Form No.67 is directory in nature and the Revenue authorities ought to have accepted the assessee’s claim of FTC after necessary verification. Reliance placed on the following decisions of this Tribunal :
1. Mr. Kedar Jagdish Mankar Vs. ACIT – order dated 28.01.2025 2. Preeti Das Vs. ITO – order dated 21.01.2025
On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.
I have heard the rival submissions and perused the record placed before me. The short issue for my consideration is whether the assessee is entitled to Foreign Tax Credit. During the year under consideration, the assessee worked the assessee worked in Germany and claimed Foreign Tax Credit of Rs.6,35,346/- for the services rendered in Germany. Assessee filed return of income for A.Y. 2021-22 u/s.139(1) of the Act on 29.10.2021 claiming Foreign Tax Credit. However, assessee has uploaded Form No.67 only on 16.04.2024 after the processing of return u/s.143(1)(a) on 05.07.2022 disallowing the FTC claimed as the assessee has not filed Form No.67 till the conclusion of assessment proceedings. Assessee preferred appeal before the First Appellate Authority but could not succeed and the assessee is now in appeal before this Tribunal.
This issue is no more res integra by virtue of catena of decisions by this Tribunal on this very issue. I find in the case of Duraiswamy Kumaraswamy Vs. PCIT & Ors 460 ITR 615 (Mad) Hon'ble Madras High Court has decided this issue in favour of the assessee. Finding of Hon’ble Court at para nos.11 to 13 reads as under :
“11. The law laid down by the Hon'ble Apex Court in G.M.Knitting Industries (P) Ltd. (supra), which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without FTC, however the same was filed before passing of the final assessment order. The 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. This is what the Hon'ble Supreme Court had held in the above cases when the returns were filed without furnishing Form 3AA and the same can be filed the subsequent to the passing of assessment order.
12. Further, in the present case, the intimation under section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the FTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside.
Accordingly, the impugned order dated 25.01.2022 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set aside only to the extent of disallowing of FTC claim made by the petitioner and hence, the first respondent is directed to consider only on the aspect of rejection of FTC claim within a period of 8 weeks from the date of receipt of copy of this order.”
In the case of Deepak Pragjibhai Vs. Gondhaliya Vs. PCIT (2025) 175 taxmann.c0m 985 (Gujarat), relied on by the ld. Counsel for the assessee, the Hon’ble High Court of Gujarat also quashed the order passed by PCIT and remanded the matter to condone the delay in filing the Form No.67 so as to enable the petition to get the credit of the tax paid at Bangladesh on the salary earned by the petitioner for the year under consideration by availing the benefit of DTAA.
Therefore, the position is very clear that the FTC cannot be denied merely because of delay in filing Form No.67 as filing of Form No.67 is directory in nature. I therefore condone the delay in filing of Form No.67 and direct the Ld. Jurisdictional Assessing Officer to allow the FTC claimed by the assessee after necessary verification. Needless to mention that ld. JAO shall afford reasonable opportunity to the assessee. Impugned order is set aside and the grounds of the appeal raised by the assessee are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 30th day of January, 2026.