ITAT Allows Foreign Tax Credit Despite Delay in Filing Form 67, Calls Requirement Procedural

The Kolkata Income Tax Appellate Tribunal (ITAT) has held that delay in filing Form 67 cannot deprive a taxpayer of claiming Foreign Tax Credit (FTC) under Section 90 of the Income-tax Act. The Tribunal ruled that filing Form 67 is a procedural requirement and not a mandatory condition that extinguishes a taxpayer’s substantive right to claim credit for taxes paid abroad.

The assessee, Neeta Makkar, had filed her return of income for AY 2017-18 declaring a total income of Rs.83.88 lakh and claimed Foreign Tax Credit of Rs.8.81 lakh under Section 90. Although the assessment under Section 143(3) accepted the returned income, the Assessing Officer denied the FTC in the tax computation sheet on the ground that Form 67 had not been filed within the prescribed time.

The Commissioner (Appeals) upheld the denial, observing that the due date for filing the return was 5 August 2017, whereas the assessee furnished Form 67 only on 31 March 2018. According to the appellate authority, the delay in filing the prescribed form disentitled the assessee from claiming the foreign tax credit.

Before the Tribunal, the assessee contended that the issue was no longer res integra, as several coordinate benches had consistently held that belated filing of Form 67 is merely a procedural lapse and cannot defeat the substantive benefit available under Section 90 and the applicable Double Taxation Avoidance Agreement (DTAA).

The Tribunal agreed with the assessee and relied extensively on its earlier decision in Surendra Kumar Goenka as well as other judicial precedents. It noted that various benches of the Tribunal and the Madras High Court in Duraiswamy Kumaraswamy v. PCIT have consistently held that Rule 128 governing Form 67 is directory in nature and cannot override the provisions of the Act or the DTAA. The Tribunal also observed that the filing of Form 67 is intended to facilitate implementation of the statutory provisions and does not create a substantive condition for availing foreign tax credit.

Following the settled judicial position, the Tribunal held that the lower authorities were not justified in rejecting the claim solely because Form 67 had been filed after the due date prescribed for filing the return of income. Thus, the Tribunal directed the Assessing Officer to grant the Foreign Tax Credit of ₹8,81,398 claimed by the assessee and allowed the appeal.

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