Foreign Tax Credit Can’t Be Denied for Delay in Filing Form No. 67: Delhi High Court

The Delhi High Court has held that the Foreign Tax Credit (FTC) cannot be denied for delay in filing Form No. 67. The bench of Justice Dinesh Mehta and Justice Vinod Kumar has observed that denial of FTC merely on a procedural ground amounts to retention of tax without authority of law and leads to unjust enrichment of the Revenue. Following the coordinate bench decision in Vijay Gupta, the bench observed that the PCIT had adequate powers under Section 264 to condone the delay, which ought to have been exercised. The lead matter pertained to Assessment Year 2020–21. The petitioner, M/s Real Time Data Services Private Limited, had foreign receipts on which tax had been deducted abroad. However, it failed to file Form No. 67 within the prescribed time under Rule 128 of the Income Tax Rules, 1962. Form No. 67 is required to claim Foreign Tax Credit under the Income Tax Act, 1961. The omission came to light only after the return was processed under Section 143(1)(a) of the Act, when the Assessing Officer (AO) denied FTC amounting to ₹1,01,34,300 due to non-filing of the form within the due date prescribed under Section 139. Upon discovering the error, the petitioner moved an application under Section 154 before the AO seeking rectification, and a revision petition under Section 264 before the Principal Commissioner of Income Tax (PCIT). The PCIT rejected the revision application, holding that he did not have the power to condone delay in filing Form No. 67 beyond the due date prescribed under Rule 128. The department argued that Rule 128 mandates filing of Form No. 67 within the due date under Section 139. There is no specific provision allowing relaxation of this requirement. Power to relax rules, if any, lies with the Central Board of Direct Taxes (CBDT) under Section 119, and not with the Commissioner in revision proceedings. The petitioner contended that section 119 confers wide powers to condone delays in appropriate cases. Rule 128 is procedural and not mandatory in a manner that extinguishes substantive rights. Denial of FTC solely due to delayed filing of Form 67 amounts to unjust enrichment by the Revenue. Form No. 67 had subsequently been filed on September 14, 2022. The High Court observed that while the petitioner had indeed failed to upload Form No. 67 within the prescribed time, such omission was a technical breach. The Court emphasized that denying Foreign Tax Credit of over ₹1 crore merely on procedural grounds would amount to withholding a substantial amount without authority of law, leading to unjust enrichment. Relying on the earlier decision in Vijay Gupta v. Commissioner of Income Tax (2016 SCC OnLine Del 1961), the Bench held that the Commissioner possesses sufficient powers under Section 264 to consider and condone such defaults. The Court noted that even if Section 119 powers were required to be invoked, the Commissioner ought to have exercised such authority instead of rejecting the revision outright. Rather than remanding the matter, the Court issued direct directions to avoid further delay: The Assessing Officer was directed to verify whether Form No. 67 had been furnished. If found filed, the AO shall allow Foreign Tax Credit in accordance with law after verification. If the AO concludes that FTC cannot be granted, a speaking order must be passed. The entire exercise must be completed within two months. In the connected writ petitions, the revision applications had additionally been rejected on the ground of limitation under Section 264. The petitioner argued that limitation periods stood extended during the COVID-19 pandemic. However, the Court chose not to enter into a detailed examination of that issue and allowed the petitions on merits, extending identical relief and directions as in the lead matter. Case Details Case Title: M/S Real Time Data Services Private Limited Versus PCIT Citation: JURISHOUR-90-HC-2026(Del) Case No.: W.P.(C) 959/2024 & CM APPL. 3939/2024 Date: 13/02/2026 Counsel For Petitioner: Satyalipsu Ray Counsel For Respondent: Puneet Rai Click Here To Read Order Read More: DGGI Ahmedabad | HC Grants Bail In GST ITC Fraud Case After Chargesheet Filing

Foreign Tax Credit Can’t Be Denied for Delay in Filing Form No. 67: Delhi High Court

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