The Income Tax Appellate Tribunal (ITAT), Bangalore, has held that a taxpayer cannot be denied foreign tax credit merely because Form No. 67 was filed belatedly. Treating the delay as a procedural lapse, the Tribunal directed the jurisdictional Assessing Officer to examine a claim of ₹1,64,427 on its merits after accepting the form and supporting documents.
The Bench of Prashant Maharishi (Vice President) and Sandeep Singh Karhail (Judicial Member) delivered the ruling in Shashank Shekhar v. Income Tax Officer, Ward 5, concerning assessment year 2017–18 and clarified that its decision required a fresh examination of the claim. It did not grant the disputed credit outright, and the appeal was allowed for statistical purposes.
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The appellant/assessee, an individual resident in India, earned income both in India and the United States during the relevant year. According to the order, he paid US taxes of ₹1,79,971 on income of ₹8,98,392 earned in that country.
He also offered the foreign income to tax in India and claimed foreign tax credit of ₹1,64,427 under Section 90 of the Income-tax Act, 1961. His grounds of appeal additionally relied on Article 25 of the India–USA Double Taxation Avoidance Agreement.
The return was processed through an intimation dated March 6, 2019, under Section 143(1), denying the foreign tax credit.
The assessee subsequently filed Form No. 67 on March 18, 2019, followed by a revised return on March 22, 2019. However, when the revised return was processed on April 12, 2019, the credit was again denied.
The Additional/Joint Commissioner of Income Tax (Appeals), Chennai, dismissed the subsequent appeal on the ground of delay without adjudicating the substantive grounds. The assessee then approached the Tribunal.
The central issue before the Tribunal was whether delayed filing of Form No. 67 under Rule 128(9) could, by itself, prevent an assessee from claiming credit for taxes paid abroad on income also offered to tax in India.
The assessee’s grounds stated that the credit had been disclosed in the original return and consistently reflected in the revised returns. He also emphasised that Form No. 67 had been filed before the revised return was processed.
No one appeared for the assessee at the Tribunal hearing, and no adjournment application was filed. The Bench therefore decided the appeal after hearing the Departmental Representative and examining the material on record.
The Tribunal noted that there was no dispute that the assessee had paid taxes outside India on foreign income that he had also offered to tax in India.
It further recorded that Form No. 67 and the US Form W-2 relating to taxes paid in the United States were included in the paper book. Consequently, the relevant form was available for consideration before the Assessing Officer–Centralised Processing Centre.
Despite the subsequent filing of Form No. 67 and the revised return, the foreign tax credit claim had remained unaccepted.
The Bench examined Rule 128(9) as it stood for the relevant assessment year. At that time, Form No. 67 and the prescribed certificate or statement were required to be furnished on or before the due date for filing the return under Section 139(1).
The Tribunal also referred to the substitution of Rule 128(9) by the Income-tax (Twenty-seventh Amendment) Rules, 2022, effective from April 1, 2022. Under the substituted provision reproduced in the order, the filing period extended to the end of the relevant assessment year, subject to the stipulated return-filing conditions.
However, its conclusion for the assessment year in dispute rested on judicial precedents addressing whether delayed filing of Form No. 67 warranted denial of the substantive credit.
The Tribunal relied on the Mumbai Bench’s decision in Sonakshi Sinha v. CIT, reported in [2022] 142 taxmann.com 414.
That ruling, drawing on earlier Tribunal decisions, treated the time requirement for filing Form No. 67 as directory. The reasoning was that Rule 128(9) did not expressly prescribe denial of foreign tax credit as a consequence of delayed filing.
The precedent also distinguished between failure to comply with a statutory condition carrying specified consequences and delayed compliance with a procedural requirement that did not expressly extinguish the credit.
The Bangalore Bench further relied on the Madras High Court’s decision in Venkatanarayanan Somayaji Lakshminarasimha v. PCIT, reported in [2025] 174 taxmann.com 754. As recorded in the Tribunal’s order, the High Court held that delayed filing of Form No. 67 was a procedural lapse capable of being condoned and could not, by itself, justify denial of foreign tax credit.
Following these authorities, the Tribunal held that mere delay in filing Form No. 67 under the version of Rule 128(9) applicable to the year under consideration would not preclude the assessee from claiming foreign tax credit.
Since the claim had been rejected on a technical ground without examination of its merits, the Bench directed the jurisdictional Assessing Officer to accept Form No. 67 and the related documents and decide the claim afresh.
The Tribunal also directed that the assessee be given a reasonable and adequate opportunity of hearing before any order is passed.
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