Bengaluru ITAT: Delay in Filing Form 67 Alone Cannot Defeat Foreign Tax Credit Claim

Pornprapha Pholdahan Vs ITO (ITAT Bangalore)

Bengaluru ITAT: Delay in Filing Form 67 Alone Cannot Defeat Foreign Tax Credit Claim

The Bengaluru ITAT held that foreign tax credit (FTC) cannot be denied merely because Form No. 67 was filed after the due date, where the assessee had claimed the credit in the original return of income. The assessee, a resident salaried individual, filed her return within the prescribed due date claiming foreign tax credit of ₹1.36 lakh under the applicable DTAA. However, Form No. 67 was filed subsequently, after the return had already been processed under section 143(1). Consequently, the Central Processing Centre denied the FTC while processing the return. The Tribunal observed that the CPC had acted correctly at that stage because Form No. 67 was not available when the return was processed.

The Tribunal, however, held that the substantive question was whether the assessee was otherwise entitled to foreign tax credit. Referring to judicial precedents, it observed that where Form No. 67 is filed subsequently and is available during the assessment or appellate proceedings, the benefit of foreign tax credit should not be denied solely on account of delayed filing of the form. Since the assessee had claimed the FTC in the return and had later furnished Form No. 67, the Tribunal directed the assessee to submit the form before the jurisdictional Assessing Officer, who was directed to verify the claim and grant the foreign tax credit in accordance with law if the assessee was otherwise eligible. The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

1. This appeal is filed by the assessee, Pornprapha Pholdahan, against the appellate order passed by the Commissioner of Income Tax (Appeals), Aurangabad, dated 12 January 2026, for the assessment year 2018-19. By the said order, the appeal filed by the assessee against the intimation dated 28 February 2019 passed under section 143(1) of the Income Tax Act, 1961, was dismissed.

2. The only issue in this appeal is whether the assessee, an individual salaried resident under the Income Tax Act, is entitled to foreign tax credit. The assessee filed her return of income on 31 August 2018 declaring total income of ₹45,08,054 and claimed credit for taxes paid under the applicable Double Taxation Avoidance Agreement. Form No. 67, in support of the claim, was filed on 21 May 2019. The return was processed under section 143(1) by the Central Processing Centre without granting relief under section 90 of the Acton 238/02/2019. The learned CIT(A) upheld the adjustment and disallowed foreign tax credit of ₹1,36,057. The assessee’s appeal was accordingly dismissed.

3. Aggrieved by the appellate order, the assessee is in appeal before us.

4. We have heard Shri Bhanuprakash Rao, Chartered Accountant, on behalf of the assessee, and Shri Ganesh R. Ghale, Standing Counsel, on behalf of the Department.

5. Briefly stated, the assessee filed her return of income on 31 August 2018, which was also the due date for filing the return. Form No. 67 claiming foreign tax credit was filed later, on 21 May 2019, and therefore was not filed within the time prescribed under Rule 128. Since Form No. 67 was not available when the return was processed, the Central Processing Centre did not grant foreign tax credit of ₹1,36,057. This is the issue in dispute. The intimation under section 143(1) was passed on 28 February 2019. As Form No. 67 was filed only on 21 May 2019, the Central Processing Centre could not have been aware of the supporting particulars for the foreign tax credit claim. The claim appeared only as an entry in the return and was not supported by the required document at that stage. Further, foreign tax credit is allowable while computing the tax payable under section 143(1)(c) of the Act, and no separate communication is required to be issued to the assessee where such credit is not allowed in the intimation. Therefore, we find no infirmity in the processing of the return by the Central Processing Centre in denying the foreign tax credit at that time.

6. The question that remains is whether the assessee should be granted foreign tax credit based on Form No. 67 filed on 21 May 2019. The assessment year involved is 2018-19. The assessee filed her return of income within the due date, i.e., on 31 August 2018, and claimed foreign tax credit of ₹1,36,057 in the return. However, Form No. 67 was not filed along with the return and was not available to the Central Processing Centre at the time of processing. Under section 143(1)(c) of the Act, the Central Processing Centre is required to determine the amount payable or refund due after granting relief allowable under section 89 or under an agreement referred to in section 90 or section 90A. The assessee’s claim is for relief under section 90, though Form No. 67 was filed belatedly. Judicial precedents have held that where Form No. 67 is not filed within time but is available at the assessment or appellate stage, or within such further time as may be permitted by judicial decisions or circulars, the benefit should not be denied merely on account of delay. In substance, the issue is whether the assessee is entitled to foreign tax credit. Since the assessee has claimed the credit in the return and has now filed Form No. 67 supporting the claim, the credit cannot be denied solely because the form was not available to the Central Processing Centre at the time of processing. In view of the above, we direct the assessee to submit the relevant Form No. 67 before the jurisdictional Assessing Officer. The Assessing Officer shall examine the same and, if the assessee is found eligible, grant the foreign tax credit in accordance with law.

7. In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 29^th June, 2026.