Rupesh Kumar Rasiklal Mehta Vs DCIT (ITAT Hyderabad)
Hyderabad ITAT: Belated Filing of Form 67 Cannot Defeat Foreign Tax Credit under Section 90 and DTAA
The Hyderabad ITAT held that Foreign Tax Credit (FTC) cannot be denied merely because Form 67 was filed after the due date prescribed under Rule 128 of the Income-tax Rules. The assessee had offered to tax in India the dividend income earned from the USA, on which tax had already been withheld in the United States, and claimed FTC of ₹85,842 under section 90 read with the India–USA DTAA. The CPC rejected the claim while processing the return under section 143(1) solely on the ground that Form 67 had been furnished belatedly. Following the coordinate Bench decision in Pornprapha Pholdahan v. ITO, the Tribunal held that the filing of Form 67 is only a procedural requirement and cannot override the substantive right to claim relief under section 90 and the applicable DTAA. Since the Revenue had not disputed the assessee’s eligibility for FTC, the payment of foreign tax, or the quantum of the claim, denial of credit merely on account of delayed filing of Form 67 was held to be unsustainable. Accordingly, the Tribunal directed the Assessing Officer to grant the FTC after verification of the foreign tax paid, reiterating that Rule 128 is a machinery provision and cannot curtail the substantive relief conferred by the Act and the DTAA.
