Tanagundi Bhogeswara Prasad Vs ADIT (ITAT Bangalore)
Foreign Tax Credit Denied for Missing Form 67: Bangalore ITAT Gives Salaried Taxpayer an Opportunity to Prove His Claim
An Indian resident who offers foreign salary to tax in India may be entitled to credit for tax paid on that income abroad. But what happens when the taxpayer claims the credit in the return and omits Form 67? The Bangalore ITAT considered this issue in Tanagundi Bhogeswara Prasad v. ADIT, CPC, ITA No. 1435/Bang/2026, order dated 22 September 2026, for AY 2020–21.
The assessee had worked for a company in Norway between 18 October 2018 and 15 June 2019. For FY 2019–20, he was a resident in India. The order records that his salary was taxed in Norway and was also offered to tax in India. In his Indian return, he declared total income of ₹80,97,980 and claimed foreign tax credit of ₹2,40,517 under section 90 in respect of income of ₹19,08,896 earned in Norway. The credit was denied because Form 67, prescribed under Rule 128, had not been filed with the return.
From return processing to a delayed appeal
The return was processed under section 143(1) without granting the foreign tax credit. The assessee then sought rectification under section 154, but the Central Processing Centre rejected the application by an order dated 29 January 2022. The order records a revised demand of ₹2,69,860 after denial of the credit.
The assessee appealed against the rectification order. According to the CIT(A), that appeal was filed on 9 September 2022, approximately 190 days late. The assessee explained that he was a salaried taxpayer unfamiliar with the relevant provisions and requested condonation. The CIT(A) held that sufficient cause had not been shown, declined to condone the delay and dismissed the appeal without deciding the credit claim on its merits.
Before the Tribunal, the assessee said that this was his first year dealing with foreign income and the compliance required to claim credit for foreign tax. He had believed that reporting the income and claiming relief under section 90 in the return was sufficient. His case was that the substantive credit should not be lost because Form 67 had not been filed at the required stage.
What the Tribunal decided
The Tribunal noted that the assessee had offered the foreign salary to tax in India and claimed credit for tax paid in Norway, but had not filed Form 67 along with the return. It then allowed the appeal for statistical purposes, directing the assessee to file Form 67 before the Assessing Officer and furnish details of the foreign tax credit claimed.
The Assessing Officer must examine those details and, if the claim is found to be in order, grant the credit after verification. Thus, the Tribunal gave the assessee an opportunity to establish his entitlement. It did not grant ₹2,40,517 outright or dispense with verification of the foreign income, foreign tax and amount of credit allowable.
The order also does not contain a separate, detailed discussion expressly condoning the delay before the CIT(A). Its operative direction nevertheless sends the foreign tax credit claim to the Assessing Officer for examination despite the CIT(A)’s dismissal on limitation.
Author’s comment
The practical value of this decision lies in its treatment of Form 67 as a compliance issue that could be addressed through verification, where the taxpayer had already declared the foreign income in India and claimed credit in the return. It is particularly relevant where an individual encounters foreign tax credit procedures for the first time. The assessee must now complete the filing directed by the Tribunal and support the credit with the necessary particulars; the ruling is an opportunity to prove the claim, not an automatic allowance.
There are also apparent copying errors in the uploaded order that should be checked before citing it in a submission. Although its opening page identifies this appeal as ITA No. 1435/Bang/2026, Tanagundi Bhogeswara Prasad, later page headers refer to a different case. The order also states that a return for FY 2019–20 was filed on 31 March 2020 under section 139(4), a date and description that do not sit comfortably together. These errors do not change the operative direction set out above, but the relevant return and appeal records should be checked if the procedural dates matter to an argument.
Cases Discussed
- Some the Course versus Assistant Commissioner of Income Tax, Bangalore (ITA No. eight through 2/Bangalore/2022)
FULL TEXT OF THE ORDER OF ITAT BANGALORE
01. This appeal is filed by Tanagundi Bhogeswara Prasad (the assessee/appellant) for assessment year 2020–21 against the appellate order dated 22 January 2026 passed by the Commissioner of Income Tax (Appeals), Agra (the learned CIT(A)). By that order, the learned CIT(A) dismissed in limine the assessee’s appeal against the rectification order Director of Income Tax, Central Processing Centre, Bengaluru (the learned AO), on the ground that it was barred by limitation.
02. The solitary issue involved in this appeal is that the assessee is an employee deriving salary from a company based at Norway from 18 October 2018 to 15 June 2019. The assessee was denied the foreign tax credit of ₹ 240,517.
2. The Assessee has raised the following grounds of appeal:
1. That the order of the learned Commissioner of Income Tax (Appeals) passed u/s 250 of the Act in so far is prejudicial to the interest of the appellant, is bad and erroneous in law and against the facts and circumstances of the case.
2. That the learned Commissioner of Income Tax (Appeals) ought to have recognized the fact that the appellant did not receive the mail or any text for the order passed u/s 154 of the Act.
3. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not recognizing that the appellant was under the bono fide belief that the filing of the return of income is sufficient.
4. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not accepting that the AY 2020- 21 was the first year of filing the form 67 for the appellant. Each of the above grounds are prejudicial to one another and the appellant craves the leave of the Hon’ble Income Tax Appellant Tribunal to add, delete, modify or otherwise amend the grounds at the time of hearing.
3. Briefly stated, the assessee was employed by Envy Limited, Norway, and earned salary return of income, declaring total income of ₹ 8,097,980, and claimed double taxation relief of ₹ 240,517 under section 90 in respect of income of ₹ 1,908,896 earned in Norway. As the relief was not granted, the assessee filed an application under section 1 54 of the Income Tax Act, which was also rejected. Against that order, the assessee preferred an appeal before the learned CIT(A). During the appellate proceedings, several notices were issued to the assessee, but no reply was filed. The learned CIT(A) noted that the appeal against the order dated 29 January 2022 was filed on 9 September 2022, as per Form No. 35, resulting in a delay of about 190 days. The assessee explained that he was a salaried taxpayer and was unaware of the provisions of the Act and therefore sought condonation of the delay. The learned CIT(A), however, held that sufficient cause had not been shown, declined to condone the delay, and dismissed the appeal.
4. Aggrieved by the order, the assessee is in appeal before us. Shri Vignesh, Chartered Accountant, appeared for the assessee, and Shri Sandeep Kumar, Additional Commissioner of Income Tax, appeared for the Revenue. Both parties were heard. The learned authorised representative has placed a paper book containing 22 pages, in which he has relied upon the decision of the coordinate bench in the case of Some the Course versus Assistant Commissioner of Income Tax, Bangalore (ITA No. eight through 2/Bangalore/2022).
5. We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee is an individual resident in India for financial year 2019–20. He was employed with Envy Limited, Norway, from 18 October 2018 to 15 June 2019, and his salary for that period was taxed in Norway. Since as an Indian resident, his global income was taxable in India, the same salary income was also offered to tax in India for the relevant financial year, resulting in double taxation in both Norway and India. While filing the return of income, the assessee claimed foreign tax credit of ₹ 240,517 under section 90 of the Income Tax Act, read with the Double Taxation Avoidance Agreement between India and Norway. The return was filed under section 139(4) on 31 March 2020, declaring total income of ₹ 8,097,980 and claiming relief under section 90. However, Form No. 67, prescribed under Rule 128 of the Income Tax Consequently, the foreign tax credit was denied. The assessee’s case is that this was his first year of dealing with foreign income and the related compliance under Rule 128, and that, being a salaried individual with no background in income tax or international taxation, he was under a bona fide belief that filing the return and claiming relief under section 90 was sufficient, with no separate requirement to file Form No. 67. The return was processed under section 143(1), denying the foreign tax credit. Thereafter, the assessee filed a rectification application under section 154, which was also rejected by the Central Processing Centre on 29 January 2022, raising a revised demand of ₹ 269,860 without allowing the foreign tax credit of ₹ 240,517. The assesse e contends that the substantive right to claim foreign tax credit cannot be denied merely because Form No. 67 was filed belatedly. Accordingly, he seeks allowance of the foreign tax credit.
6. In the result, we allow the assessee’s appeal with a direction to the assessee to file Form No. 67 before the learned Assessing Officer and furnish the details of the foreign tax credit claimed. The learned Assessing Officer shall examine the same and, if the claim is found to be in order, grant the foreign tax credit after verification.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 22nd September, 2026.
