Sanjeev Sivasankaran Menon Vs DCI (ITAT Bangalore)
Form 67 Filed Late, US Tax Paid on Time: Bengaluru ITAT Allows Foreign Tax Credit Claim
An Indian taxpayer disclosed dividend income from shares in a US company and claimed credit for the tax paid on that dividend in the United States. The Centralised Processing Centre (CPC) denied the credit because Form 67 had not been filed within the prescribed time. The taxpayer filed the form later, but his rectification request and first appeal failed.
The Bengaluru ITAT has now held that delay in filing Form 67 should not, by itself, defeat the foreign tax credit claim. Following its decision in the taxpayer’s own case for another assessment year, it directed the Assessing Officer (AO) to allow credit of ₹1,79,378, subject to verification of the US tax paid and the corresponding income offered to tax in India.
The dividend and the tax credit claimed
Sanjeev Sivasankaran Menon reported salary income of ₹87,15,849 and income from other sources of ₹13,54,444 for assessment year 2019–20. The latter included a dividend of ₹7,17,560 from shares in a US company allotted to him under an employee stock option plan (ESOP).
The order records that ₹1,79,378 was paid as tax in the USA on that dividend. The taxpayer included the dividend in his Indian return and claimed foreign tax credit in respect of the US tax.
While processing the return under section 143(1), the CPC denied the credit through an intimation dated 18 March 2021. The taxpayer subsequently filed Form 67 on 16 August 2023 and applied for rectification under section 154. That application was rejected on 20 November 2023.
Why the first appeal failed
Before the Commissioner of Income Tax (Appeals), the taxpayer stressed that the dividend had been offered to tax in India and tax had actually been paid on it in the USA. His argument was that filing Form 67 within the prescribed time was a procedural requirement; missing that deadline should not extinguish an otherwise valid claim for credit.
The CIT(A) did not accept the submission and upheld the denial. The taxpayer therefore approached the ITAT.
At the Tribunal hearing, his representative pointed to an earlier order in his own case for assessment year 2021–22: ITA No. 203/Bang/2025, decided on 13 October 2025. According to the representative, the same Form 67 issue had already been decided in his favour. The department supported the orders below but, as the present Bench recorded, identified no material difference between the two years on the issue before it.
What the earlier order had decided
The earlier Bengaluru Bench had considered a return in which the taxpayer claimed foreign tax credit but did not file Form 67 along with the return. The form was furnished later. That Bench regarded the failure to file it with the return as a technical violation that could not alone justify refusing credit where the underlying foreign tax claim was otherwise supportable.
It had also addressed the CIT(A)’s view concerning lack of an express power to condone the delay. Rather than treating that objection as the end of the matter, the earlier Bench sent the issue to the AO because the AO had not had an opportunity to verify Form 67. It directed that credit be granted if the form and claim were found correct.
The distinction is central to the present order. The Tribunal’s approach protects the taxpayer’s opportunity to claim credit despite late filing, while preserving verification of the facts on which that credit depends.
The ruling for AY 2019–20
Following the order in the taxpayer’s own case, the present Bench held that he was entitled to foreign tax credit in accordance with that view. It directed the AO to allow ₹1,79,378, subject to verification of the tax paid in the USA and the corresponding dividend income offered to tax in India. The taxpayer’s appeal was allowed.
The ITAT did not treat the filing date of 16 August 2023 as an automatic bar to the claim. Equally, its direction was not for an unconditional refund based only on the figure stated in the return. The AO must carry out the verification specified in the order before giving effect to the credit.
Author’s comment
This decision is useful where foreign income was disclosed in the Indian return and credit for foreign tax was claimed, but Form 67 was filed later. It draws a practical line between the timing of a supporting form and the substance of the claim. The CPC’s denial arose from the delayed form; the ITAT required the claim to be considered once the relevant particulars were available for verification.
The fact that the taxpayer had already succeeded on the same issue in his own case was particularly important. The department could not point to a material distinction for assessment year 2019–20, so the Bench followed that earlier ruling.
For implementation, the taxpayer still needs to support the link between the ₹7,17,560 US dividend included in Indian income and the ₹1,79,378 US tax for which credit is sought. The order grants relief from rejection solely on account of the delayed Form 67; the final credit remains subject to the AO’s verification.
Cases Discussed
- Sanjeev Sivasankaran Menon, ITA No. 203/Bang/2025, AY 2021-22, order dated 13.10.2025 — Coordinate Bench decision in the assessee’s own case followed on the identical issue of delayed filing of Form 67 and Foreign Tax Credit.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The present appeal filed by the assessee for A.Y. 2019-20 is against the order of the Ld. Commissioner of Income Tax (Appeals) [hereafter “Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) dated 03.12.2025.
2. In the memo of appeal, the assessee has raised various grounds, which are interconnected and revolve around the denial of Foreign Tax Credit of Rs. 1,79,378 in respect of tax paid in the USA on dividend income received from shares allotted under the Employee Stock Option Plan (ESOP).
3. The brief facts of the case are that the assessee is an individual and had declared salary income of Rs. 87,15,849/- and income from other sources of Rs. 13,54,444/-. The income from other sources included dividend income of Rs. 7,17,560/- received from shares of a US company allotted to the assessee under ESOP. The assessee had paid tax of Rs. 1,79,378/- in the USA on the said dividend income. The impugned dividend was included in the gross total income declared in the ROI filed for the year under consideration. Accordingly, the assessee claimed credit for taxes paid in the USA in the ROI. However, while processing the return u/s 143(1) of the Act vide intimation dated 18.03.2021, the CPC denied the benefit of foreign tax credit. The assessee subsequently filed Form No. 67 on 16.08.2023 and also filed an application for rectification u/s 154 of the Act. The said application was rejected vide order dated 20.11.2023.
4. Aggrieved by the rejection of the claim, the assessee filed an appeal before the Ld. CIT(A) and submitted that the tax had actually been paid in the USA on the dividend income which was also offered to tax in India. It was contended that the filing of Form No. 67 on or before the due date prescribed u/s 139(1) of the Act is a procedural requirement and the delay in filing the said Form should not result in denial of the substantive claim of Foreign Tax Credit. The Ld. CIT(A), however, did not accept the contention of the assessee and upheld the denial of Foreign Tax Credit.
5. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. The Ld. AR filed a paper book running from pages 1 to 13 and reiterated the submissions made before the lower authorities. The Ld. AR further submitted that the issue involved in the present appeal is squarely covered by the decision of the Coordinate Bench of this Tribunal in the assessee’s own case in ITA No. 203/Bang/2025 for A.Y. 2021-22, wherein the identical issue relating to Foreign Tax Credit has already been decided in favour of the assessee. The Ld. AR therefore submitted that the present appeal may also be decided in accordance with the said decision.
6. The Ld. DR, on the contrary, vehemently supported the orders of the lower authorities. However, the Ld. DR could not point out any material difference in the facts or the issue involved in the present year vis-à-vis the assessee’s own case for A.Y. 2021-22.
7. We have heard the rival submissions of both the parties and perused the materials available on record. The limited issue before us relates to the denial of Foreign Tax Credit of Rs. 1,79,378/- in respect of tax paid in the USA on dividend income of Rs. 7,17,560/- by the lower authorities on account of delayed filing of Form-67. At the outset, we note that the very same issue has already been considered by the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2021-22 in ITA No. 203/Bang/2025. The Hon’ble bench, vide order dated 13th October 2025, decided the issue in favour of the assessee. The finding of the Hon’ble Tribunal is reproduced below:
“6. We have heard the arguments of both sides and perused the materials available on record.
7. From the facts available on record and the materials, we understand that the only issue to be decided in this appeal is whether the disallowance made by the CPC which was confirmed by the Ld.CIT(A) in respect of the foreign tax credit paid in the other country is correct or not. Admittedly, the assessee had paid tax on the income in foreign countries for which the assessee had also furnished the Form no. 67 and therefore as per the DTAA, the tax paid on the income earned in the foreign country could not be again subjected to tax under the provisions of the Act. The only requirement to be done by the assessee is that the necessary claims should be made in Form 67. The assessee had filed his return of income in time and also claimed in the tax paid on the income earned in the foreign country but the necessary Form 67 was not filed along with the return of income. Therefore the CPC had disallowed the said claim. The Ld.CIT(A) also relied on the provisions and the CBDT circular and confirmed the said disallowance. From the facts, we found that the assessee had filed the Form 67 on 02/08/2022 and therefore there is no dispute about the fact that the income has suffered tax in another country and therefore the said income should not be again taxed in India as per the DTAA. The non-filing of Form 67 along with the return, at the best can be treated as a technical violation and on that basis, the disallowance could not be made. The Ld.CIT(A)’s finding that the authorities has no express powers vested them to condone the delay in filing Form 67 is also not correct. This view was taken by the Coordinate Bench of this Tribunal in a number of cases and therefore we are also taking a view that assessee is entitled for deduction on the foreign tax remittance based on the Form no. 67 filed. Anyhow, the AO had no opportunity to verify the said Form 67 and therefore in order to render substantial justice, we are remitting this issue to the file of the AO to verify the Form 67 and if found correct, grant the relief of foreign tax credit to the assessee.
8. In the result, the appeal filed by the assessee is allowed for statistical purposes.”
7.1 Respectfully following the decision of the Coordinate Bench in the assessee’s own case for A.Y. 2021-22, we hold that the assessee is entitled to Foreign Tax Credit in accordance with the view taken therein. Accordingly, the AO is directed to allow the Foreign Tax Credit of Rs. 1,79,378/-, subject to verification of the tax paid in the USA and the corresponding income offered to tax in India. Thereby, the grounds raised by the assessee are accordingly allowed.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 24th Sept. 2026.
