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FTC Cannot Be Denied for Late Form 67: Substantive Right Prevails

Case Law Details

TaxGuru Citation
2026 taxguru.in 3833
Case Name
John Kishore Vs DCIT (ITAT Chennai)
Date of Judgement/Order
Only available for paid members
Related Assessment Year
2020-21
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John Kishore Vs DCIT (ITAT Chennai)

The issue before the ITAT Chennai was whether Foreign Tax Credit (FTC) can be denied merely because Form 67 was not filed within the due date prescribed under Rule 128(9).

The assessee, who was deputed to Germany, had claimed FTC of ₹5.73 lakh in the return. However, CPC denied the credit during processing u/s 143(1) solely due to non-filing of Form 67 within time. Though the assessee later filed Form 67 and supporting documents, rectification was rejected and the CIT(A) upheld denial treating the requirement as mandatory.

The Tribunal disagreed with this approach and held:

  • Filing Form 67 within due date is only a procedural / directory requirement, not mandatory.
  • Denial of FTC on such technical lapse would defeat the substantive right under section 90 / DTAA.
  • Relied on Delhi High Court (Real Time Data Services Pvt Ltd, 2026) and multiple ITAT rulings holding that procedural delay cannot extinguish substantive relief.

ITAT emphasized that:

  • No adverse consequence is prescribed in Rule 128 for delay.
  • DTAA provisions override procedural rules.
  • Denial of FTC would amount to unjust enrichment by the Revenue.

Accordingly, the Tribunal:

  • Set aside the order of CIT(A),
  • Restored the matter to the AO, and
  • Directed the AO to examine Form 67 and grant FTC if otherwise eligible.

The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

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Author Info

CA Vijayakumar Shetty
Qualification: CA in Practice
Company: Shetty & Co, Chartered Accountants, Mangalore
Location: Mangalore, Karnataka
Articles Published: 6,941

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