Case Law Details
Srikanth Atluri Vijayawada Vs ITO (ITAT Visakhapatnam)
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), which had upheld the denial of Foreign Tax Credit (FTC) for Assessment Year (AY) 2020-21. The dispute arose because the assessee had not filed Form No. 67 within the time prescribed under Rule 128(9) of the Income Tax Rules, 1962 along with the return of income filed under Section 139(1) of the Income-tax Act, 1961.
The assessee claimed that taxes had been paid in the foreign jurisdiction and that denial of the corresponding Foreign Tax Credit would result in double taxation. Although Form No. 67 had not been filed along with the original return, the assessee subsequently filed the form through an application under Section 154 of the Act seeking rectification. The assessee contended that Rule 128(9) does not prescribe any penal consequence or disallowance for delayed filing of Form No. 67 and, therefore, the Foreign Tax Credit could not be denied solely because of the delay.
During the hearing, the assessee relied on the Tribunal’s own decision in the assessee’s case for AY 2021-22, where it had held that the amendment to Rule 128 was clarificatory in nature and that belated filing of Form No. 67 did not disentitle the assessee from claiming Foreign Tax Credit. In that earlier decision, the Tribunal had directed the Assessing Officer to allow the Foreign Tax Credit despite delayed filing of Form No. 67.
The Revenue relied on an earlier decision of the Visakhapatnam Bench in Muralikrishna Vaddi Vs. ACIT/DCIT, where the Tribunal had held that Rule 128(9) uses the word “shall” and therefore Form No. 67 was required to be furnished along with the return of income. Based on that decision, the Revenue argued that the assessee’s appeal should be dismissed.
After considering both decisions, the Tribunal followed its own order in the assessee’s case for the earlier assessment year. It observed that the earlier order had specifically considered and distinguished the decision in Muralikrishna Vaddi. The Tribunal noted that the earlier decision had also considered the Explanatory Memorandum relating to the amendment of Rule 128(9) as well as several decisions of the Bangalore, Hyderabad and Jaipur Benches, and concluded that filing of Form No. 67 is directory in nature and not mandatory.
The Tribunal further observed that the provisions of the Double Taxation Avoidance Agreement (DTAA) override the provisions of the Income-tax Act. Since Article 24 of the applicable DTAA provides for granting credit of taxes paid in another country on the same income, such credit cannot be denied merely because of a procedural lapse arising from delayed filing of Form No. 67.
Respectfully following its own decision in the assessee’s earlier assessment year, the Tribunal allowed the appeal and directed the Revenue to grant credit for the taxes paid by the assessee in the foreign jurisdiction. Accordingly, the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-2 Noida [“Ld.CIT(A)] vide DIN & Notice No.ITBA/APL/S/250/2025- 26/1083059265(1) dated 27.11.2025, arising out of order passed by the Ld.AO u/s 154 of the Income Tax Act, 1961 (“the Act”) dated 21.09.2024 for the A.Y.2020-21.
2. In the above cited appeal, the grievance of the assessee is that Foreign Tax Credit claim was not allowed, as the required certificate was not enclosed along with the return of income filed u/s 139(1) of the Act. In this case, the Ld.AO and the Ld.CIT(A) have denied the Foreign Tax Credit on the ground that Form 67 was not filed within the stipulated time under Rule 128(9) of Income Tax Rules, 1962. Subsequent to filing of return, the appellant had filed Form 67 vide application u/s 154 of the Act, rectifying the original return. The main claim of appellant is that the required taxes were paid in the foreign jurisdiction, thereby discharging his tax liability and disallowing the same would result in double taxation, which is not legal. The appellant’s contention is that Rule 128(9) does not provide for any penal consequence or disallowance in case of delayed filing of Form 67, hence, disallowance of Foreign Tax Credit is not justified. In view of the same, the appellant filed this appeal before ITAT, requesting to allow Foreign Tax Credit to the appellant and set aside the disallowance made by the Ld.CIT(A).
3. The Ld.AR of the appellant filed written submissions/paper book at the time of hearing, containing ITR acknowledgement of the assessee for the impugned assessment year, Form 67 filed and acknowledgement of the same. In the paper book, the Ld.AR of the appellant has enclosed a copy of ITAT order in the assessee’s own case, Srikanth Atluri Vs. Income Tax Officer, Ward-2(3) in ITA No.491/Viz/2024 for the A.Y.2021-22 dated 09.06.2025, where it was held as follows :
“13. From the above amendment we observe that legislature allows the assessee to make the claim for the Foreign Tax Credit even though if it is filed belatedly due to various circumstances. Article 24 of the DTAA also allows the credit for taxes paid in the other countries. Since the amendment being a clarificatory amendment it can be applied retrospectively. Accordingly, we are of the considered view that the Form No. 67 filed belatedly by the assessee i.e., on 19.11.2022 claiming Foreign Tax Credit of Rs. 5,73,915/ – under section 90 of the Act deserves to be allowed.
15. Respectfully following the various judicial pronouncements as cited by Ld.AR, and also considering the amendment to Rule 128 including the Explanatory Memorandum, we direct the Ld. AO to allow the Foreign Tax Credit of Rs.5,73,915/ – to the assessee, even though the Form No. 67 is filed belatedly. Accordingly, grounds raised by the assessee are thus allowed.”
3.1. In view of the above order, the Ld.AR of the appellant requested the Bench to allow the claim in this year also.
4. The Ld.DR relied on the decision of Muralikrishna Vaddi Vs. ACIT/DCIT in ITA No.269/Viz/2021 for the A.Y.2018-19 dated 14.06.2022, wherein, the coordinate Bench of Visakhapatnam has dismissed the appeal of the assessee by holding that, Rule 128(9) of Income Tax Rules, 1962 used the word “shall” and hence Form 67 shall be enclosed along with the return of income. In view of the same, the Ld.DR has pleaded that the assessee’s appeal should be dismissed.
5. After perusing both the orders of coordinate Bench of Visakhapatnam, this Bench takes a view in favour of the assessee by following the decision of ITAT in assessee’s own case for the earlier year for the following reasons :
(a) The decision of the coordinate Bench of this Tribunal in the case of Muralikrishna Vaddi was considered and distinguished with the assessee’s own case for the earlier year while giving relief to the appellant. In the assessee’s own case for the earlier year, the coordinate Bench has taken into consideration the Explanatory Memorandum to the amendment to Rule 128(9) of Income Tax Rules and also several decisions rendered in favour of the assessee by Bangalore, Hyderabad and Jaipur Benches and held that Form No.67 is directory in nature and not mandatory.
(b) Moreover, the provisions of Double Tax Avoidance Agreement (“DTAA”) override the Income Tax Act and hence when the DTAA provides by way of Article 24 for the credit of taxes paid on the same income in another country, it cannot be denied to the assessee on the basis of procedural lapses, which is arising out of the delay in filing of Form No.67. In view of the same, respectfully following the decision of coordinate Bench in assessee’s own case in the earlier year, the assessee’s appeal is allowed and the Revenue is directed to give credit to the taxes paid in foreign jurisdiction.
6. In the result, the appeal filed by the Assessee is allowed.
Order pronounced in the open court on 12th June, 2026.
Author Bio
