Pune ITAT: Foreign Tax Credit Cannot Be Denied Merely for Delay in Filing Form 67

Hemant Ramchandra Pawar Vs DCIT (ITAT Pune)

Pune ITAT: Foreign Tax Credit Cannot Be Denied Merely for Delay in Filing Form 67

The Pune ITAT held that Foreign Tax Credit (FTC) is a substantive right available under the Act and the applicable DTAA, and therefore cannot be denied merely because Form 67 was filed belatedly. The Tribunal directed the Assessing Officer to verify the claim and grant the eligible FTC.

The assessee, an employee of Tech Mahindra, was deputed to Denmark during AY 2019-20 and earned salary income there. The foreign salary was duly offered to tax in India and the assessee claimed Foreign Tax Credit of ₹2.25 lakh in respect of taxes paid in Denmark. However, although the FTC claim was disclosed in the return itself, Form 67 was filed 603 days late, resulting in denial of the credit by CPC and creation of a tax demand.

The Tribunal noted that the assessee had disclosed the foreign income and foreign taxes paid in the return of income itself through the relevant schedules. Thus, the Department was already in possession of all material facts relating to the FTC claim. The credit was denied solely because Form 67 was not filed within the prescribed time limit under Rule 128.

Relying on several decisions including Akshay Rangroji Umale, Uttamkumar Tukaram Patil, Vinodkumar Lakshmipathi, Deepak Shimoga Padmaraju, and Dheeraj Tolaram Talreja, the Tribunal reiterated that filing of Form 67 is directory and procedural in nature, and not a mandatory condition for claiming FTC. It emphasized that procedural requirements cannot defeat a substantive relief granted under the Act and the applicable DTAA.

The ITAT further observed that Rule 128 does not provide for denial of FTC merely because Form 67 is filed belatedly. Once the foreign income has been offered to tax in India and the foreign taxes paid are verifiable, the credit cannot be refused on a technical ground. The Tribunal also noted that treaty benefits under the DTAA cannot be curtailed by procedural rules.

Accordingly, the Tribunal held that filing Form 67 during the pendency of assessment proceedings constitutes sufficient compliance, directed the Assessing Officer to verify the foreign tax payment details and grant the eligible Foreign Tax Credit of ₹2.25 lakh in accordance with law. The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT PUNE

This is an appeal filed by the Assessee against the order of the Learned Additional/Joint Commissioner of Income Tax (Appeals)-5, Chennai [Ld. Addl./JCIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2019-20 on 09/01/2026.

Submission of Ld. AR:

2. Ld. AR submitted a written statement along with case laws. The relevant paragraphs of the written statement are reproduced hereunder:

“1. The appellant is an individual assessee having PAN: AGIPP6832D and is resident in India for Assessment Year 2019-20.

2. The appellant filed his return of income on his own without seeking any professional help for the A.Y. 2019-20 on 25.07.2019 vide acknowledgement number 709507240250719. The total income declared for the year was Rs.28,42,230/-.

3. During the relevant previous year, the appellant was deputed by Tech Mahindra Limited to Denmark as Principal Architect. The deputation agreement dated 12.11.2018 records that the appellant was to perform His duties in Denmark and that the host company during deputation was Tech Mahindra Limited, Denmark.

4. The appellant received salary income in Denmark. The foreign salary income was duly offered to tax in India in the return of income filed for Α.Υ. 2019-20.

5. On such foreign salary income, the appellant paid tax in Denmark amounting to DKK 22,774. Accordingly, the appellant claimed Foreign Tax Credit of Rs.2,25,600/- under section 90 of the Income-tax Act, 1961 Read with the applicable India-Denmark Double Taxation Avoidance Agreement.

6. Form No.67 could not be filed on or before the due date prescribed under section 139(1) of the Act. The delay was purely procedural, bona fide and unintentional as the appellant was not aware of such form prescribed under Income Tax Rules.

7. Subsequently, after a delay of 603 days, the appellant filed Form No.67 and supporting claim details while filing the rectification request under section 154 on 19.03.2021.

8. CPC passed rectification order under section 154 dated 03.04.2021 and denied the Foreign Tax Credit of Rs.2,25,600/- claimed by the appellant. Consequently, a demand of Rs.2,91,270/- was raised.

9. The appellant preferred appeal before the learned CIT(A). The learned CIT(A) condoned the delay in filing the appeal before the first appellate authority. However, the appeal was dismissed on merits only on the ground that Form No.67 was not filed within the time prescribed under Rule 128 of the Income-tax Rules, 1962.

10. The appellant submits that Foreign Tax Credit is a substantive right and the delay in filing Form No.67 is only a procedural lapse. The issue is squarely covered in favour of the appellant by the Pune Bench decisions in Uttamkumar Tukaram Patil v. ITO and Akshay Rangroji Umale v. CPC.

11. Being aggrieved by the order of the learned CIT(A), the appellant has preferred the present appeal before this Hon’ble Tribunal.

• • The present appeal is preferred by the appellant against the order passed by the learned CIT(A) / Addl. JCIT(A)-5, Chennai under section 250 of the Income-tax Act, 1961 dated 09.01.2026, whereby the learned CIT(A) confirmed the denial of Foreign Tax Credit of Rs.2,25,600/- claimed under section 90 of the Act read with the applicable India-Denmark DTAA.
  • The issue before this Hon’ble Tribunal is whether Foreign Tax Credit, which is otherwise allowable under section 90 read with the applicable DTAA, can be denied merely on the ground that Form No.67 was filed belatedly.
  • The appellant respectfully submits that Foreign Tax Credit is a substantive right. Filing of Form No.67 is procedural and intended to enable verification of the claim. Delay in filing Form No.67 cannot defeat the substantive right of the appellant to claim credit of foreign taxes paid in Denmark, particularly when the foreign income has been offered to tax in India and the corresponding foreign tax has been paid in Denmark.”

Submission of Ld. DR:

3. The Ld. DR relied on the order of Ld. CIT(A).

Findings and analysis:

4. In this case admitted fact is that Assessee had claimed Foreign tax credit of Rs.2,25,600/-. The assessee was deputed by Tech-Mahindra Ltd. to Denmark. The assessee received salary from Tech-Mahindra Limited to Denmark for the deputation period. Assessee filed return of income disclosing the foreign salary and claiming foreign tax credit. Admittedly, there was a delay in filing Form No. 67 as per Rule 128 of Income Tax Rules. However, Assessee had filed Form 67 on 19/03/2021. Copy of Form 67 is at Page No. 66 to 68 of the paper book. Assessee had filed return of income for AY 2019-20 u/s 139 of the Act on 25/07/2019. Assessee claimed foreign tax credit in the said return. Copy of the return filed by the assessee is at Page Nos. 26 to 59 of the paper book. In the Schedule FSI and Schedule TR Assessee had provided details of salary earned outside India and taxes paid outside India. Thus, all the facts were mentioned in the return of income which was filed u/s 139(1) of the Act within the statutory time limit. The Assessee was denied credit for taxes paid outside India only because Form 67 was filed beyond the statutory time limit.

4.1 In the case of Uttamkumar Tukaram Patil Vs. ITO in ITA No. 2693/PUN/2024 for AY 2019-20, order dated 02.05.2025, ITAT, Pune directed the Assessing Officer to verify the Assessee’s claim of foreign tax credit and allow it. Similarly, in the case of Akshay Rangroji Umale Vs. DCIT in ITA No. 1428/PUN/2023 for AY 2019-20 on identical facts held that filing of Form 67 is directory in nature. The relevant paragraph of the ITAT order is reproduced as under :

Quote, “16. The Hon‟ble Apex Court in ‘CIT Vs G. M Knitting Ltd‟ reported 379 ITR 456 (SC) & 93 CCH 475 which in turn appreciating the ratio laid by Hon‟ble Bombay High Court in ‘CIT Vs Shivanand Electronics [1994] 209 ITR 63 (Bom.) held that it shall be sufficient compliance with the law if requisite forms are filed during the assessment proceedings and before the final order of the assessment was made. The Co-ordinate bench in ‘Sonakshi Sinha Vs CIT‟ reported in 66 CCH 0050, dealing with identical issue of belated filing of return and form no 67 adjudicated that, under amended rule w.e.f. 01/04/2022, the assessee can file requisite form on or before the end of the assessment year therefore, assessee is eligible for FTC, though not in accordance with rule 128(9) of IT Rules. We therefore, respectfully following the aforestated judicial precedents, hold that belated filing of form no 67, certificate & statement as envisaged under s/r (8) anytime before it is actually processed or before the final assessment is actually made is sufficient compliance of s/r (9) of IT Rules, thus entitled to FTC. Thus, all other contentions and grounds of appeal are adjudicated accordingly.” Unquote.

4.2 In the case of Dheeraj Tolaram Talreja Vs. ITO (2026) 183 taxmann.com 551 (Mumbai-Trib.), the ITAT Mumbai held as under :

“15. Insofar as the claim of foreign tax credit is concerned, it is clarified, as a matter of principle, that filing of Form No. 67 is directory in nature and not mandatory, and therefore, foreign tax credit cannot be denied solely on the ground of delay in filing the said form. However, since the quantification and allowability of foreign tax credit is intrinsically dependent upon the correct determination of residential status and the extent of income chargeable to tax in India, the Assessing Officer shall re-examine the claim of foreign tax credit in the light of the aforesaid directions and the settled legal position, and grant the eligible credit in accordance with law.”

4.3 In the case of Vinodkumar Lakshmipathi Vs. CIT(A) NFAC, Delhi (2022) 145 taxmann.com 235 (Bangalore-Trib.), the ITAT, Bangalore held as under :

“It was submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for non-compliance of any procedural provision. As the provisions of DTAA override the provisions of the Act, the Assessee has vested right to claim the FTC under the tax treaty, the same cannot be disallowed for mere delay in compliance of a procedural provision.

14. The learned DR reiterated the stand of the revenue that rule 128(9) of the Rules, is mandatory and hence the revenue authorities were justified in refusing to give FTC. He also submitted that the issue was debatable and cannot be subject matter of decision in Sec.154 proceedings which are restricted in scope to mistakes apparent on the face of the record.

15. In his rejoinder, the learned counsel for the Assessee submitted that Form No.67 was available before the AO when the intimation u/s.143(1) of the Act dated 28.5.2020 was passed. He pointed out that the AO or the CIT(A) did not dismiss the Assessee application for rectification u/s.154 of the Act on the ground that the issue was debatable but rather the decision was given that the relevant rule was mandatory and hence non-furnishing of Form No.67 before the due date u/s.139(1) of the Act was fatal to the claim for FTC.

16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee‘s application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.

17. In the result, the appeal is allowed.”

6. In view of the above order of the Tribunal, we direct the AO to give credit for foreign tax as per Form 67 filed on 22.9.2018 before Ld. CIT(A) after due verification.

7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.”

4.4 Similarly, in the case of Deepak Shimoga Padmaraju Vs. ADIT/ITO (2024) 162 taxmann.com 96 (Bangalore-Trib.), the ITAT Bangalore Tribunal held as under :

“15. In his rejoinder, the learned counsel for the Assessee submitted that Form No.67 was available before the AO when the intimation u/s.143(1) of the Act dated ITA No.680/Bang/2022 Vinodkumar Lakshmipathi, Bangalore Page 9 of 10 28.5.2020 was passed. He pointed out that the AO or the CIT(A) did not dismiss the Assessee application for rectification u/s.154 of the Act on the ground that the issue was debatable but rather the decision was given that the relevant rule was mandatory and hence non-furnishing of Form No.67 before the due date u/s.139(1) of the Act was fatal to the claim for FTC.

16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee‘s application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.

17. In the result, the appeal is allowed.” 6. In view of the above order of the Tribunal, we direct the AO to give credit for foreign tax as per Form 67 filed on 22.9.2018 before Ld. CIT(A) after due verification.”

7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. 5. Respectfully following the above judgment, we direct the AO to give credit for foreign tax credit as per Form No.67 filed on 22/10/2022 after due verification.”

5. Therefore, ITAT held that if Form 67 is filed during the assessment proceedings, it is sufficient compliance of Rule 128 of the Income Tax Rules. Respectfully, following judicial precedents, we hold that Assessee is eligible for foreign tax credit as Assessee had filed Form 67 during the pendency of assessment proceedings. In these facts, we direct the Assessing Officer to verify the Assessee’s claim of foreign tax credit based on Form 67 and return of income and allow it if proper.

6. In the result the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 10^th June, 2026