Filling of Form 67 is a directory requirement and not a mandatory requirement to claim Foreign Tax Credit

The assessee is a resident individual taxpayer and has earned income from outside India during the Assessment year 2018-19. The assessee being an ordinary resident while filing her return of Income offered her global income for taxation and claimed foreign tax credit (FTC) for the taxes paid outside India under section 90 of the Act by way of a revised return of income on 31.08.2018.
The assessee did not file Form 67 before filing the return of income. On realising the same, the Assessee filed Form 67 on 18.04.2020.
The revised return of income was processed by CPC and the claim of FTC was disallowed. The Assessee filed a rectification petition before the assessing officer submitting that claim of FTC should be allowed.
The assessing officer upheld the order of CPC while passing its rectification order merely on the ground that the form 67 has not been filed within the due date as specified under the Income Tax Rules.
The order of the AO was upheld by the Commissioner of Income Tax (Appeals) and held that Form 67 is mandatory in nature and should be filed within the due date as specified under the Income Tax Rules.

Whether the assessee should be allowed the claim of foreign taxed paid even if the Form 67 is filed after the due date of filing of return?

The Hon’ble ITAT held that Rule 128(9) does not provide for disallowance of FTC in case of delay in filing of Form 67 and Form 67 is not a mandatory but a directory requirement.
Moreover, DTAA overrides the provisions of Income Tax Act and rules cannot be contrary to the Act.

Merely Procedural delay should not result in denial of the benefit available to the assessee of Double taxation Avoidance Agreement between the countries

Case Law: Ms. Brinda RamaKrishna, v. The Income Tax Officer, Ward 5(3)(1), Bangalore, ITAT Bangalore, ITA. No. 454/Bang/2021

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