Submission Of Form-67 Is Not Mandatory For Availing Foreign Tax Credit: Delhi ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that submission of Form-67 is not mandatory for availing foreign tax credit (FTC).

The bench of Sudhir Pareek (Judicial Member) and S. Rifaur Rahman (Accountant Member) has observed that filing Form-67 is a procedural or directory requirement and is not a mandatory requirement. Therefore, a violation of procedural norms does not extinguish the substantive right to claim credit from the FTC.

A resident taxpayer who has credit for the amount of any foreign tax paid in a country outside India by way of deduction or otherwise will be required to furnish the statement in Form 67 on or before the due date specified for furnishing the return of income.

The appellant/assessee filed the Income Tax return for the assessment year 2020-2021, declaring total income and tax liability as NIL, on account of a claim for tax credit under Section 90/91 of the Income Tax Act, 1961.

The AO has disallowed the foreign tax credit for non-compliance with a procedural provision, i.e., filing of Form-67 along with the ITR, by issuing an intimation order under Section 143(1) of the Income Tax Act of 1961 against the return filed by the assessee, imposing tax liability.

The assessee filed Form 67 on January 21, 2022, along with a rectification application requesting acceptance of Form 67; however, the assessee received an order imposing tax liability. The assessee again received an order under Section 154 showing the same tax liability after submitting the rectification application.

The assessee preferred appeal before the CIT (A), who, after considering the submissions, dismissed the appeal of the assessee and sustained the action of the AO on the basis that requisite Form No.67 was not filed within the prescribed time. The CIT (A) has upheld the order of the AO on the ground that the assessee has failed to file Form 67 within the due date, along with the ITR. Though it is agreed that Form 67 was not filed along with the ITR, it was filed belatedly on January 21, 2022, and is on record.

The assessee contended that both lower authorities failed to appreciate the important fact that the requisite filing of Form 67 is a procedural and directory requirement and is not mandatory. The violation of procedural norms does not extinguish the substantive right to claim credit from FTC.

The tribunal held that the FTC deserves to be allowed to the assessee even if Form 67 was filed by the assessee after the due date of filing the return, and not allowing foreign tax credit by AO (CPC) was nothing but a mistake apparent on record.

The tribunal set aside the orders of the authorities below and restored the matter to the file of the AO with the direction to verify the assessee's claim in respect of foreign tax credit as per law after admitting or accepting Form 67.

Counsel For Appellant: Akash Vajpai

Counsel For Respondent: Om Prakash

Case Title: Suchi Agrawal Versus ITO

Case No.: ITA No:- 601/Del/2024

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