The Income Tax Appellate Tribunal, Bangalore has clarified that an assessee cannot be denied foreign tax credit solely because Form 67 was filed belatedly, provided the credit was claimed in the return of income and the form is subsequently submitted. This ruling underscores the substantive entitlement to relief under Section 90 of the Income Tax Act, 1961 over procedural timelines, offering relief to taxpayers who comply with the essential requirements for claiming foreign tax credits.
Background & Facts
The Dispute
The appellant, Pornprapha Pholdahan, a salaried resident individual, filed her return of income for the assessment year 2018-19 on 31 August 2018, declaring a total income of ₹45,08,054. She claimed foreign tax credit of ₹1,36,057 under the applicable Double Taxation Avoidance Agreement (DTAA), supported by Form No. 67. However, Form No. 67 was filed belatedly on 21 May 2019, after the return was processed under Section 143(1) of the Income Tax Act, 1961 on 28 February 2019. The Central Processing Centre (CPC) denied the foreign tax credit as Form No. 67 was not available at the time of processing.
Key Facts
- The assessee filed her return of income on 31 August 2018, the due date for filing
- Foreign tax credit of ₹1,36,057 was claimed in the return
- Form No. 67, supporting the foreign tax credit claim, was filed on 21 May 2019
- The return was processed under Section 143(1) on 28 February 2019
- The CPC denied the foreign tax credit due to the absence of Form No. 67 at the time of processing
- The Commissioner of Income Tax (Appeals), Aurangabad, dismissed the assessee’s appeal by order dated 12 January 2026
Procedural History
- 31 August 2018: Return of income filed declaring total income of ₹45,08,054
- 28 February 2019: Intimation under Section 143(1) passed denying foreign tax credit
- 21 May 2019: Form No. 67 filed belatedly
- 12 January 2026: CIT(A) dismissed the assessee’s appeal
- 26 May 2026: Appeal heard by ITAT Bangalore
- 29 June 2026: ITAT pronounced order allowing the appeal for statistical purposes
Relief Sought
The assessee sought relief in the form of foreign tax credit of ₹1,36,057, which was denied by the CPC and upheld by the CIT(A). The assessee contended that the belated filing of Form No. 67 should not disentitle her from claiming the credit, as the claim was duly made in the return of income.
The Legal Issue
The central question before the ITAT was whether an assessee is entitled to foreign tax credit under Section 90 of the Income Tax Act, 1961 when Form No. 67, supporting the claim, is filed belatedly, i.e., after the return of income is processed under Section 143(1).
Arguments Presented
For the Appellant
The assessee’s counsel, Sri Bhanuprakash Rao, argued that:
- The assessee had claimed foreign tax credit in her return of income filed within the due date
- Form No. 67, though filed belatedly, substantiated the claim and should not disentitle the assessee from relief
- Judicial precedents support the view that belated filing of Form No. 67 should not deny the substantive right to foreign tax credit if the claim is otherwise valid
- The assessee’s entitlement to relief under Section 90 should not be defeated by procedural delays
For the Respondent
The Department’s counsel, Sri Ganesh R. Ghale, contended that:
- Form No. 67 was not filed within the prescribed time under Rule 128 of the Income Tax Rules, 1962
- The CPC could not have granted the foreign tax credit as the supporting form was not available at the time of processing
- The intimation under Section 143(1) is final unless rectified under Section 154, and no further communication is required for denial of credit
- The assessee’s failure to comply with procedural requirements disentitles her from claiming the credit
The Court's Analysis
The ITAT examined the provisions of Section 90 and Section 143(1) of the Income Tax Act, 1961, along with Rule 128, which prescribes the procedure for claiming foreign tax credit. The Tribunal noted that:
- Section 143(1)(c) requires the CPC to determine the amount payable or refund due after granting relief allowable under Section 90 or Section 90A
- The assessee had claimed foreign tax credit in her return, but Form No. 67 was not available to the CPC at the time of processing
- The denial of credit by the CPC was procedurally correct as the supporting document was absent
However, the ITAT relied on judicial precedents which hold that belated filing of Form No. 67 should not disentitle an assessee from claiming foreign tax credit if the claim is substantiated at a later stage. The Tribunal emphasized that the substantive right to relief under Section 90 should not be defeated by procedural delays. The ITAT observed:
"Judicial precedents have held that where Form No. 67 is not filed within time but is available at the assessment or appellate stage, or within such further time as may be permitted by judicial decisions or circulars, the benefit should not be denied merely on account of delay. In substance, the issue is whether the assessee is entitled to foreign tax credit. Since the assessee has claimed the credit in the return and has now filed Form No. 67 supporting the claim, the credit cannot be denied solely because the form was not available to the Central Processing Centre at the time of processing."
The ITAT directed the assessee to submit Form No. 67 before the jurisdictional Assessing Officer, who was instructed to examine the claim and grant the foreign tax credit if the assessee is found eligible.
The Verdict
The ITAT allowed the assessee’s appeal for statistical purposes. The Tribunal set aside the order of the CIT(A) dated 12 January 2026 and directed the jurisdictional Assessing Officer to examine Form No. 67 submitted by the assessee. If the assessee is found eligible, the Assessing Officer shall grant the foreign tax credit of ₹1,36,057 in accordance with law.
What This Means For Similar Cases
Substantive Entitlement Overrides Procedural Delays
This ruling establishes that the substantive entitlement to foreign tax credit under Section 90 cannot be defeated merely because Form No. 67 is filed belatedly. Practitioners should note:
- The assessee’s claim must be substantiated by Form No. 67, even if filed after the return is processed
- The CPC’s denial of credit due to absence of Form No. 67 at the time of processing is not absolute
- Courts and tribunals are inclined to uphold the assessee’s right to relief if the claim is otherwise valid
Assessing Officers Must Re-examine Belated Claims
- Assessing Officers are now directed to re-examine claims for foreign tax credit even if Form No. 67 is filed belatedly
- The onus is on the assessee to submit Form No. 67 before the jurisdictional officer for verification
- This ruling reduces the risk of denial of credit solely on procedural grounds, provided the assessee complies with the substantive requirements
Implications for Taxpayers and Practitioners
- Taxpayers who have claimed foreign tax credit in their returns but filed Form No. 67 belatedly can now seek relief by submitting the form to the Assessing Officer
- Practitioners should advise clients to ensure Form No. 67 is filed as soon as possible, even if belatedly, to substantiate their claims
- This ruling may encourage taxpayers to pursue appeals even if their claims were initially denied due to procedural lapses
