ITAT Mumbai: Delay in Filing Form 67 Is Procedural, Cannot Defeat Foreign Tax Credit Claim

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that a delay in filing Form No. 67 is merely a procedural lapse and cannot be used as a ground to deny foreign tax credit (FTC) under Section 90 of the Income Tax Act, 1961.

The ruling came in the case of Sachin Shrikant Khedekar v. ACIT (ITA No. 431/Mum./2026), where the Tribunal allowed the assessee’s appeal and directed the Assessing Officer to examine the FTC claim on merits after considering the relevant documents.

The assessee, a film artist, had filed his return for Assessment Year 2018–19 declaring total income of ₹80.48 lakh, including foreign income of ₹26.84 lakh. Taxes amounting to ₹5,36,896 had been paid abroad, and corresponding FTC was claimed under Section 90. However, while processing the return under Section 143(1), the Centralised Processing Centre denied the credit on the ground that Form No. 67 had not been filed within the prescribed time under Rule 128(9) of the Income Tax Rules, 1962.

Subsequently, the assessee filed Form No. 67 along with supporting documents during rectification proceedings under Section 154. Despite this, both the Assessing Officer and the Commissioner of Income Tax (Appeals), NFAC, rejected the claim, treating the requirement under Rule 128(9) as mandatory.

Before the Tribunal, the assessee argued that the filing requirement is procedural and cannot override the substantive right to claim FTC under Section 90. It was also submitted that Form No. 67 had been furnished during the rectification stage along with proof of foreign tax payment.

The Tribunal, after examining the record, found that Form No. 67 and supporting documents had indeed been filed before the Assessing Officer during rectification proceedings. It observed that the denial of FTC was solely on technical grounds without examining the merits of the claim.

Importantly, the Bench noted that Rule 128(9), as applicable for the relevant assessment year, prescribed a timeline but did not specify any consequence for non-compliance. It also took note of the amendment effective from 1 April 2022, which extended the time limit for furnishing Form No. 67 till the end of the assessment year.

Relying on judicial precedents, including coordinate bench decisions and the Madras High Court ruling, the Tribunal held that procedural requirements should not defeat substantive rights. It ruled that mere delay in filing Form No. 67 cannot preclude an assessee from claiming FTC in respect of taxes paid abroad.

Accordingly, the Tribunal restored the matter to the Assessing Officer with a direction to examine the FTC claim on merits after considering Form No. 67 and supporting evidence. The appeal was allowed for statistical purposes.