Delay in filing form 67 for claiming Foreign Tax Credit – Mandatory or Directory requirement

Recently, the division bench of Bangalore ITAT in the case of M/s 45 Hertz software India Pvt Ltd vs ACIT has allowed foreign tax credit even though Form 67 was filed only during assessment stage. ITAT followed single member bench decision to hold that requirement under 128(9) is only directory in nature and not mandatory. It further emphasizes on settled law that provisions under the Act does not override DTAA.

Extract of the order is reproduced herein below.

6. There is no dispute that the Assessee is entitled to claim FTC. On perusal of provisions of Rule 128 (8) & (9), it is clear that, one of the requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.67. This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms.Brinda Kumar Krishna vs.ITO in ITA no.454/Bang/2021 by order dated 17/11/2021.

7. It’s a trite law that DTAA overrides the provisions of the Act and the Rules, as held by various High Courts, which has also been approved by Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd. reported in (2021) 432 ITR 471.

8.We, accordingly, hold that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidence in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee.

 

The copy of the order is as under:

 

Delay in filing form 67 for claiming Foreign Tax Credit - Mandatory or Directory requirement