Foreign Tax Credit Cannot Be Denied for Late Filing of Form 67: ITAT Delhi Rules in Favour of Assessee

Case Background

Case: Parag Gupta Vs ITO (ITAT Delhi)
Assessment Year: 2021-22
**Appeal No.😗* ITA No.661/Del/2026
Order Date: 30.06.2026

Overview of the Dispute

This case before the Income Tax Appellate Tribunal, Delhi, centered on a foundational question in cross-border taxation: can foreign tax credit (FTC) be denied to a resident assessee solely because Form No. 67 was submitted after the due date prescribed under Section 139(1) of the Income-tax Act, 1961, even though it was filed within the extended timeline permitted under Section 139(4)?

The assessee, a salaried individual employed with Amazon Seller Services Pvt. Ltd., earned income from both India and the United States. Being a resident for Indian tax purposes, he was obligated to offer his global income to tax in India. Taxes were duly paid in the USA on the salary earned there, and accordingly, the assessee claimed FTC amounting to ₹13,91,287/- under Section 90/Section 90A of the Act in his return of income filed on 24.12.2021.

Form No. 67, the requisite documentary proof evidencing foreign taxes paid, was submitted on 10.01.2022 — after the Section 139(1) due date but clearly within the outer limit available under Section 139(4) of the Act.

Action Taken by the Revenue Authorities

The Centralized Processing Centre (CPC), Bangalore processed the return under Section 143(1) of the Act and issued an intimation dated 22.03.2022. In this intimation, the CPC denied the FTC of ₹13,91,287/- on the sole ground that Form No. 67 had not been furnished within the due date stipulated under Section 139(1) of the Act.

The assessee challenged this denial before the Additional/Joint Commissioner of Income Tax (Appeals) [JCIT(A)-2, Kolkata]. However, the JCIT(A) upheld the CPC's position vide order dated 06.11.2025, leading the assessee to prefer an appeal before the ITAT Delhi.

The singular question for adjudication: Whether delayed filing of Form No. 67 — beyond the Section 139(1) due date but within the Section 139(4) period — is sufficient ground to deny foreign tax credit under Section 90/Section 90A of the Income-tax Act, 1961?

Notably, there was no dispute whatsoever regarding:

  • The assessee's entitlement to FTC as a matter of right
  • The fact that taxes were actually paid in the USA
  • The quantum of foreign taxes paid
  • The resident status of the assessee and his obligation to offer global income to tax

The entire controversy was confined strictly to the procedural aspect of the timing of Form No. 67 submission.

Relevant Statutory Framework

Rule 128 of the Income-tax Rules, 1962 — Foreign Tax Credit

Rule 128 of the Income-tax Rules, 1962 governs the mechanism for granting FTC to resident assessees. The key sub-rules at the heart of this dispute are Rule 128(8) and Rule 128(9).

Rule 128(1) provides the substantive entitlement:

"An assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule."

Rule 128(8) stipulates that FTC shall be allowed upon furnishing: