Foreign Tax Credit Cannot Be Denied for Late Filing of Form 67 — ITAT Mumbai Rules in Favour of Assessee
Case Overview: Sachin Shrikant Khedekar Vs ACIT (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal delivered a significant ruling affirming that foreign tax credit (Section 90) cannot be withheld merely on the ground that Form No. 67 was not submitted within the prescribed timeline. The Tribunal categorically held that the requirement under Rule 128(9) of the Income Tax Rules, 1962 is procedural and directory in nature, and a technical delay in filing Form 67 cannot override the substantive entitlement of an assessee to claim Foreign Tax Credit (FTC).
Background and Facts of the Case
The assessee in this matter is a film artist who derives income from professional engagements, both within India and abroad. For Assessment Year 2018-19, the assessee filed his return of income on 06/10/2018, declaring a total income of Rs. 80,48,010.
Out of the total professional receipts, a sum of Rs. 26,84,478 was received from overseas parties, on which tax amounting to Rs. 5,36,896 had been paid outside India. The assessee duly included this foreign income in the return and simultaneously claimed relief of Rs. 5,36,896 under Section 90 of the Income Tax Act, 1961 ("the Act") towards tax paid abroad.
Processing of Return and Initial Denial
When the return was processed through the Centralised Processing Centre (CPC), an intimation dated 17/03/2020 was issued under Section 143(1) of the Act, whereby the claimed foreign tax credit of Rs. 5,36,896 was denied by ADIT, CPC, Bengaluru. No specific reasons related to the merits of the claim were recorded — the credit was denied simply because Form No. 67 had not been filed along with the return.
Rectification Proceedings and Further Denial
Following the denial, the assessee filed a rectification application under Section 154 of the Act, submitting Form No. 67 (dated 06/10/2018) along with documentary evidence of the taxes paid abroad. Despite this, the rectification application was rejected vide order dated 18/05/2023 solely on the ground that Form No. 67 had not been filed as mandated under Rule 128(9) of the Income Tax Rules, 1962 ("the Rules").
CIT(A) Order
Aggrieved by the rejection, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The learned CIT(A) dismissed the appeal vide impugned order dated 22/12/2025, holding that Form No. 67 was not filed at all by the assessee as prescribed — overlooking the fact that it had in fact been filed during the rectification proceedings. The assessee thereafter approached the ITAT Mumbai.
Grounds of Appeal Before the ITAT
The assessee raised the following grounds before the Tribunal:
- The Appellate Authority was not justified in confirming the disallowance of relief claimed under
Section 90amounting to Rs. 5,36,896. - The Appellate Authority erred in holding that Form 67 was not filed at all, despite it having been submitted during rectification proceedings, which formed the sole basis for dismissing the appeal.
- The Appellate Authority failed to appreciate that the issue was squarely covered by binding judicial precedents, including rulings of the jurisdictional Tribunal, that were cited during appeal proceedings.
- The assessee reserved the right to add, alter, or modify any of the grounds before the date of hearing.