ITAT Pune Ruling: Substantive Right to Foreign Tax Credit Cannot Be Denied Due to Procedural Delay in Filing Form 67

The intersection of domestic tax compliance and international taxation often creates friction, particularly when procedural lapses threaten substantive treaty benefits. In a significant judicial pronouncement, the Pune Bench of the Income Tax Appellate Tribunal (ITAT) in the matter of Ganesh Vishwas Petkar Vs DCIT has reaffirmed that the requirement to file Form 67 for claiming Foreign Tax Credit (FTC) is merely directory in nature. The Tribunal emphatically ruled that a delay in submitting this form cannot extinguish an assessee's inherent right to claim relief against double taxation.

Factual Matrix of the Dispute

The conflict originated during the Assessment Year (AY) 2020-21. The assessee, an individual resident employed at Veritas Software Technologies India Private Limited, submitted his original income tax return on 08.12.2020. The return disclosed a total income of Rs. 62,49,270/-.

Included within this declared income was a foreign dividend component amounting to Rs. 10,97,479/-, which was generated from investments held in the United States of America. Because this dividend income was subjected to taxation in the US, the assessee rightfully claimed a Foreign Tax Credit of Rs. 2,74,369/- under Section 90 of the Income Tax Act 1961.

The Procedural Roadblock

The Centralized Processing Centre (CPC) processed the return under Section 143(1) of the Income Tax Act 1961 on 24.12.2021. During this automated processing, the claimed FTC of Rs. 2,74,369/- was entirely disallowed. The primary reason for this rejection was the non-availability of Form 67 on the designated due date.