ITAT Visakhapatnam Allows Foreign Tax Credit Despite Delay in Filing Form 67

Background of the Dispute

The Income Tax Appellate Tribunal, Visakhapatnam Bench, in the case of Srikanth Atluri Vijayawada Vs ITO, has once again clarified that mere delay in filing Form 67 cannot be the sole reason to refuse Foreign Tax Credit (FTC), where the assessee has in fact paid tax in a foreign country on the same income.

The appeal concerned Assessment Year (AY) 2020-21 and arose from the order of the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-2 Noida [Ld.CIT(A)], who had confirmed the Assessing Officer’s (Ld.AO) action passed under Section 154 of the Income Tax Act, 1961 denying FTC to the assessee.

The controversy centred around non‐compliance with the time requirement in Rule 128(9) of the Income Tax Rules, 1962, which stipulates that Form 67 should be filed on or before the due date of filing return under Section 139(1).

Facts of the Case

Filing of Return and Claim of Foreign Tax Credit

  • The assessee had income which suffered tax in a foreign jurisdiction.
  • While filing the original return of income for AY 2020-21 under Section 139(1), the assessee did not enclose Form 67, which is prescribed for claiming FTC under Rule 128.
  • FTC was accordingly not granted in the intimation, as the requisite form and certificate were not furnished along with the original return.

Rectification Application under Section 154

Subsequently, the assessee sought to cure the procedural lapse by:

  1. Filing Form 67 after the return had already been filed; and
  2. Moving an application under Section 154 seeking rectification of the intimation to grant FTC based on the newly filed Form 67.

The assessee argued that:

  • All due taxes on the relevant income had been duly paid in the foreign country.
  • Denial of FTC in India would result in double taxation, which is impermissible in law, particularly in view of the applicable Double Taxation Avoidance Agreement (DTAA).
  • Rule 128(9) does not itself prescribe any adverse consequence, penalty, or automatic disallowance of FTC solely due to late furnishing of Form 67.
  • Therefore, FTC could not lawfully be denied merely because Form 67 was not filed within the time stipulated under Rule 128(9).

Findings of the AO and CIT(A)

Both the Ld.AO and Ld.CIT(A) took the view that:

  • As per Rule 128(9), Form 67 must be filed within the time limit prescribed—i.e., on or before the due date for filing the return under Section 139(1).
  • Since the assessee failed to comply with this requirement while filing the original return, FTC was not admissible.
  • The subsequent filing of Form 67 along with a Section 154 application could not cure this defect for the purpose of claiming FTC for AY 2020-21.

On this basis, the authorities denied the FTC and the assessee carried the matter in appeal before the ITAT, Visakhapatnam.

Assessee’s Arguments Before the Tribunal

Reliance on Tribunal’s Decision in Assessee’s Own Case (AY 2021-22)

At the hearing before the Tribunal, the authorised representative (Ld.AR) placed strong reliance on the earlier decision of the same Bench in the assessee’s own case:

  • Case: Srikanth Atluri Vs. Income Tax Officer, Ward-2(3)
  • Appeal No.: ITA No.491/Viz/2024
  • Assessment Year: 2021-22
  • Date of Order: 09.06.2025

In that decision, the Tribunal had dealt with delayed filing of Form 67 and held that: