The filing of Form No. 67 for claiming Foreign Tax Credit is directory and not mandatory; a technical breach in filing cannot override the substantive right of an assessee to receive credit for taxes paid abroad.

ORDER

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 1393/Del/2026 filed by the assessee has arisen from the learned CIT(A)’s appellate order dated 16.01.2026 passed u/s 250 of the Income-tax Act, 1961(in short “Act”) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1084848855(1), which appeal in turn has arisen from the rectification order u/s 154 of the Income Tax Act, 1961 dated 13.03.2025 passed by learned CPC, Bangalore (hereinafter referred to as the‘AO’) , for Assessment Year 2018-19.

2. The assesse has raised following grounds of appeal in Memo of Appeal filed with Income Tax Appellate Tribunal, Delhi Benches, New Delhi:

“1. That the order of the Ld. Commissioner of Income Tax (Appeals) passed under section 250 of the Income Tax Act, 1961 ("the Act") dated 16.01.2026 is bad in law and on facts.

2. That no prior intimation was given to the Appellant of the adjustment, by way of denial of credit for foreign tax paid, as required under the first Proviso to Clause (a) of Sub-section (1) of Section 143 of the Act and, therefore, the order under Section 143(1)(a) dated 21.03.2020, passed by the Centralized Processing Centre, without requisite prior intimation of the adjustment, is bereft of jurisdiction, void ab-initio and liable to be quashed.

3. That no notice of defect in the income tax return filed under Sub-section (1) of Section 139 was given to the Appellant, as provided under Sub-section (9) of section 139 of the Act and, therefore, the order under Section 143(1)(a) dated 21.03.2020, passed by the Centralized Processing Centre is bereft of jurisdiction, void ab-initio and liable to be quashed.

4. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in law not to allow credit for the taxes paid by the Appellant on the income earned in United States of America (USA), although there is no specific provision for such adjustment under Clause (a) of Sub-section (1) of Section 143 of the Act.

5. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in law to hold that the requirement to submit Form No.67 under Rule 128 is mandatory to claim foreign tax credit, whereas it is merely a procedural requirement and therefore only directory in nature.

6. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in law not to allow credit for taxes paid by the Appellant in the USA, as provided under Article 25 of the Double Taxation Avoidance Agreement ("DTAA") signed between India and the USA, which is binding on authorities of both countries and in accordance with the provisions of section 90 of the Income Tax Act, 1961.

7. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in law not to consider Sub-section (2) of Section 90 of the Income Tax Act, 1961 which specifically provides that where the Central Government has entered into an agreement with the Government of any country outside India under Sub-section (1) for granting relief of tax or avoidance of double taxation then in relation to the assessee to whom such agreement applies the provisions of the Act shall apply to the extent they are more beneficial to that assessee.

8. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in law to dismiss the appeal without properly considering the replies of the Appellant and the facts, circumstances and legal submissions contained therein, thereby violating principles of natural justice.

9. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in law to hold that there was no mistake apparent from the record and thus credit for foreign tax, though admittedly paid by the Appellant, could not be allowed in a rectification under section 154.

10. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in law in failing to consider the rulings of the Income Tax Appellate Tribunals (ITATs), including the jurisdictional ITAT and, ignoring the principle of judicial discipline, held that the said rulings have only persuasive value a