The Delhi High Court ruled Foreign Tax Credit cannot be denied solely for delayed Form 67 filing, directing reconsideration within two months. Real Time Data Services Private Limited challenged FTC denial for AY 2020-21 and subsequent years.
NEW DELHI: The Delhi High Court ruled that the Foreign Tax Credit (FTC) cannot be denied solely due to a delay in submitting Form 67. The court determined that tax authorities, including the Principal Commissioner of Income Tax (PCIT) under Section 264, have the authority to grant relief and instructed the Assessing Officer (AO) to reconsider the case within two months.
Real Time Data Services Private Limited has filed three writ petitions against the income tax authorities in the Delhi High Court, all related to the denial of FTC for the Assessment Year 2020-21 and subsequent years. The primary issue revolves around the delayed filing of Form No. 67 under Rule 128 of the Income Tax Rules, 1962.
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In this case, the petitioner company failed to submit Form No. 67 within the statutory timeframe specified under Section 139 of the Income Tax Act, 1961. The company claimed it was unaware of the error until it received an intimation order from the AO under Section 143(1)(a), which included the denial of the FTC amounting to Rs 1,01,34,300, deducted from foreign receipts.
Subsequently, the petitioner filed a request for rectification under Section 154 of the Act before the AO and later approached the PCIT under Section 264 for revision. However, the PCIT rejected the application, claiming it lacked the authority to condone the delay in submitting Form No. 67.
The petitioner then filed a writ petition with the Delhi High Court. Upon reviewing the facts, the court found that tax authorities cannot deny the company’s right to claim the FTC simply because Form No. 67 was not filed on time.
The court remarked that denying this credit based on a technical delay would result in unjust enrichment for the tax department.
In its final decision, the court referenced previous rulings, confirming that the PCIT has adequate powers to address such matters under Section 264 of the Income Tax Act, 1961. Rather than remanding the case to the relevant authorities, the court instructed the AO to verify whether Form No. 67 was filed subsequently and, if so, to grant the FTC in accordance with the law. If the AO decides against this, a reasoned order must be provided.
The process is to be completed within two months.
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