Big Relief: Delay in Form-67 Not Fatal to Foreign Tax Credit (FTC)

In a taxpayer-friendly ruling, the ITAT Hyderabad (ITA No. 1705/Hyd/2025) -  Amit Vishnav H  held that delay in filing Form-67 cannot be the sole ground to deny Foreign Tax Credit under a DTAA.

The assessee, employed in the USA with Cognizant US Corp., claimed FTC under the India–USA DTAA but filed Form-67 after the due date. The CPC disallowed the credit under section 143(1), citing Rule 128(9).

The Tribunal observed that denying FTC would cause double taxation, violating section 90 of the Act. It ruled that DTAA provisions override procedural rules, and Rule 128(9) is directory, not mandatory. Accordingly, the appeal was allowed, and FTC was directed to be granted.

Key takeaway: Procedural lapses alone cannot defeat substantive treaty relief. Tax professionals should still file Form-67 on time, but this ruling offers strong support for condoning delays.