COMMISSIONER OF INCOME TAX Vs. JHANJI DR R N

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, ("the Act"), at the instance of the Revenue to answer the following question of law, namely :

(2.) THE relevant assessment year is 1976-77. During the relevant period, the assessee, a medical practitioner had received salary in Iran of Rs. 1,41,265 on which the tax deducted at source in Iran was Rs. 16,413. THE assessee also earned an income of Rs. 5,247 in India during the same year. THE assessee claimed deduction under Section 80RRA of the Act in respect of the remuneration received by him for services rendered outside India and also relief from double taxation under Section 91(1) of the Act. THE Income-tax Officer held that the relief under Section 91(1) was allowable only on the amount of tax paid on Rs. 70,632 which was 50 per cent. of the remuneration received for services rendered outside India since the deduction under Section 80RRA was allowed to the same extent. THE Income-tax Officer took the view that 50 per cent. of the foreign income which was deducted under Section 80RRA was not doubly taxed and, that, therefore, the remaining half only which had been included in the income for the purpose of tax in India was doubly taxed. Accordingly, it was only 50 per cent. of the foreign income which qualified for relief from double taxation under Section 91(1).

(3.) NOW comes for consideration the disputed meaning of Section 91(1) which admittedly applies in the present case. This provision provides for relief from double taxation on that amount included in the income which has already been taxed in the foreign country. The question is : what is the amount which can be said to be doubly taxed in these circumstances ? The expression requiring construction in Section 91(1) is "such doubly taxed income". The provision for relief from double taxation is that deduction would be given from the Indian income-tax payable by the individual of "a sum calculated on such doubly taxed income" at the rate of tax specified. This means that after ascertaining the total Indian income-tax payable on the total income determined under the provisions of the Act, giving the deduction under Section 80RRA and all benefits permitted by other provisions of the Act, a deduction would be made therefrom of tax calculated at the specified rate on "such doubly taxed income", on which tax has already been paid in the foreign country.