TMI Blog1988 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 allow able 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 ). The assessee's appeal to the Appellate Assistant Commissioner failed as the Appellate Assistant Commissioner confirmed the view taken by the Income-tax Officer. However, the assessee's further appeal to the Tribunal has been allowed and it has been held by the Tribunal that the assessee is entitled to the credit of the entire amount of tax of Rs. 16,413 deducted at source in the foreign country ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year outside India (and which is not deemed to accrue or arise in India), he has paid in any country with which there is no agreement under section 90 for the relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income at the Indian rate of tax or the rate of tax of the said country, whichever is the lower, or at the Indian rate of tax if both the rates are equal." Section 80RRA says that "in computing the total income of the individual", a deduction equal to 50 per cent. of the foreign income shall be given. Thus, the "total income" computed under the Act includes only 50 per cent. of the foreign income by virtue of the deduction granted under section 80RRA. As earlier stated, there is no controversy about the meaning or effect of section 80RRA and a deduction of an amount equal to 50 per cent. of the foreign income has been given "in computing the total income of the individual". Now comes for consideration the disputed meaning of section 91 (1) which admittedly applies in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 91(1) is not to be construed in isolation but in the company of section 80RRA since the two are parts of the same scheme. We shall now consider certain other provisions and the specific argument of learned counsel for the assessee based on those provisions. The argument of learned counsel for the assessee in substance is that the total foreign income is included while computing the "total income" and deduction under section 80RRA is given only thereafter and, therefore, for the purpose of section 91 (1), it must be held that the expression "such doubly taxed income" means the total foreign income and not merely 50 per cent. of that amount which is included in the total income for purposes of payment of tax in India: The argument is based on the definition of "total income" in section 2(45) read along with section 4(1) and section 5(1)(c) of the Act. The argument is that the "total income", according to the definition, means the total amount of income referred to in section 5, computed in the manner laid down in this Act; according to section 5(1)(c), the total income of a person who is a resident includes all income including the total foreign income, and the charge of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age Indian residents to start business in the foreign country and to give full relief at the Indian rate of tax or the rate of tax of the foreign country, whichever was lower. Under the 1922 Act, no such deduction was given as is provided in section 80RRA of the 1961 Act in computing the "total income", and, therefore, the total foreign income was taxed in India also. This Supreme Court decision does not support the assessee's contention in the present case. The consequence of the construction we have made of section 91(1) is that the entire foreign income which is actually taxed in India being included in computing the "total income" is only 50 per cent. of the total foreign income by virtue of the deduction given under section 80RRA. This entire amount which alone is taxed is in effect doubly taxed and, therefore, relief from double taxation under section 91 (1) can be given only by allowing deduction of the amount of tax paid once again in India on half of the total foreign income. The principle enunciated in the above Supreme Court decision supports this construction. We find that the Andhra Pradesh High Court in CIT v. C. S. Murthy [1988] 169 ITR 686 has taken the same vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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