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2019 (5) TMI 1160 - AT - Income TaxForeign tax credit u/s 91 - assessee is an individual “Resident but not Ordinarily Resident” in India - income accrued in India - income tax paid in foreign jurisdictions pertaining to the federal tax and state income tax - proportionate tax on salary for 224 days of stay in India - assessee declared his income under the head salaries for the proportionate period for which he was employed with his employer in USA - article 2 of the Indo US DTAA - HELD THAT:- As relying on WIPRO LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1 (3) , BANGALORE [2015 (10) TMI 826 - KARNATAKA HIGH COURT] and DR. RAJIV I. MODI VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX (OSD) RANGE-1, AHMEDABAD [2017 (11) TMI 207 - ITAT AHMEDABAD] assessee is entitled for tax credit of federal as well as state taxes paid by him u/s 91. Section 91 are to be treated as general in application and these provisions can yield to the treaty provisions only to the extent the provisions of the treaty are beneficial to the assessee; that is not the case so far as question of tax credits in respect of state income taxes paid in USA are concerned. Accordingly, even though the assessee is covered by the scope of India US and India Canada tax treaties, so far as tax credits in respect of taxes paid in these countries are concerned, the provisions of Section 91, being beneficial to the assessee, hold the field. As Section 91 does not discriminate between state and federal taxes, and in effect provides for both these types of income taxes to be taken into account for the purpose of tax credits against Indian income tax liability, the assessee is, in principle, entitled to tax credits in respect of the same. Whether the assessee who is not a ‘resident’ but ‘resident and not ordinarily resident’ can also claim relief/ deduction u/s 91 of the act or not? - Provisions of section 91 (1) provides relief/deduction of taxes paid with respect to a person who is a ‘resident’ in India. The provisions of section 91 (2) also deals with the person who is a ‘resident’ in India. The provisions of section 91 (3) deals with the person who is a ‘non-resident’. The revenue contends that as the assessee is not a ‘resident’ therefore he is not entitled to benefit of section 91 . The provisions of section 6 of the income tax act provides for qualification of the persons who are residents in India. The provisions of section 6 (6) carves out another category of person in ‘ Residents’ , who is said to be ‘not ordinarily resident’ in India. However such persons are also ‘resident’. The category is also called a ‘resident but not ordinarily resident’ in India. Therefore persons who are ‘resident but not ordinarily resident’ in India are forming larger group of the persons who are ‘resident’ in India. In view of this, we reject the contentions of the revenue that benefit of section 91 (1) of the act does not apply to a person who is ‘not ordinarily resident’ in India. - ground of the assessee are allowed.
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