TMI Blog2008 (8) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... roneous judgment means one rendered according to course and practice of court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. An order cannot be termed as erroneous unless it is not in accordance with law. Section 91 provides for unilateral double taxation relief in respect of income arising in countries with which the Central Government has not entered into the agreement u/s 90. The object of section 91 is with the amount of Indian income-tax paid or the amount of tax paid in foreign country whichever is lower is allowed as deduction from the tax payable under the Act on such doubly taxed income. No dispute that the assessee is entitled to relief u/s 91 of the Act. The scheme of the Act is that section 115JB is applicable wherein the case of an assessee, being a company, the income-tax payable on the total income as computed under this Act in respect of any previous year is less than 7.5 per cent of its book profit, 7.5 per cent book profit shall be deemed to be the total income of the assessee. On consideration of guidelines laid down by the Apex Court in the decisions of CIT v. Carew Co. Ltd.[ 1979 (9) TMI 4 - SUP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced with the intention that the company must pay at least 7.5 per cent of its book profit as taxes. The CIT further noted that it does not amount to double taxation of the same income in India as well as in Bhutan as the relief under section 91 is admissible to the assessee from tax payable on the income computed as per provision of sections 28 to 43D of the Income-tax Act, 1961. Similar observation noted by the CIT for assessment year 2002-03 that the Assessing Officer has wrongly allowed relief of Rs. 14,34,485 while computing tax payable under section 115JB for tax paid by the assessee in Bhutan in making assessment under section 143(3). The CIT found in both the years the orders of the Assessing Officer are erroneous and prejudicial to the interests of the revenue. 4. The learned AR while arguing the matter on merit submitted that the action of the Assessing Officer is perfectly in consonance with the provisions of the Income-tax Act. Section 115JB provides that where in the case of the assessee be a company, the income-tax payable on the total income is to be computed under this Act is less than 7.5 per cent of its book profits such book profits shall be deemed to be the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 91. The said sections read as under: "263.(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation. For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, ( a )an order passed on or before or after 1-6-1988 by the Assessing Officer shall include ( i )an order of assessment made by the Assistant Commissioner or Deputy Director or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; ( ii )an order made by the Joint Commissioner in exercise of the power or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akistan he has paid in that country, by deduction or otherwise, tax payable to the Government under any law for the time being in force in that country relating to taxation of agricultural income, he shall be entitled to a deduction from the Indian income-tax payable by him ( a )of the amount of the tax paid in Pakistan under any law aforesaid on such income which is liable to tax under this Act also; or ( b )of a sum calculated on that income at the Indian rate of tax; whichever is less. (3) If any non-resident person is assessed on his share in the income of a registered firm assessed as resident in India in any previous year and such share includes any income accruing or arising outside India during that previous year (and which is not deemed to accrue or arise in India) in a country with which there is no agreement under section 90 for the relief or avoidance of double taxation and he proves that he has paid income-tax by deduction or otherwise under the law in force in that country in respect of the income so included he shall be entitled to a deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income so included at the Indian r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his sub-section, viz. (1) the order is erroneous; (2) by virtue of the order being erroneous prejudice has been caused to the interests of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions erroneous , erroneous assessment and erroneous judgment have been defined in Black s Law Dictionary . According to the definition, erroneous means involving error; deviating from the law . "Erroneous assessment" refers to an assess- ment that deviates from the law and is, therefore, invalid, and is defect that is jurisdictional in its nature, similarly, erroneous judgment means one rendered according to course and practice of court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. 6.2 An order cannot be termed as erroneous unless it is not in accordance with law. Section 91 provides for unilateral double taxation relief in respect of income arising in countries with which the Central Government has not entered into the agreement under section 90. The object of section 91 is with the amount of Indian income-tax paid or the amount of tax paid in for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book profit, 7.5 per cent book profit shall be deemed to be the total income of the assessee. This can be explained by an illustration. Suppose an assessee having income in India is x and income outside India is y . In normal calculations of income from sections 28 to 43D, the income i.e., x + y is less than the income z ; as per calculation under section 115JB then income z is to be taken. In the case under consideration x + y is less than 7.5 per cent so income according to section 115JB is taken which is more than income x + y . On consideration of above guidelines laid down by the Apex Court in the above decisions and the ratio laid down by the Calcutta High Court in the case of Jeewanlal (1929) Ltd. ( supra ), we find that income in Bhutan has been considered while invoking section 115JB, once Bhutan income has been considered for the purpose of this Act, the assessee is entitled to deduction under section 91. We are, therefore, of the considered view that the assessee is entitled to deduction under section 91 of the Act even on merit. The orders of the Assessing Officer are neither erroneous nor prejudicial to the interests of the revenue, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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