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TMI Blog1987 (7) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee received salary of Rs. 64,470 from the Government of Iran wherefrom tax of Rs. 5,974 was deducted under the law in force in that country. The residential status of the assessee for the assessment year 1976-77 is " resident and ordinarily resident ", as indicated in the assessment order dated March 26, 1980. Under section 5 of the Act, the total income of any previous year of a person who is resident in India includes, inter alia, all income accruing or arising to him outside India during such year (section 5(1)(c) of the Act). Consequently, the salary income accruing or arising to the assessee outside India in Iran was liable to be included in the total income of the assessee for the purpose of assessment to income-tax in India. There is no dispute that the aforesaid salary income accruing or arising to the assessee in Iran fell to be included in the assessee's total income for the income-tax assessment year 1976-77. Before the Income-tax Officer making the assessment, the assessee put forward two claims. The first claim was that he was entitled to deduction in respect of remuneration received from the foreign employer in terms of section 80RRA of the Act. The second c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritsar Bench of the Tribunal in ITO v. B. K. Kapila in ITA No. 1124 of 1979 dated February 7, 1980 reported in [1980] 17 CTR 6 ". The Revenue applied for a reference under section 256(1) of the Act. That is how the Tribunal referred the question of law which we have set out in paragraph 1 for the consideration of this court. The question arising for consideration is one of importance. We would have liked the Tribunal to deal with the question by referring to the relevant provisions of law and set out its views concerning the matter so that this court would be in a position to appreciate the decision of the Tribunal in proper perspective. In our opinion, it would not be proper for the Tribunal to refer to the decision of another Bench of the Tribunal and merely observe that it agrees with the decision of that Bench. Tax journals which report decisions of the various Benches of the Tribunal are not easily available. It happened that neither standing counsel for the Income-tax Department nor learned counsel for the assessee could place before us initially the Tax Tribunal " Current Tax Reporter wherein the decision of the Amritsar Bench is reported. It was only after some effort that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia during the previous year. The expression, " doubly taxed income ", in its plain grammatical meaning, refers to the foreign income taxed under the Indian law. The main requirement, therefore, is that the income must have been taxed outside India and the same income must have again been subjected to tax under the Income-tax Act in India. If any portion of the foreign income is not subjected to tax in India, then, the assessee will not be entitled to claim deduction on that part of the foreign income which is not subjected to tax in this country. This fits into the real scheme and intent of section 91 of the Act which is to the effect that in respect of any income, a person should not be doubly taxed, once outside India and again in India. If the income taxed outside India is subjected to tax again in India, then, the provisions of section 91 of the Act would come into operation and the assessee can claim appropriate relief on the doubly taxed income. We may refer to the judgment of the Supreme Court in K.V.A.L.M. Ramanathan Chettiar v. CIT [1973] 88 ITR 169. Speaking for the majority, jaganmohan Reddy J. observed (at p. 190): " The words `such doubly taxed income' can have refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70 was included because of section 5(1)(c) of the Act, the income that is really subjected to tax is only one-half of it, the remaining one-half having been allowed as deduction under section 80RRA of the Act and given a holiday from the levy of tax. It seems plain, therefore, that the doubly taxed income in the facts and circumstances of the assessees case is not the gross sum of Rs. 64,470, but only Rs. 32,235 and it is only in respect of the latter mentioned sum that the assessee can claim appropriate relief under section 91 of the Act. That is what the Income-tax Officer did. Learned counsel for the assessee, Sri Parvatharao, contends that, once the remuneration is included in the total income of the assessee, it must be held to have been subjected to tax regardless of the fact that portion of that income included in the gross total income was deducted and not subjected to tax because of other provisions contained in the Act. We are unable to accept this contention Section 91 makes it abundantly clear that tax relief can be claimed only in respect of foreign income which is the subject-matter of tax doubly, once outside India and again in India. If any particular slice of fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the full amount received from the paying company. Therefore, it is reasonable to assume that in enacting section 80M, the Legislature intended to grant relief with reference to the amount of dividend computed in accordance with the provisions of the Act and not with reference to the full amount of dividend received from the paying company. It is difficult to imagine any reason why the Legislature should have intended to give relief with reference to the full amount of dividend received from the paying company when that is not the amount which is liable to suffer tax once again in the hands of the assessee. The Legislature could certainly be attributed with the intention to prevent double taxation but not to provide an additional benefit which would go beyond what is required for saving the amount of dividend from taxation once again in the hands of the assessee. " The aforesaid observations provide a complete answer to the question arising for consideration in the assessee's case. The relief by way of deduction of tax under section 91 of the Act should be confined to the amount doubly taxed in accordance with the provisions of the Act and not to the full amount received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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