Rajasthan High Court - Jaipur
Commissioner Of Income-Tax vs 1. P. N. Sachdev. (D. B. I. T. R. No. 41 Of ... on 11 March, 1990
Equivalent citations: (1992)87CTR(RAJ)10, [1992]193ITR498(RAJ)
JUDGMENT
On an application made by the Department under section 256(1), the following question has been referred to the High Court for its opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to deduct the full amount of tax deducted at source by the Government of the foreign country from the tax payable on the said income in India ?"
The dispute relates to the assessees claim for tax deducted at source of Rs. 4,776. The Income-tax Officer gave credit only for half of his figure, as, according to him, half of the income was exempt under section 80RRA. The Revenue filed an appeal before the Tribunal which was dismissed by the order dated November 28, 1985. Thereafter, it filed an application under section 256(1) and, on that application, the question mentioned above was referred to the High Court for its opinion.
In CIT v. Dr. R. N. Jhanji [1990] 185 ITR 586 (Raj), this court held that an assessee is not entitled to relief under section 91(1) of the Income-tax Act, 1961, of the full amount of tax paid on the total foreign income earned in the foreign country and that the assessee could be entitled to the relief under section 91(1) of the Act only on the amount of tax paid on fifty per cent. of the total foreign income.
On a construction of section 91(1) of the Income-tax Act, 1961, we find ourselves in agreement with the view taken in CIT v. Dr. R. N. Jhanji [1990] 185 ITR 586 (Raj). Section 91(1) has to be construed along with section 80RRA being a part of the same scheme. If that is so done, the irresistible conclusion would be that no amount of tax paid on the total foreign income in the foreign country is entitled to relief under section 91(1) of the Income-tax Act. Only fifty per cent. of the total foreign income is liable to be excluded.
For the reasons given above, we answer the question in favour of the Revenue and against the assessee, by holding that the assessee was not entitled to deduct the full amount of tax deducted at source by the Government of Iran on its foreign currency earned in Iran from the tax payable on the said income in India.