Double taxation relief under section 91(1) is limited to foreign tax attributable only to income taxed in India.

Relief under section 91(1) was confined to the foreign tax attributable to the portion of foreign income actually included in the assessee's total income in India. The Court applied earlier authority and held that double taxation relief does not extend to the entire tax deducted at source abroad, but only to the proportion relatable to income chargeable in India after applying section 80RRA. The reference was therefore answered against the assessee and in favour of the Revenue.

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Issues: Whether the assessee was entitled under section 91(1) of the Income-tax Act, 1961 to credit for the entire tax deducted at source in Iran, or only to credit proportionate to the income included in total income after applying section 80RRA of the Income-tax Act, 1961.

Analysis: The question was covered by earlier decisions holding that section 91(1) grants double taxation relief only to the extent of the foreign tax relatable to the portion of foreign income assessable in India, and not to the whole amount of tax deducted abroad. The reasoning was drawn from the interpretation of the corresponding earlier provision in section 49D of the Indian Income-tax Act, 1922, as applied to the foreign income brought to tax in India.

Conclusion: The assessee was not entitled to credit for the entire amount of tax deducted at source in Iran; the relief under section 91(1) was confined to the proportion attributable to the income included in the assessee's total income.

Final Conclusion: The reference was answered against the assessee and in favour of the Revenue.

Ratio Decidendi: Relief against double taxation under section 91(1) is limited to the foreign tax attributable to the portion of foreign income actually included in taxable income in India, and does not extend to the full tax deducted abroad.

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