Advance tax credit rules require foreign-paid tax to be set off in regular assessment, with excess refundable.

Advance tax paid at Lahore under section 18A of the Indian Income-tax Act had to be credited in the regular Indian assessment for the same year because section 18A(11) treats such payment as tax paid for the relevant income period. Later adjustment of the amount by Pakistan tax authorities against a separate demand did not affect the statutory duty of the Indian authorities to allow credit on regular assessment. As the advance tax exceeded the tax finally found due, the assessee was entitled to refund of the excess.

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Issues: Whether advance tax paid at Lahore under section 18A of the Indian Income-tax Act was required to be credited in the regular assessment made in India for the same assessment year, and whether the assessee was entitled to refund of the excess.

Analysis: The advance payment was made when the Indian Income-tax Act was applicable to Lahore, so the payment fell within section 18A. Under section 18A(11), any sum paid in pursuance of that section must be treated as tax paid in respect of the relevant income period and credit must be given in the regular assessment. The fact that Pakistan income-tax authorities later adjusted the amount against a separate demand did not affect the assessee's right under the Indian Income-tax Act, because such action could not override the statutory obligation of the Indian authorities to grant credit on regular assessment.

Conclusion: The assessee was entitled to credit for the advance tax paid at Lahore and, since that amount exceeded the tax found due on regular assessment, was also entitled to refund of the excess.

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