Double taxation relief under section 91(1) upheld where foreign tax paid by a firm was borne by its partners.

Assessee's claim for double taxation relief under section 91(1) was accepted for tax paid by a Nepal firm on income accruing outside India. The Tribunal relied on the continued application of Circular No. 6 of 1944 and treated the practical tax burden as falling on the partners, so the same income should not be taxed again in the partners' hands after taxation in the firm's hands. It also followed the same relief granted to the other partners on identical footing. Relief under section 91(1) was thus available and the Revenue's challenge failed.

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Issues: Whether the assessee was entitled to double taxation relief under section 91(1) of the Income-tax Act, 1961 in respect of his share of income-tax paid by the firm in Nepal on income accruing or arising outside India.

Analysis: The claim was supported by the continued application of Circular No. 6 of 1944 for the assessment year in question. The Tribunal accepted that, even though the firm and its partners are separate taxable entities, the practical burden of tax falls on the partners and the same income should not be taxed twice, once in the hands of the firm and again in the hands of the partners. The Tribunal held that the benefit extended to the other partners on the same footing was also available to the assessee.

Conclusion: The assessee was entitled to relief under section 91(1) and the Revenue's challenge failed.

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