Foreign tax credit under section 91 is limited to income actually taxed in India after the section 80RRA deduction.

Section 91 relief was confined to foreign income that was actually subjected to Indian tax after the section 80RRA deduction. The Tribunal read "such doubly taxed income" with the computation scheme under the Income-tax Act and held that a Chapter VI-A deduction reduces the tax base but does not change the character of the income included in total income. On the facts, it preferred authorities supporting the Revenue and concluded that credit could not extend to the entire foreign tax deducted at source, but only to the portion relatable to income taxed in India.

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Issues: Whether the assessee, having obtained a deduction under section 80RRA on 50% of foreign salary income, was entitled under section 91 to credit for the full foreign tax deducted at source or only to the extent relatable to the amount actually subjected to tax in India.

Analysis: Section 91 grants relief in respect of income which has suffered tax both abroad and again in India, and the expression "such doubly taxed income" must be read with the scheme of computation of total income under sections 2(45), 5, 14 and 80B(5). A deduction under Chapter VI-A, including section 80RRA, reduces the amount on which Indian tax is ultimately payable, but it does not alter the character of the income included in total income. However, on the facts of this case, the Tribunal followed the view that relief under section 91 is confined to the portion of foreign income that is actually subjected to Indian tax after giving effect to the section 80RRA deduction, and it preferred the contrary High Court authorities supporting the Revenue.

Conclusion: The assessee was not entitled to credit for the entire foreign tax deducted at source; relief under section 91 was restricted to the part of foreign income taxed in India, and the Revenue's contention succeeded.

Final Conclusion: The appeal was decided in favour of the Revenue by holding that double-taxation relief cannot extend beyond the income actually brought to tax in India after the section 80RRA deduction.

Ratio Decidendi: For the purpose of section 91, "such doubly taxed income" means the foreign income that is both included in Indian computation and actually subjected to Indian tax after applicable deductions, so relief cannot be granted on income excluded from tax by a Chapter VI-A deduction.

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