Double taxation relief under section 49D extends to foreign income taxed abroad and again included in Indian total income.

Section 49D of the Indian Income-tax Act, 1922 was construed as a residuary double taxation relief provision covering foreign income that had already suffered tax abroad and was again included in the assessee's total income in India. The majority held that relief is not confined to an identical item matched by the same head or source in both jurisdictions, and that the statutory phrase "such doubly taxed income" does not require a narrow item-by-item correspondence. Hegde J. dissented, taking the view that only the same income actually taxed in both countries could qualify for relief.

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Issues: Whether, for relief under section 49D of the Indian Income-tax Act, 1922, the assessee is entitled to deduction only in respect of the exact income item twice taxed under the same head or source, or whether the relief extends to the foreign income included in the total income and subjected again to Indian tax.

Analysis: The majority construed section 49D as a residuary provision granting relief on foreign income which has in fact suffered tax abroad and is again brought to tax in India by inclusion in the total income. The provision was read in the context of the scheme of assessment under the Act, under which income is classified under heads but tax is levied on the aggregate total income. The words "such doubly taxed income" were held not to impose a further restriction that the income must match identically by head, source, or numerical item under both jurisdictions. Relief was therefore not confined to the business income alone, and the foreign income could not be reduced by excluding unrelated domestic income from other sources or by treating domestic business loss as determining the foreign-taxed amount.

Conclusion: Section 49D was interpreted in favour of the assessee, and the double taxation relief was held to extend to the foreign income included again in Indian taxation; the appeals were allowed.

Dissenting Opinion: Hegde J. took the view that section 49D required identification of the same income that had been doubly taxed, and that only the portion actually taxed in both countries could qualify for relief. On that construction, the relief would be confined to the income component found to have borne tax twice over.

Ratio Decidendi: For relief under section 49D of the Indian Income-tax Act, 1922, the controlling criterion is whether foreign income taxed abroad is again included in the assessee's total income in India and subjected to Indian tax, not whether the income can be matched identically by head or source in both jurisdictions.

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