2006 (1) TMI 88

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....w in holding that the assessee is entitled for relief under section 91 of the Income-tax Act, 1961 without taking into account the weighted deduction allowed under section 35B of the Income-tax Act, in respect of the Iranian income?" The facts leading to the above question of law are as under: The respondent-assessee is a company in which the public are substantially interested. The relevant assessment year is 1981-82. The corresponding accounting year ended on March 31, 1981. The respondent-assessee is a resident company. The said resident company earned income in Iran for which there was no double taxation avoidance agreement. The respondent-company earned income from Iran amounting to Rs. 25,61,426 on which tax of Rs. 10,29,564 was....

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....ht in excluding the deduction allowed under section 35B of the Income-tax Act, 1961 from the Iranian income to arrive at the correct Iranian income, which had suffered tax both in Iran and India, for the purpose of relief under section 91 and also relied on the Andhra Pradesh High Court judgment reported in CIT v. M.A. Mois [1994] 210 ITR 284. Even though notice had been served on the respondent-company in this tax case, there was no representation for the assessee. We have heard counsel appearing for the Revenue. The relevant provision of law for our consideration is section 91 of the Income-tax Act. Section 91 of the Income-tax Act deals with countries with which no agreement exists and it grants unilateral relief in cases where sectio....

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....espondent-assessee in Iran was of Rs. 25,69,426. The said section 91 speaks of the income which accrued or arose outside India. Hence, the income which accrued or arose outside India, viz., in Iran, was prior to the adjustments contemplated under section 35B. It is on that income, the respondent-assessee is entitled to the benefit of double income-tax relief. The curtailment of the benefit in this regard by imputing the deduction under section 35B to the income from Iran is clearly erroneous. Reading section 91 with the decision of the apex court in the case of K.V.AL. M. Ramanathan Chettiar v. CIT [1973] 88 ITR 169, it is clear that the double taxation relief has to be worked out on the Iranian income earned abroad, as above. Learned co....