TaxTMI 
TaxTMI 
2002 (11) TMI 81
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....e, we have reproduced hereinbelow the facts in I.T.R. No. 712 of 1987. Facts: For the assessment year 1978-79, the Tribunal has referred to this court the following question under section 256(1) of the Act. "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for double income-tax relief under section 91(1) in respect of income from Tanzania without adjusting the losses from Thailand Branch?" The assessee--The Bombay Burmah Trading Corporation Ltd.--had its business in India, Tanzania and Thailand. During the assessment year in question, the assessee suffered a loss from the Thailand branch. While computing the assessment, the Income-tax Officer adjusted the....
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....he Income-tax Act, the foreign income was required to be taken into account. He contended that the short point which arises for consideration in this case was whether the foreign income is to be taken into account while computing the assessee's total income as net foreign income. He contended that the judgment of the Supreme Court in K.V.AL.M. Ramanathan Chettiar v. CIT [1973] 88 ITR 169, does not deal with this question. He contended that under section 91(1), if an assessee has business branches all over the world and in the branch at Tanzania, if there is business income which is taxable in that country and if in the Thailand branch, there is a loss then, that loss should be set off against the business income in Tanzania and that net for....
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....1) of the Act. He contended that the basis of the said relief was that there should be a double taxation of income. He contended that the entire scheme of sections 90 and 91 which comes under Chapter IX, shows that the relief is to be calculated country-wise and not on the basis of amalgamation of income from various countries. In this connection, he relied upon the provisions of section 90 in support of his contention that the relief is to be calculated country-wise. He contended that sections 90 and 91 come under Chapter IX. They are parts of the same scheme. They indicate that the relief is to be calculated on the income accruing country-wise. Mr. Dastur, learned counsel for the assessee, gave examples to illustrate the working of sectio....
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....r section 91(1) of the Act, any person who is resident of India proves that, in respect of his income outside India, he has paid in any country with which there is no agreement under section 90, income-tax under the law in force in that country, then such person shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income at the Indian rate of tax or the rate of tax of the said country, whichever is lower or at the Indian rate of tax if both the rates are equal. Under Explanation (iii), the expression "rate of tax of the said country" has been defined to mean income-tax paid in the said country in accordance with the corresponding law in force in that country. If one analyses s....
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....t rates of tax operate in Sri Lanka, Tanzania and Argentina then, for the purposes of section 91(1), it would be impossible to compare the average rate of tax of one of the three countries, viz., Sri Lanka, Tanzania and Argentina, with the Indian income-tax rate. Thirdly, take the case of Argentina itself. In Argentina, the average rate of tax varies with the income falling between Rs. 39,000 Rs. 1,30,000 and Rs. 76,000--Rs. 4,00,000. If, the loss in Thailand is to be set off then, the net foreign income would come in the lower scale whereas, if one goes country-wise then the income will come in the higher scale. Therefore, in certain cases, the argument of the Department based on aggregation of income would result in defeating the scheme o....