TaxTMI 
TaxTMI 
1989 (5) TMI 88
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....cannot be given credit for the whole tax paid abroad." 2. The brief facts relating to the aforesaid grounds of appeal are as under : 2.1 The assessee was employed for a part of the year by M/s. Hindustan Lever Ltd. in India, and for the remaining part of the year, he was employed by M/s. Lever Bros., Nigeria. The status of the appellant was admittedly resident for the year under appeal. 2.2 The total income of the assessee was computed by the I.T.O. as under :-- I. Salary 1. Hindustan Lever Ltd., Bombay Rs. 12,811 2. Lever Brothers, Nigeria Ltd. Rs. 2,53,281 ----------------------- Rs.2,66,092 ---------------------- Less : Std. deduction Rs. 3,500 Rs. 2,62,592 II. Income from other sources 1. Dividends Rs. 1,018 2. Bank interest Rs. 1,332 3. Int. on F.D. Rs. 2,462 4. Int. on refund of C.D.S. Rs. 1,000 --------------------- Rs. 5,812 Rs. 5,812 --------------------- Rs. 2,68,404 Less : Deductions : U/s. 80-C Rs. 2,167 U/s. 80-L Rs. 3,000 U/s. 80RRA Rs. 1,26,641 ---------------------- Rs.1,31,808 ----------------------- Taxable Income : Rs.1,36,596 ------------------------ Rounded off to Rs.1,36,600....
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....ed and the assessee was, therefore, entitled to credit of only 50% of tax deducted it source from such salary income received from foreign employer. He, therefore, submitted that the order passed by the C.I.T. (Appeals) deserves to be set aside and the order passed by the assessing authority should be restored. It was also pointed out that the aforesaid contention of the Revenue is fully supported by the judgments of the Hon'ble Andhra Pradesh High Court and Rajasthan High Court in the following judgments : (i) CIT v. C. S. Murthy [1988] 169 ITR 686/37 Taxman 185 (AP). (ii) CIT v. Dr. R. N. Jhangi [1988] 40 Taxman 428 (Raj.) 4. The learned authorised representative for the assessee was fair enough to agree that the above referred judgments of Hon'ble Andhra Pradesh High Court and Rajasthan High Court are clearly against the assessee. He further contended that the judgments of Hon'ble Andhra Pradesh High Court and Rajasthan High Court in the above referred cases have not laid down the correct law relating to interpretation of sec. 91 of the Income-tax Act, 1961. He further supported the order passed by the learned C.I.T. (Appeals) and also relied upon the judgment of Hon'bl....
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....ely on each head of income. In other words, assessment to income-tax is one whole and not a group of assessments for different heads or items of incomes." The learned authorised representative further repeated the same arguments which were submitted before the C.I.T. (Appeals). He further contended that the C.I.T. (Appeals) had rightly accepted the assessee's contention that credit of full amount of tax deducted from salary paid by foreign employer should be deducted from tax payable in India as per the provisions of sec. 91 regardless of the fact that 50% of such foreign salary income has been deducted as per sec. 80RRA from the gross total income computed as per the provisions of the Income-tax Act, 1961. 5. We have carefully considered the rival submissions made by both the sides. The point involved in the aforesaid appeal raises an interesting question of law. It will be worthwhile to reproduce the relevant provisions of sec. 91 in order to properly examine and decide the question involved in this appeal : " 91(1) If any person who is resident in India in any previous year proves that, in respect of his income which accrued or arose during that previous year outside In....
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.... -- Profits and gains of business or profession E -- Capital gains F -- Income from other sources. 5.4 Sec. 80B(5) defines gross total income as under : " gross total income " means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter. 5.5 Section 80RRA provides deduction in respect of remuneration received for services rendered outside India : (1) Where the gross total income of an individual who is a citizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, a deduction from such remuneration. 5.6 It will also be relevant to reproduce sec. 49D of the Indian Income-tax Act, 1922 which is claimed to be pari materia with present sec. 91 of the Income-tax Act, 1961: " 49D. Relief in respect of incomes accruing or arising outside the taxable territories-- (1) If any person who is resident in the taxable territories in any year ....
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....y of tax under the charging section 4 of the Income-tax Act. Sec. 14 containing provisions relating to computation of total income provides that all incomes shown for the purposes of charge of income-tax and computation of total income be classified under the various heads of income prescribed in sec. 14. Thus, the entire amount of foreign salary income is chargeable to tax as per sec. 5 in the case of the appellant who was admittedly a resident-assessee during the year under consideration. The entire foreign salary income is subjected to charge of income-tax and formed part of computation of total income under the head " Income from salaries " as prescribed under sec. 14 of the Income-tax Act, 1961. The entire amount of such foreign salary income has been charged to tax and is a part of computation of total income as per the relevant provisions for computation of salary income contained in secs. 15 to 17 of the Income-tax Act, 1961. There is no denial of the fact that the entire foreign salary income forms part of the total income computed as per the provisions of the Income-tax Act, 1961. The only question which requires serious consideration is that whether the deductions allowa....
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....sec. 49D of the Indian Income-tax Act, 1922, in accordance with the scheme of that section." 5.9 The question for consideration is whether the various deductions provided in Chapter VI-A, which are meant for fulfilment of the desired national objectives, would alter the true nature of income liable to tax under the provisions of the Income-tax Act, 1961 as an income which is not liable to tax merely because of grant of such deductions under Chapter VI-A. Chapter VI-A provides for various types of deductions in respect of life insurance premium contribution, provident fund u/s. 80C, deduction in investments in certain new shares u/s. 80CC and deduction in respect of deposits under National Saving Scheme under sec. 80CC(A) etc. Suppose an assessee deriving salary income of Rs. 2,62,000 in India, deposits Rs. 40,000 in Life Insurance Premiums, G.P.F., P.P.F. etc., deposits Rs. 30,000 in National Saving Scheme will be eligible to deduction of Rs. 20,200 under sec. 80C and Rs. 30,000 under sec. 80CC(A). Can it be said that his entire salary income of Rs. 2,62,000 has not been taxed in India and or can it be validly said that only a sum of Rs. 2,11,800 has been taxed out of the salary....
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....cannot be said that such an item will not be includible in the total income. Rule 4 only applies when a part of the income is not includible in the total income under the Income-tax Act. If a part of the income was includible in the total income under the Income-tax Act then the provisions of rule 4 will not be attracted. Rule 4 will only apply in respect of items of income which are referred to in Chapter III, but rule 4 will not include any item of income which is included in Chapter VII which deals with incomes forming part of total income on which no income-tax is payable. At the relevant time as sec. 84 was in operation, the relief as provided by that section was granted to the assessee-company, but merely by reason of such relief being granted it is not possible to take the view that the provisions of rule 4 are attracted. Notwithstanding the fact that relief is granted u/s. 84 it is not possible to say that such income was not includible in the total income." 6. The deduction provided under sec. 80RRA for meeting the hardships faced by Indian citizens who are employed abroad for meeting increased cost of living and also for fulfilment of the national objectives of earning....
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....he foreign income by virtue of the deduction granted under sec. 80RRA. Sec. 91(1) provides for relief from double taxation on that amount included in the income which has already been taxed in the foreign country. The provision for relief from double taxation is that deduction would be given from the Indian income-tax payable by the individual of ' a sum calculated on such doubly taxed income ' at the rate of tax specified. This means that after ascertaining the total Indian income-tax payable on the total income determined under the provisions of the Act giving the deduction under sec. 80RRA and all benefits permitted by other provisions, a deduction would be made therefrom of tax calculated at the specified rate on ' such doubly taxed income ' on which tax has already been paid in the foreign country. Thus, that part of the foreign income on which deduction is given under sec. 80RRA ' in computing the total income of the individual ' for the purpose of determining the Indian income-tax payable, cannot be said to be taxed once again in India in order to qualify for the relief from double taxation. If the assessee's contention was accepted, then the assessee would be given relief n....