Law:

Section:

Section 91 of the Income-tax Act, 1961 [Corresponding to section 49D of the Indian Income-tax Act, 1922] – Double taxation relief – Where no agreement exists – Assessment year 1960-61 – Assessee, a resident company, held certain shares of U.K. based company - It received dividend – It income after deduction of British income-tax by said U.K. based company – There was no reciprocal arrangement for relief or avoidance of double taxation between India and U.K. – As per statute law of U.K., tax could be deducted only at standard rate and dividends which had borne tax in hands of paying company were treated as franked income in hands of the assessee i.e., income in the form of dividends had been subjected to tax – Whether, on facts, it could be said with reasonable certainty that in respect of dividend income of assessee, income-tax had been paid by deduction or otherwise under law in force in country in which income had arisen – Held, yes – Whether all requirements of section 49D of 1922 Act, read with Explanation thereto, had been satisfactorily established by assessee and, therefore, assessee was eligible to relief under section 49D – Held, yes FACTS The assessee, a resident company, held shares of U.K. based joint stock companies. The net dividend income in respect of the shares held by it amounted to Rs. 15,266 after deduction of the British income-tax. For the assessment year 1960-61, the assessee claimed relief under section 49D of 1922 Act. The ITO declined to grant the relief but the reasons for the decision were not made explicit. In appeal by the assessee, the AAC confirmed the decision of the ITO observing that even if it be held that the net dividend income suffered U.K. tax by deduction, there was nothing to show that the tax deducted was paid to U.K. revenue and, therefore, section 49D of 1922 Act was not attracted. On further appeal, the Tribunal allowed the assessee's claim. On reference, the High Court, after an exhaustive examination of the relevant provisions of the Act of U.K. and the decisions bearing on the question, confirmed the decision of the Tribunal. On appeal to the Supreme Court: HELD To be eligible for relief under section 49D of the…

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