Law:

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Section 91(1), read with section 80RRA of the Income-tax Act, 1961 - Double taxation relief - Where no agreement exists - Whether assessee, who was entitled to deduction under section 80RRA, was entitled to deduct half amount and not full amount of tax deducted at source by Government of Iran on his income earned in Iran, from tax payable on said income in India - Held, yes FACTS The assessee claimed deduction of full amount of tax deducted at source by the Government of Iran on its foreign currency earned in Iran from the tax payable on the said income in India. The ITO gave credit only half of the said amount holding that half of the income was exempt under section 80RRA. The Tribunal, however, accepted the assessee's claim. On reference: HELD Section 91(1) has to be construed along with section 80RRA being a part of the same scheme. If that is so done the irresistible conclusion would be that no amount of tax paid on the total foreign income in the foreign country is entitled to relief under section 91(1). Only fifty per cent of the total foreign income is liable to be excluded. Therefore, the assessee was not entitled to deduct full amount of tax deducted at source by the Government of Iran on his income earned in Iran, from the tax payable on the said income in India. CASE REVIEW CIT v. Dr. R.N. Jhanji[1990] 185 ITR 586 (Raj.) followed and relied upon. CASES REFERRED TO CIT v. Dr. R.N. Jhanji [1988] 73 CTR (Raj.) 152. B.R. Arora for the Applicant. Rajesh Balia for the Respondent. JUDGMENT 1. On an application made by the department under section 256(1) of the Income- tax Act, 1961 ('the Act') the following question has been referred to the High Court for its opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in taw in holding that the assessee was entitled to deduct full amount of tax deducted at source by the Government of foreign country from the tax payable on the said income in India?" 2. The dispute relates to the assessee's claim for tax deducted at source for Rs. 4,776. The ITO gave credit only half of this figure, as according to him half of the income was exempt under section 80RRA of the Act. The…

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