Law:

Section:

Section 90 of the Income-tax Act, 1961 [Corresponding to section 49A of the Indian Income-tax Act, 1922], read with Double Taxation Relief Agreement with Ceylon - Double Taxation Relief - Where agreement exists - Assessment year 1960-61 - Agreement provided that an abatement equal to lower of two amounts of tax i.e. tax payable in Ceylon and tax payable in India would be allowed - Tax payable by assessee in Ceylon was Rs. 704 and in India was Rs. 1876.50 - An abatement to extent of Rs. 704 had been allowed - Whether assessee could not claim any amount by way of abatement higher than that amount - Held, yes FACTS The income-tax authorities in Ceylon assessed the income of assessee under the Ceylon Income-tax Ordinance, 1932 and granted the reliefs to which he was entitled under that Ordinance and fixed the amount of tax payable by him at Rs. 704. It was common ground that the said tax had been paid. The assessee claimed higher amount of abatement which claim was rejected. On reference: HELD A reading of article III of the agreement and the relevant portion of the Schedule makes it quite clear that what has to be done in a case like the instant case can be summed up as follows: (1)Ascertain the income which has been assessed both under the Ceylon Income-tax Ordinance, 1932, and the Indian Income-tax Act, 1922. In this case the amount of that income was Rs. 18,765. (2)Ascertain the portion of that amount of Rs. 18,765-which is in excess of the amount calculated according to the percentage specified in column III of the Schedule. The percentage specified in column III for the income in this case was 'Nil' and so the excess was the whole of the amount of Rs. 18,765. (3)Ascertain the tax payable on the excess-Rs. 18,765-under the Ceylon Income-tax Ordinance, 1932, and the Indian Income-tax Act, 1922, and allow an abatement equal to the lower of the two amounts of tax. In this case the Ceylon tax was Rs. 704 and the Indian tax is Rs. 1,876.50. The abatement that should be allowed, therefore, was Rs. 704. An abatement to the extent of Rs. 704 had been allowed. The assessee could not possibly claim, in the light of the provisions on the subject, any amount by way of…

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