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Interpretation of double taxation relief under section 49D of the Indian Income-tax Act. Analysis: The case involved a dispute over the computation of doubly taxed income for the application of section 49D of the Indian Income-tax Act. The assessable income of the assessee in Malaya was &8377; 93,312, and the chargeable income was &8377; 88,635. The income computed for assessment in India was &8377; 88,966, which after adjustments resulted in a total taxable income of &8377; 72,742. The Income-tax Officer granted relief only for &8377; 63,141, based on the Malayan income subject to tax in India and business losses at the headquarters in India. The Tribunal, however, considered the entire amount of &8377; 72,742 as income subjected to tax in both Malaya and India, leading to the reference question before the court. The key contention was whether the entire amount of &8377; 84,466 should be regarded as income subjected to tax under the Indian Income-tax Act, despite a portion being allowed as a deduction for business losses. The court analyzed precedents, including the Assam Railways case, emphasizing the need to identify the actual income that suffered double taxation. The court highlighted that relief for double income-tax could only be granted on the amount that had actually borne tax under both laws. Examining section 49D of the Indian Act, the court concluded that the nature of the income eligible for double tax relief must be established, considering the income taxed in both countries. The court held that only the amount on which tax had been imposed and paid by the assessee was eligible for double tax relief. In this case, the Malayan income subject to tax in India was determined to be &8377; 63,141 after excluding income from other sources not taxed in Malaya. Thus, the court found the Tribunal's view erroneous and ruled in favor of the department. In conclusion, the court answered the reference question in the negative, supporting the department's position. The decision clarified the interpretation of double taxation relief under section 49D, emphasizing the need to identify the actual income subjected to tax in both countries for granting relief. The department was awarded costs, including counsel's fee.
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