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Issues Involved:
1. Entitlement to relief u/s 91 of the Income-tax Act, 1961, for the entire tax deducted at source by the Government of Iran. 2. Determination of the amount of foreign income that qualifies as "doubly taxed income" for the purpose of relief u/s 91. Summary: Issue 1: Entitlement to Relief u/s 91 The assessee, a dental surgeon employed in Osmania Dental College, Hyderabad, went on deputation to Iran and received a salary of Rs. 64,470 from the Government of Iran, from which Rs. 5,974 was deducted as tax. The assessee claimed relief u/s 91 for the entire tax deducted at source by the Government of Iran. The Income-tax Officer (ITO) allowed relief only on Rs. 32,235, which is 50% of the remuneration, as the other 50% was allowed as a deduction u/s 80RRA. The Appellate Assistant Commissioner and the Tribunal upheld the assessee's claim for the entire tax relief, but the High Court disagreed, stating that relief u/s 91 should only be on the income actually subjected to tax in India. Issue 2: Determination of "Doubly Taxed Income" The High Court emphasized that "doubly taxed income" refers to the foreign income taxed both outside and inside India. Since only Rs. 32,235 of the foreign income was subjected to tax in India (after allowing a deduction u/s 80RRA), the relief u/s 91 should be limited to this amount. The Court referred to the Supreme Court's judgment in K.V.A.L.M. Ramanathan Chettiar v. CIT, which clarified that only the income subjected to tax in both jurisdictions qualifies for relief. The Court also cited Distributors (Baroda) P. Ltd. v. Union of India, which supported the view that relief should be based on the income actually taxed in India. Conclusion: The High Court concluded that the ITO was correct in restricting the relief u/s 91 to Rs. 32,235, and the Appellate Assistant Commissioner and the Tribunal erred in extending the relief to the entire foreign income. The question was answered in the negative, in favor of the Revenue and against the assessee.
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