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TMI Blog1989 (5) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... acts relating to the aforesaid grounds of appeal are as under: 2.1 The assessee was employed for a part of the year by M/s Hindustan Lever Ltd. in India and for the remaining part of the year, he was employed by M/s Lever Bros., Nigeria, The status of the appellant was admittedly resident for the year under appeal. 2.2 The total income of the assessee was computed by the ITO as under: Rs. Rs. I. Salary . . 1. Hindustan Lever Led., Bombay 12,811 . 2. Lever Brothers, Nigeria Ltd. 2,53,281 . . 2,66,092 . Less: Std. deduction 3,500 2,62,592 II. Income from other sources . . 1. Dividends 1,018 . 2. Bank interest 1,332 . 3. Int. on FD 2,462 . 4. Int. on refund of CDS 1,000 . . 5,812 5,812 . . 2,68,404 Less: Deductions: . . Under s. 80-C 2,167 . Under s. 80-L 3,000 . Under s. 80RRA 1,26,641 . . . 131,808 . Taxable Income 1,36,596 . Rounded off to 1,36,600 The assessee claimed credit for full tax deducted at source by the foreign employer against the tax payable by him with reference to his income chargeable to tax under the provisions of the IT Act, 1961. The ITO, however, allowed credit only with regard to 50 per cent of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue is fully supported by the judgments of the Hon'ble Andhra Pradesh High Court and Rajasthan High Court in the following judgments: (i) CIT vs. C.S. Murthy (1988) 69 CTR (AP) 26 : (1988) 169 ITR 686 (AP). (ii) CIT vs. Dr. R.N. Jhanji (1988) 73 CTR (Raj) 152 : 40 Taxman 428 (Raj). 4. The learned authorised representative for the assessee was fair enough to agree that the above referred judgments of Hon'ble Andhra Pradesh High Court and Rajasthan High Court are clearly against the assessee. He further contended that the judgments of Hon'ble Andhra Pradesh High Court and Rajasthan High Court in the above referred cases had laid down the correct law relating to interpretation of s. 91 of the IT Act, 1961. He further supported the order passed by the learned CIT(A) and also relied upon the judgment of Hon'ble Supreme Court in the case of K.V.A.L.M. Ramanathan Chettiar vs. CIT (1973) CTR (SC) 58 : (1973) 88 ITR 169 (SC). He invited our attention particularly at page 189 and 191 of the aforesaid judgment delivered by the Hon'ble Supreme Court. The question relating to interpretation of s. 49-D of Indian IT Act, 1922, which was contended to be pari materia with s. 91 of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax deducted from salary paid by foreign employer should be deducted from tax payable in India as per the provisions of s. 91 regardless of the fact that 50 per cent of such foreign salary income has been deducted as per s. 80RRA from the gross total income computed as per the provisions of the IT Act, 1961. 5. We have carefully considered the rival submissions made by both the sides. The point involved in the aforesaid appeal raises an interesting question of law. It will be worthwhile to reproduce the relevant provisions of s. 91 in order to properly examine and decide the question involved in this appeal: "91(1) If any person who is resident in India in any previous year proves that, in respect of his income which accrued or arose during that previous year outside India (and which is not deemed to accrue or arise in India), he has paid in any country with which there is no agreement under s. 90 for the relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income at the Indian rate of tax or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, a deduction from such remuneration. 5.6 It will also be relevant to reproduce s. 49D of the Indian IT Act, 1922 which is claimed to be pari materia with present s. 91 of the IT Act, 1961. 49-D. Relief in respect of incomes accruing or arising outside the taxable territories (1) If any person who is resident in the taxable territories in any year proves that, in respect of his income which accrues or arises during that year without the taxable territories (and which is not deemed to accrue or arise in the taxable territories), he has paid in any country, with which there is no reciprocal arrangement for relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income at the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of total income under the head "income from salaries" as prescribed under s. 14 of IT Act, 1961. The entire amount of such foreign salary income has been charged to tax and is a part of computation of total income as per the relevant provisions for computation of salary income contained in ss. 15 to 17 of the IT Act, 1961. There is no denial of the fact that the entire foreign salary income forms part of the total income computed as per the provisions of the IT Act, 1961. The only question which requires serious consideration is that whether the deductions allowable under Chapter VI-A in s. 80RRA providing for deduction of 50 per cent of such foreign salary income can be termed as doubly taxed income for the purposes of s. 91 of the IT Act, 1961. 5.8 It may be worthwhile to refer few other judgments of Hon'ble High Court and Supreme Court relating to interpretation of old s. 49-D of the Indian IT Act, 1922; (i) CIT vs. Clive Insurance Co. Ltd. 1978 CTR (SC) 68 : (1978) 113 ITR 636 (SC). The head-note is reproduced hereunder: "Held, affirming the decision of the High Court, (i) that, according to the law of the U.K., dividends which had borne tax in the hands of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, provident fund under s. 80C, deductions in investments in certain new shares under s. 80CC and deduction in respect of deposits under National Saving Scheme under s. 80CC(A) etc. Suppose an assessee deriving salary income of Rs. 2,62,000 in India, deposits Rs. 40,000 in Life Insurance Premiums GPF, PPF, etc., deposits Rs. 30,000 in National Saving Scheme will be eligible to deduction of Rs. 20,200 under s. 80C and Rs. 30,000 under s. 80CC(A). Can it be said that his entire salary income or Rs. 2,62,000 has not been taxed in India and or can it be validly said that only a sum of Rs. 2,11,800 has been taxed out of the salary income of the assessee. In order to appreciate the true nature of deduction allowed under Chapter VI-A as distinguished with income not liable to tax under the provisions of the IT Act, 1961, it may be worthwhile to make a useful reference to the following decision of the Hon'ble Bombay High Court. CIT vs. Century Spg. & Mfg. Co. Ltd. (1977) CTR (Bom) 132 : (1978) 111 ITR 6 (Bom). The aforesaid judgment involved the question relating to interpretation of items of income not includible in its total income in r. 4 of Schedule II of the Companies (Profits) Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming part of total income on which no income-tax is payable. At the relevant time as s. 84 was in operation, the relief as provided by that section was granted to the assessee-company, but merely by reason of such relief being granted it is not possible to take the view that the provisions of r. 4 are attracted. Notwithstanding the fact that relief is granted under s. 84 it is not possible to say that such income was not includible in the total income". 6. The deduction provided under s. 80RRA for meeting the hardships faced by Indian citizens who are employed abroad for meeting increased cost of living and also for fulfilment of the national objectives of earning mere foreign exchange for the country was inserted much after the existing provisions of s. 91 of the IT Act, 1961 and perhaps they may have provided further relief to the salaried employees who accept foreign assignments. In view of the aforesaid discussions, we cannot straight away say that the arguments advanced by the learned authorised representative of the assessee are without any force. 7. However, the judgments of Hon'ble Andhra Pradesh High Court and Rajasthan High Court relied upon by the learned Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act giving the deduction under s. 80-RRA and all benefits permitted by other provisions, a deduction would be made therefrom of tax calculated at the specified rate on 'such doubly taxed income' on which tax has already been paid in the foreign country. Thus, that part of the foreign income on which deduction is given under s. 80RRA 'in computing the total income of the individual' for the purpose of determining the Indian income-tax payable, cannot be said to be taxed once again in India in order to qualify for the relief from double taxation. If the assessee's contention was accepted, then the assessee would be given relief not only in respect of the amount which had been taxed twice but also in respect of the amount which had been taxed once only in the foreign country and not also in India on account of the deduction under s. 80-RRA while computing the total income of the individual. It was obvious that s. 91(1) was not to be construed in isolation but in the company of s. 80-RRA since the two were part of the same scheme". 8. Since the aforesaid two judgments of Hon'ble Andhra Pradesh High Court and Rajasthan High Court are the only judgments brought to our notice on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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