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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 ..... peal 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 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce from such salary income received from foreign employer. He, therefore, submitted that the order passed by the CIT(A) deserves to be set aside and the order passed by the assessing authority should be restored. It was also pointed out that the aforesaid contention of the 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments for different heads or items of incomes". The learned authorised representative further repeated the same arguments which were submitted before the CIT(A). He further contended that the CIT(A) had rightly accepted the assessee's contention that credit of full amount of tax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me" means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter;" 5.5 Sec. 80RRA provides deduction in respect of remuneration received for services rendered outside India. (1) Where the gross total income of an individual who is a citizen 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income prescribed in s. 14. Thus the entire amount of foreign salary income is chargeable to tax as per s. 5 in the case of the appellant who was admittedly a resident-assessee during the year under consideration. The entire foreign salary income is subjected to charge of income-tax and formed part of computation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired national objectives, would alter the true nature of income liable to tax under the provisions of the IT Act, 1961 as an income which is not liable to tax merely because of grant of such deductions under Chapter VI-A. Chapter VI-A provides for various types of deductions in respect of life insurance premium contribution, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IT Act. If a part of the income was includible in the total income under the IT Act, then the provisions of r. 4 will not be attracted. Rule 4 will only apply in respect of items of income which are referred to in Chapter III, but r. 4 will not include any item of income which is included in Chapter VII which deals with incomes forming 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 employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n country. The provision for relief from double taxation is that deduction would be given from the Indian income-tax payable by the individual of 'a sum calculated on such doubly taxed income' at the rate of tax specified. This means that after ascertaining the total Indian income-tax payable on the total income determined under the provisions 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-RR ..... 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