Section 91

Double taxation relief - Where no agreement exists

The essential requirements - Under section 91, the following requirements have to be satisfied in order that an assessee is entitled to claim deduction on the doubly taxed income :

q The assessee must have been resident in India  in the relevant previous year.

u Income must have accrued or arisen to him during that previous year outside India.

u In respect of that income which arose or accrued outside India, he must have paid by deduction or otherwise tax under the law in force in the country in question.

If the above conditions are fulfilled, the assessee will be entitled to deduction from the income-tax payable by him in India a sum calculated on such doubly taxed income at the Indian rate of  tax or at the rate of tax of the said country, whichever is lower - CIT v. C.S. Murthy [1988] 169 ITR 686 (AP).

Meaning of ‘such doubly taxed income’ - The expression ‘such doubly taxed income’ really purports to indicate that it is only that portion of the income on which tax has been imposed and been paid by the assessee that is eligible for the double tax relief. Thus, where the foreign income which suffered tax in the foreign country was Rs. 88,535, and the income actually taxed in India after allowances and set off of losses was Rs. 63,141, relief admissible would be calculated on Rs. 63,141 - CIT v. O.VR.SV.VR. Arunachalam Chettiar [1963] 49 ITR 574 (Mad.).

When deduction is allowed under section 80RRA - Where the asses­see is entitled to deduction of 50 per cent of foreign income under section 80RRA, only the balance 50 per cent which is taxed in both the countries should be  taken as the basis for computing double taxation relief - CIT v. P.N. Sachdev [1990] 87 CTR (Raj.) 10/CIT v. M.A. Mois [1992] 65 Taxman  385 (AP)/CIT v. Dr. R.N. Jhanji [1988] 40 Taxman 428 (Raj.)/CIT v. Dr. R.S. Bhatt [1988] 41 Taxman 46 (Raj.)/CIT v. C.S. Murthy (supra).

Where tax has been deducted at source from the assessee’s income in Iran, the assessee would not be entitled to credit for the entire amount of tax deducted at source in Iran under section 91(1), but only in proportion to the income included in the total income of the assessee after  considering the provisions of section 80RRA - CIT v. Dr. K.L. Parikh [1994] 209 ITR 394 (Raj.).