- (1.) ON an application made by the Department under S. 256(1), the following question has been referred to the High Court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to deduct the full amount of tax deducted at source by the Government of the foreign country from the tax payable on the said income in India ? "The dispute relates to the assessee's claim for tax deducted at source of Rs. 4,776. The ITO gave credit only for half of his figure, as, according to him, half of the income was exempt under S. 80 RRA. The Revenue filed an appeal before the Tribunal which was dismissed by the order dated November 28, 1985. Thereafter, it filed an application under S. 256(1) and, on that application, the question mentioned above was referred to the High Court for its opinion.
(2.) IN CIT vs. Dr. R. N. Jhanji (1988) 73 CTR (Raj) 152 : (1990) 185 ITR 586 (Raj), this Court held that an assessee is not entitled to relief under S. 91(1) of the INCOME TAX ACT, 1961, of the full amount of tax paid on the total foreign income earned in the foreign country and that the assessee could be entitled to the relief under S. 91(1) of the Act only on the amount of tax paid on fifty per cent. of the total foreign income. On a construction of S. 91 (1) of the INCOME TAX ACT, 1961, we find ourselves in agreement with the view taken in CIT vs. Dr. R. N. Jhanji (supra). Sec. 91(1) has to be construed along with S. 80 RRA being a part of the same scheme. If that is so done, the irresistible conclusion would be that no amount of tax paid on the total foreign income in the foreign country is entitled to relief under s. 91(1) of the IT Act. Only fifty per cent. of the total foreign income is liable to be excluded.
(3.) FOR the reasons given above, we answer the question in favour of the Revenue and against the assessee, by holding that the assessee was not entitled to deduct the full amount of tax deducted at source by the Government of Iran on its foreign currency earned in Iran from the tax payable on the said income in India.;