Commissioner of Income Tax vs Dr. R.S. Bhatt

This is a reference u/s 256(1) of the Income Tax Act, 1961, at the instance of the Revenue to answer the following question of law, namely :

"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 Iranian Government on his foreign salary earned in Iran from the tax payable on the said income in India ?"

The relevant assessment year is 1978-79. The question for decision and the facts on which the question arises are similar to those in D. B. Income Tax Reference No. 36 of 1982 Commissioner of Income Tax Vs. Dr. R.N. Jhanji, on August 29, 1988. Following that decision and for the same reasons, we hold that the Tribunal was not justified in holding that the assessee is entitled to relief u/s 91(1) of the Income Tax Act, 1961, of the full amount of tax paid on the total foreign income in the foreign country and that the assessee is entitled to the relief u/s 91(1) of the Act only of the amount of tax paid on fifty per cent. of the total foreign income.

The reference is answered accordingly. No costs.