The relief under section 91 of the Income-tax Act, 1961, is available only for doubly taxed income, which is the foreign income that is taxed under the Indian law.

Y. V. ANJANEYULU, J.

( 1 ) THIS reference arising under section 256 (1) of the Income-tax Act, 1961 (for short "the Act"), made by the Income-tax Appellate Tribunal (for short "the Tribunal"), at the instance of the commissioner of Income-tax raises a short but interesting question. The matter relates to the income-tax assessment year 1976-77 and the question referred for the consideration of this court is :"whether, on the facts and in the circumstances of the case, the assessee is entitled to relief under section 91 of the Income-tax Act, 1961, of the entire tax deducted at source by the Government of Ira ?"we shall notice the relevant facts.

( 2 ) THE assessee was employed as a dental surgeon in the Osmania Dental College, Hyderabad. He went on deputation to Iran. In the previous year relevant to the income-tax assessment year 1976-77, the assessee received salary of Rs. 64,470 from the Government of Iran wherefrom tax of Rs. 5,974 was deducted under the law in force in that country. The residential status of the assessee for the assessment year 1976-77 is "resident and ordinarily resident", as indicated in the assessment order dated 26/03/1980. Under section 5 of the Act, the total income of any previous year of a person who is resident in India includes, inter alia, all income accruing or arising to him outside India during such year (section 5 (1) (c) of the Act ). Consequently, the salary income accruing or arising to the assessee outside India in Iran was liable to be included in the total income of the assessee for the purpose of assessment to income-tax in India. There is no dispute that the aforesaid salary income accruing or arising to the assessee in Iran fell to be included in the assessees total income for the income-tax assessment year 1976-77.

( 3 ) BEFORE the Income-tax Officer making the assessment, the assessee put forward two claims. The first claim was that he was entitled to deduction in respect of remuneration received from the foreign employer in terms of section 80rra of the Act. The second claim was that in determining the tax payable on the foreign income, appropriate relief on the income doubly taxed should be allowed under section 91 of the Act.

( 4 ) AS far as the first claim is concerned, it may be pointed out that section 80rra provided for deduction equal to 50% of the remuneration received from the foreign employer subject to the requirements specified therein being satisfied. On scrutiny, the Income-tax Officer was satisfied that the requirements relating to the eligibility for deduction under section 80rra were satisfied. Accordingly, the officer allowed, by way of deduction, Rs. 32,235 which is equal to 50% of the remuneration of Rs. 64,470 received from the foreign employer.

( 5 ) A dispute arose in the determination of the assessees second claim. According to the assessee, the income doubly taxed under the Indian laws is Rs. 64,470 which was the remuneration paid by the foreign employer and, consequently, he is entitled to appropriate tax relief under section 91 of the Act in respect of that doubly taxed income. On the other hand, the Income-tax Officers claim was that although the assessee received remuneration of Rs. 64,470 from the foreign employer, the amount that was doubly taxed under the Act in India is only one-half as the balance one-half was allowed under section 80rra of the Act. The officer accordingly restricted the relief under section 91 of the Act to only Rs. 32,235.

( 6 ) THE tax at the rate applicable to Iran on the sum of Rs. 32,235 was ascertained as Rs. 2,986 and as that tax was less than the Indian rate of tax, the said amount of Rs. 2,986 was allowed as a deduction from out of the tax payable by the assessee.

( 7 ) AGGRIEVED by the order of the Income-tax Officer, the assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner accepted the assessees claim and directed allowance of the entire tax paid in I

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