COMMISSIONER OF INCOME TAX Vs. C S MURTHY

JUDGEMENT

(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 :

(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.