DOUBLE TAXATION RELIEF
Q.1. Mr. Ram a resident in India, is doing money-lending business in Malaya as well as in India. For the assessment year 2012-13 his incomes were:
|(i) Income from money-lending business in Malaya||2,00,000|
|(ii) Loss from money –lending business in India||60,000|
|(iii) Income from other sources in India||40,000|
The assessing officer allowed the double taxation relief on Rs. 1, 40,000 while Mr. Ram claimed it n Rs.1, 80,000. Is the claim of Ram tenable in the law?
The Assessing Officer allowed double taxation relief on the income failing under he head ‘Gains of Business or Profession’ (i.e., Rs. 3,00,000 – 60,000), as Mr. Ram paid tax in Malaya on his foreign business income. But the Assessing Officer is not justified. To decide whether the assessee is entitled to double taxation relief of any income, the consideration that the income has been derived under a particular head would have not much relevance. The assessee is entitled to tax relief on the amount on which he had paid tax in a foreign country and that income had to be assessed in India. However, the relief cannot be granted on the amount exceeding his total income. Hence, the claim of Mr. Ram is tenable in the law and he is entitled to double taxation relief on Rs. 2,80,000.
Q.2. A is a musician deriving income from concerts performed outside India of Rs. 2,50,000. Tax of Rs.37,500 was deducted at source in the country where the concerts were given. India does not have any agreement with that country for avoidance of double taxation. Assuming that Indian income of A is Rs. 5,00,000, what is the relief due to him under section 91 for assessment year 2012–13.
Section 91 applies if the following conditions are satisfied :
(i) A person should be resident in India for the year for which the relief is claimed.
(ii) The income should have accrued in a country outside India.
(iii) There is no agreement with that country for avoidance of double taxation.
(iv) The person should have paid tax by deduction or otherwise under the law of that country.
All these conditions are satisfied in this case. The relief is available on doubly taxed income.
Q.3. An individual, resident of India has the following income during P.Y. 2011-12:
|1. Business income in India||7,20,000|
|2. Business income in a foreign country with which India|
|does not have a avoidance of double taxation agreement||2,40,000|
|Tax levied in foreign country on income mentioned in 2||48,000|
|Deposited in public provident fund||60,000|
Compute his tax liability.
Less : Double taxation relief :
Indian rate of tax (Rs. 1,25,660 x 100 ÷ 9,00,000)
(a) Tax on doubly taxed income (Rs. 1,25,660 x 2,40,000 ÷ 9,00,000) = Rs. 33,509
(b) Tax deducted outside India Rs. 48,000
Tax relief (a) or (b), whichever is less Rs. 33,509
Tax Payable (Rs. 1,25,660 – 33,509) = 92,151
Rounded off Rs. 92,150.
Q.4. X is a resident in India for income tax purposes. His total income in P.Y. 2011-12 is Rs. 6,45,000, which includes net foreign income of Rs.45,000 (Income Rs.50,000-tax paid in foreign country, Rs.5,000) from a country with which India does not have double tax avoidance agreement. Will X is allowed relief from double taxation? If so, what are the conditions prescribed for the purpose and what will be the amount of relief?
Q.5. Professor Gupta, an individual and citizen of India, earned the following remuneration during the P.Y.:
|Salary from Delhi university for 8 months||6,00,000|
|Salary form a university of U.S.A||6,00,000|
He went to U.S.A on leave without four months during the P.Y. He returned to India on 1.4.2012 and brought with him Rs.3,00,000 in convertible foreign exchange. The foreign university deducted tax at source Rs.90,000
Compute (i) Double taxation relief and (ii) Tax payable for A.Y. 2012-13.