INCOME TAX ACT, 1961

Section 90

Double Taxation Relief - DTAA between India and USA - Allowability of tax credits in respect State taxes paid in United States in respect of salary earned/taxed in India -

Assessee employed with M/s. Allen & Co., LLC, claimed relief for double taxation with respect to Federal as well as State taxes paid in United States in respect of salary earned/taxed in India. AO held that only federal income tax paid in USA would be covered for the purpose of credit of tax paid abroad. Held: Even though assessee was covered by the scope of Indo-US DTAA, so far as tax credit in respect of taxes paid in these countries was concerned, provisions of section 91, being beneficial to assessee, hold the field. As section 90 does not discriminate between State taxes and federal taxes, and in effect provides for both these types of income, taxes have to be taken into account for the purpose of tax credits against Indian income tax liability, assessee was, in principle, entitled to tax credits in respect of the same, however, subject to the rider that credit for all taxes paid abroad, in any case, cannot exceed Indian income-tax liability in respect of same income.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

Income Tax Act, 1961

Section 91

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