Given below are two statements one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): Section 91 provides for grant of unilateral relief in the case of resident taxpayers on income which has been taxed in India as well as in the country with which there is no Double Taxation Avoidance Agreement. Reason (R): The relief under section 91 is granted by allowing to the tax payer a deduction from tax liability of an amount equal to the tax calculated at the average Indian rate of tax or the amount of tax calculated at the rate of tax of that other country on the doubly taxed income, whichever is higher. In the light of the above statements, choose the most appropriate answer from the options given below:
Analysis of Assertion (A)
Assertion (A) states that Section 91 provides unilateral relief for resident taxpayers when income is taxed in India and another country lacking a Double Taxation Avoidance Agreement (DTAA).
- Section 91 of the Income Tax Act, 1961, specifically addresses the scenario where a resident taxpayer has paid income tax in a country with which India does not have a DTAA.
- It allows for unilateral relief to prevent double taxation.
- Therefore, Assertion (A) is factually correct.
Analysis of Reason (R)
Reason (R) describes the method for granting relief under Section 91, suggesting it involves choosing the higher of the Indian tax rate or the foreign tax rate on the doubly taxed income.
- The relief under Section 91 is calculated based on the tax payable on that specific income in India and the tax actually paid in the foreign country.
- The relief granted is the lesser of the two amounts: (i) the Indian income-tax payable on the doubly-taxed income, or (ii) the amount of income-tax paid in the other country on that income.
- Reason (R) incorrectly states the relief is the higher amount.
- Therefore, Reason (R) is incorrect.
Conclusion
Based on the analysis:
- Assertion (A) is correct.
- Reason (R) is incorrect.
This corresponds to Option C, which states "(A) is correct but (R) is not correct".
Important Questions from International Taxation
Counter Vailing Duties (CVD) are often imposed on imports to offset the impact of
The main objective of safeguard duty is
Arm's length price as per section 92F is the price applied or proposed to be applied when:
- Which of the following requirements have to be satisfied in order that an assessee is entitled to claim deduction under section 91 for doubly taxed income?
A. The assessee must have been non- resident in India in the relevant previous year.
B. The assessee must have been resident in India in the relevant previous year.
C. Income must have been accrued or arisen to him during that previous year in India.
D. Income must have been accrued or arisen to him during that previous year outside India.
E. In respect of that income which accrued or arouse outside India, he must have paid by deduction or otherwise tax under the law in force in the country in question.
Choose the correct answer from the options given below: - When tax system would be progressive?
