Understanding Section 91 Deduction for Doubly Taxed Income

Section 91 of the Income Tax Act, 1961, provides relief to an assessee who has paid tax in a foreign country on income that is also taxable in India. This relief is available to prevent the same income from being taxed twice. To be eligible for this deduction, certain specific conditions related to the assessee's residency, the source of income, and the tax paid abroad must be met.

Analysis of Conditions for Section 91 Relief

Let's examine each condition presented in the options to determine which ones must be satisfied for an assessee to claim a deduction under Section 91:

• Condition A: The assessee must have been non-resident in India in the relevant previous year.

  This condition is generally incorrect. Relief under Section 91 is typically claimed by residents of India who earn income from outside India that is taxed in both countries. For a non-resident, the scope of Indian taxation is usually limited, and the applicability of Section 91 in such cases is different or non-existent for income earned abroad.

• Condition B: The assessee must have been resident in India in the relevant previous year.

  This condition is correct. To claim relief in India for taxes paid on foreign income, the assessee must be a resident of India during the relevant previous year. India taxes its residents on their global income.

• Condition C: Income must have been accrued or arisen to him during that previous year in India.

  This condition is incorrect. Section 91 specifically deals with income that has accrued or arisen outside India. If income accrued or arose in India, it would be taxed in India under Indian tax laws, and the claim for double taxation relief related to foreign taxes paid would not apply to this Indian-sourced income.

• Condition D: Income must have been accrued or arisen to him during that previous year outside India.

  This condition is correct. The fundamental premise of Section 91 relief is that the income in question is earned from a foreign source (i.e., accrued or arisen outside India) and has been subjected to tax in that foreign country.

• Condition 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.

  This condition is correct and is the core requirement for Section 91 relief. The assessee must have actually paid tax on the foreign-sourced income in the country where it arose. This payment could be through deduction at source or any other mode recognized by that country's tax laws.

Determining the Correct Combination of Conditions

Based on the analysis above, the conditions that must be satisfied for an assessee to be entitled to claim deduction under Section 91 for doubly taxed income are:

• The assessee must have been resident in India in the relevant previous year (Condition B).
• The income must have accrued or arisen to him during that previous year outside India (Condition D).
• In respect of that foreign-sourced income, tax must have been paid in the foreign country (Condition E).

Therefore, the correct combination of conditions is B, D, and E only.