The Tax PublishersSA No. 34/Hyd/2019 & ITA No. 2043/Hyd/18
2019 TaxPub(DT) 1864 (Hyd-Trib) : (2019) 176 ITD 0294 : (2019) 199 TTJ 0273INCOME TAX ACT, 1961
Section 90
When tax rate was determined under DTAA, then the tax rate prescribed thereon would have to be followed strictly without any additional taxes thereon in the form of surcharge or education cess, therefore, direction was given to AO to delete the levy of surcharges and education cess.
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Double taxation relief - Agreement between India and UAE - Applicability of surcharge and education cess -
Assessee, a foreign company, earned royalty income and interest income. Assessee paid tax @ 10% (royalty) and @12.5% (interest) respectively as per India UAE Double Taxation Avoidance Agreement. However, AO had also levied 2% surcharge and 3% education cess on the tax so computed, which was sustained by CIT(A). The assessee's contention was that the surcharge and education cess was not to be levied on the tax rate prescribed under DTAA. Held: Article 2 of the tax treaty provided that the taxes covered should include tax and surcharge thereon. Further that, education cess was nothing, but an additional surcharges which was also covered by the scope of article 2. Provision of articles 11 and 12 must find precedence over the provision of Income Tax and restrict the liability in respect of income tax or surcharge or additional surcharge. Thus, direction was given to the AO to delete the levy of surcharges and education cess.
Followed:DIC Asia Pacific Pte. Ltd. v. ADIT (2012) 18 ITR(T) 358 (Kol) : 2012 TaxPub(DT) 2517 (Kol-Trib).
REFERRED : Capgemini SA v. Deputy Commissioner of Income Tax (International Taxation)-2(1)(1), Mumbai [13-7-2016] (2016) 72 taxmann.com 58 (Mumbai-Trib.) : 2016 TaxPub(DT) 3646 (Mum-Trib); Deputy Director of Income Tax-3(1), Mumbai v. J.P. Morgan Securities Asia (P.) Ltd. [23-10-2013] (2014) 42 taxmann.com 33 (Mumbai-Trib.) : 2015 TaxPub(DT) 0683 (Mum-Trib); Deputy Director of Income Tax (IT)-1(1), Kolkata v. BOC Group Ltd. [30-11-2015] (2015) 64 taxmann.com 386 (Kolkata-Trib.) : 2016 TaxPub(DT) 0169 (Kol-Trib); Everest Industries Ltd. v. Joint Commissioner of Income Tax, Range-1 [31-1-2018], (2018) 90 taxmann.com 330 (Mumbai-Trib.) : 2018 TaxPub(DT) 2083 (Mum-Trib); Soregam SA v. Deputy Director of Income Tax, Circle-3(2), Int. Taxation, New Delhi [30-11-2018] (2019) 101 taxmann.com 94 (Delhi-Trib.) and Sunil V. Motiani v. Income Tax Officer (International Taxation)-4(1) [27-2-2013] (2013) 33 taxmann.com 252 (Mumbai-Trib.) : 2013 TaxPub(DT) 2285 (Mum-Trib).
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE ITAT, HYDERABAD 'A' BENCH
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