Dy. CIT v. BOC Group Ltd.

INCOME TAX ACT, 1961

--Double taxation relief--Agreement between India and United KingdomApplicability of surcharge and education cess--Assessee was a foreign company. It filed return of income declaring certain income and subjecting the same to tax at the rate of 15 per cent in terms of DTAA. It did not calculate surcharge and education cess on the tax rate, as according to assessee Indian tax defined in DTAA was income tax including any surcharge thereon, and education cess was a kind of additional surcharge. Assessment was completed under section 143(1) by applying normal tax rates ignoring the DTAA rates and, thereafter, applying surcharge and education cess. CIT(A) held that nature of income was fees for technical services and tax rates applicable would be rates as per DTAA, i.e., 15 per cent. Further held that the surcharge and education cess was not to be levied on the tax rate prescribed under DTAA. Held: Where the Article 2 stated that surcharge was included in income tax and the tax rate of 15 per cent for fee for technical services was prescribed in Article 13, it would have to be deemed to include surcharge and since cess was nothing but an additional surcharge, the tax prescribed under DTAA @ 15 per cent in the instant case would be deemed to have included surcharge and education cess. Hence, when the 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.

Income Tax Act, 1961, Section 90

Followed:DIC Asia Pacific Pte. Ltd. v. Asstt. DIT (International Taxation) (2012) 52 SOT 447 (Kol-Trib).

REFERRED : CIt v. Arthusa Offshore Co. (2008) 169 Taxman 484 (Uttaranchal), Sunil V. Motiani v. ITO (International Taxation) (2013) 59 SOT 37 (Mum-Trib) and Parke Davis & Co. LIC v. Asstt. CIT (2014) 162 SOT 282 (Mum-Trib).

FAVOUR : In favour of assessee.

A.Y. : 2010-11

IN THE ITAT, KOLKATA C BENCH

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