Page 409 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes agreement. The meaning assigned would be deemed to have come to effect from the
date on which the said agreement came into force and not from the date of the said
notification.
(iv) The DTAAs under section 90 are intended to provide relief to the taxpayer, who is
resident of one of the contracting country to the agreement. Such tax payer can claim
relief by applying the beneficial provisions of either the treaty or the domestic law.
However, in many cases, taxpayers who were not residents of a contracting country
also resorted to claiming the benefits under the agreement entered into by the
Indian Government with the Government of the other country. In effect, third party
residents claimed the unintended treaty benefits.
Therefore, sub-section (4) has been inserted in section 90 to provide that the non-
resident to whom the agreement referred to in section 90(1) applies, shall be allowed
to claim the relief under such agreement if a Tax Residence Certificate (TRC) obtained
by him from the Government of that country or specified territory is furnished,
containing such particulars as may be prescribed, declaring his residence of the
country outside India or the specified territory outside India, as the case may be. The
submission of TRC containing prescribed particulars shall be a necessary but not
sufficient condition for availing benefits of the agreements referred to in these
sections. In effect, further conditions can be stipulated for claiming treaty benefits,
in addition to the requirement of submission of TRC.

(v) The charge of tax in respect of a foreign company at a rate higher than the rate at
which a domestic company is chargeable, shall not be regarded as less favourable
charge or levy of tax in respect of such foreign company.

However, the charge of tax in respect of a foreign company at a rate higher than the
rate at which a domestic company is chargeable, shall not be regarded as less
favourable charge or levy of tax in respect of such foreign company.

!
Caution However, the above mentioned position is likely to be changed as and when the
General Anti-avoidance Rules (GAAR) becomes effective.

Notes Models of Treaties
Tax treaties are generally based on certain models. The most common ones are:
1. OECD model (Organisation of Economic Co-operation and Development) - Most of
India’s treaties are based on this model.
2. U.N. models Double Taxation Convention, 1980 between developed and developing
countries.
2. Double taxation relief to be extended to agreements (between specified associations)
adopted by the Central Government [Section 90A]
(i) Section 90A provides that any specified association in India may enter into an
agreement with any specified association in the specified territory outside India and
the Central Government may, by notification in the Official Gazette, make the
necessary provisions for adopting and implementing such agreement for -
grant of double taxation relief,
avoidance of double taxation of income,

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