2020 (10) TMI 297

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....sessment year 2006-07. The appeal was admitted by a bench of this Court vide order dated 12.08.2013 on the following substantial question of law: (i) Whether the Tribunal was correct in holding that the assessee is liable to be taxed at 10% in view of replacement of 15% with 10% of tax in Article 12 of the DTAA without taking into consideration that the modification of rate of tax by way of notification dated 18.07.2005 was with effect from 01.08.2005 and recorded a perverse finding? (ii) Whether the Tribunal was correct in extending the benefit of Notification to the whole of the Previous year, when the Notification was given effect from 01.08.2005 as per Article 7 of the DTAA? 2. Facts leading to filing of the appeal ....

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....26.10.2012 allowed the appeal preferred by the assessee. In the aforesaid factual background, this appeal has been filed. 3. Learned counsel for the revenue submitted that the Notification dated 18.07.2005 issued under Section 90 of the Act came into force with effect from 01.08.2005. With reference to Section 195(1) of the Act, it was contended that the rates in force mean the dates on which credit take place in the account and therefore, the Assessing Officer has rightly applied the rate of tax under the Double Taxation Avoidance Agreement (DTAA). On the other hand, learned counsel for the assessee submitted that from perusal of Article 4 of the Notification dated 18.07.2015, it is evident that paragraph 12 of Article 12 of DTAA has be....

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....n the backdrop of aforesaid well settled legal position, facts of the case may be seen. In the instant case, relevant extract of Notification dated 18.07.2005 issued under Section 90 of the Act reads as under: "Article 4: Paragraph 2 of Article 12 (Royalties and Fees for Technical Services) of the agreement shall be deleted and replaced by the following paragraph: "2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax charged shall not exceed 10%." 6. Thus, it is evident that paragraph 2 of Article 12....