Advanced Direct Tax Laws and Practice · Double Taxation Avoidance Agreement (DTAA)

Adoption of Agreements Between Specified Associations under Section 159

Updated 11 October 2026 · Fact-checked

Under section 159(2) of the Income-tax Act, 2025, a specified association in India may enter into an agreement with a specified association in a specified territory for double taxation relief. The agreement has effect only when the Central Government notifies provisions to adopt and implement it. Answer by stating the provision, the facts, and the conclusion.

Understand Adoption of Agreements between Specified Associations

Normally a DTAA is signed between the Government of India and the government of another country. Section 159(1) allows this. It also allows an agreement with the Government of a specified territory.

Some areas outside India are not countries, and the usual government-to-government route may not work. Section 159(2) fills this gap. It lets a specified association in India sign an agreement with a specified association in that territory.

Two terms matter. A specified territory is any area outside India that the Central Government notifies as such. A specified association is any institution, association or body, incorporated or not, that (A) functions under a law in force in India or under the laws of the specified territory, and (B) is notified as such by the Central Government.

An agreement between associations is not self-operating. The Central Government must, by notification, make the provisions necessary for adopting and implementing it. Only after notification does section 159(4) apply to the assessee.

The purposes are the same as for a government agreement under section 159(3): relief for doubly taxed income, avoidance of double taxation without creating opportunities for non-taxation or reduced taxation, exchange of information, and recovery of tax.

Key rules to remember

Government route: Section 159(1): Central Government agreement with (a) any other country or (b) any specified territory; The Government may also notify provisions to implement the agreement.
Association route: Section 159(2): specified association in India + specified association in specified territory + notification by Central Government; The notification adopts and implements the agreement.
Purposes of agreement: Section 159(3): (a) relief; (b) avoidance of double taxation; (c) exchange of information; (d) recovery of tax; Clause (b) requires that no opportunity for non-taxation, reduced taxation or treaty shopping is created.
Beneficial provisions rule: Section 159(4): the Act applies to the extent it is more beneficial to the assessee; Applies where a government agreement exists, or an association agreement has been notified.
Chapter XI override: Section 159(6): Chapter XI applies even if not beneficial; Applies irrespective of sub-section (4).
Non-resident's conditions: Section 159(8): residence certificate from that Government + prescribed documents and information; Both are needed to claim relief.
Definitions: Section 159(9): specified association and specified territory are those notified by the Central Government; A specified association must also function under a law in force in India or in the specified territory.

How to solve Adoption of Agreements between Specified Associations questions

Use this order for any question on association agreements. Tie each step to the facts given.

1Identify the parties. Is it the Government of India or an association? Is the other side a country or a territory?
2Check the territory. Is it an area outside India notified as a specified territory?
3Check each association. Does it function under a law in force in India or the territory, and is it notified as a specified association?
4Check notification. Has the Central Government notified provisions adopting and implementing the agreement?
5State the purpose covered: relief, avoidance of double taxation, information exchange or recovery. Mention the anti-abuse condition if relevant.
6Apply section 159(4): the Act applies to the extent more beneficial. Note that Chapter XI applies regardless.
7If the assessee is a non-resident, check the residence certificate and prescribed documents under section 159(8).
8Conclude clearly: relief available or not, and why.

Quickest way: Four-check test

When to use it: Use it for short-answer questions or when time is tight.

Parties: both specified associations?
Territory: notified as specified?
Notification: agreement adopted and implemented by the Central Government?
Assessee: if non-resident, residence certificate and documents?
If all four are yes, relief applies on a more-beneficial basis, subject to Chapter XI.

Common mistakes in Adoption of Agreements between Specified Associations

Treating an association agreement as valid on signing alone.
Students assume it works like a government treaty.
Fix: State that the Central Government must notify provisions to adopt and implement it.
Saying any association in India can sign.
The word 'specified' is skipped.
Fix: The body must be notified as a specified association and function under a law in force in India or the territory.
Confusing specified territory with any foreign country.
Both are outside India.
Fix: A specified territory is an area outside India notified as such. Countries fall under section 159(1)(a).
Saying the treaty always overrides the Act.
Section 159(4) is half remembered.
Fix: The Act applies to the extent it is more beneficial to the assessee, and Chapter XI applies even if not beneficial.
Confusing section 159 with section 160.
Both deal with double taxation relief.
Fix: Section 160 applies to countries with no agreement under section 159. It gives a deduction at the lower of the Indian rate and the foreign rate.
Omitting the residence certificate for a non-resident.
Students focus only on the agreement.
Fix: Under section 159(8) a non-resident needs a residence certificate from that Government plus prescribed documents.

Worked examples

Example 1

An Indian professional body, notified as a specified association, signs an agreement with a similar body in an area outside India that has been notified as a specified territory. The agreement has not yet been notified by the Central Government. A resident of India asks whether he can claim relief under it. Advise.

Show the solution

Provision: section 159(2) allows a specified association in India to enter into an agreement with a specified association in the specified territory, and the Central Government must notify provisions to adopt and implement it.
Facts: both parties and the territory are notified. The agreement itself is not notified.
Section 159(4)(b) applies only where the association agreement has been notified under sub-section (2).
Conclusion: relief cannot be claimed under the agreement until notification. The assessee may check whether section 160 is available, but that section applies only to countries with which there is no agreement under section 159.

Answer: No. The agreement takes effect for relief only after the Central Government notifies provisions to adopt and implement it under section 159(2).

Example 2

A non-resident, Mr. Rao, claims relief under a notified agreement between specified associations. He has no residence certificate from the Government of the specified territory. Can he get relief?

Show the solution

Provision: section 159(8) says a non-resident can claim relief under an agreement under sub-section (1) or (2) only when two conditions are met.
Condition (a): a certificate of residence obtained from the Government of that country or specified territory.
Condition (b): he provides other prescribed documents and information.
Facts: the certificate is missing, so condition (a) fails.
Conclusion: he is not entitled to relief now, even though the agreement is notified.

Answer: No. Without the residence certificate and the prescribed documents, relief cannot be claimed under section 159(8). He may claim once both are provided.

Exam tips

Quote section 159(2) and the words 'notification' and 'specified association' in your answer.
Define both specified association and specified territory using section 159(9), since this is an easy mark.
In case questions, check notification before discussing relief.
Mention section 159(4) and section 159(6) together to show you know the limit on beneficial treatment.
Do not bring in section 160 unless the facts mention a country without an agreement.

Practice questions from Double Taxation Avoidance Agreement (DTAA)

Adoption of Agreements between Specified Associations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalAdoption of Agreements between Specified Associations

Adoption of Agreements between Specified Associations: frequently asked questions

What is a specified association under the Income-tax Act, 2025?

It is any institution, association or body, incorporated or not, that functions under a law in force in India or in the specified territory. It must also be notified as such by the Central Government.

What is a specified territory?

It is any area outside India that the Central Government notifies as a specified territory. The Government may enter an agreement with its government, or an association route may be used.

Is an agreement between associations effective on its own?

No. The Central Government must notify provisions to adopt and implement it. Section 159(4)(b) applies only after notification.

Does the agreement always override the Act?

No. The Act applies to the extent it is more beneficial to the assessee. Chapter XI applies even if its provisions are not beneficial.