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CMA Final · Direct Tax Laws and International Taxation · Double Taxation Avoidance Agreements (DTAA)

A treaty uses the term 'royalty' but does not define it. The term is also not defined in the Act or any notification under section 159(7)(b), and the Central Government has no explanation for it. How is the term interpreted under section 159(7)(c) for a tax-related meaning?

Such a term takes the meaning assigned in any Act of the Central Government related to taxes, and that meaning is deemed effective from the date the agreement came into force, as section 159(7)(c) provides.

  1. AAs in any Act of the Central Government related to taxes, with effect from the date the agreement came into forceCorrect
  2. BAs in the law of the other contracting country, from the date of the assessment year
  3. CAs the Assessing Officer decides in each case, from the date of filing of return
  4. DAs in the Companies Act, 2013, from the date of notification of the Act

Explanation

Section 159(7)(c) says an undefined term takes its meaning from any Central Act related to taxes (and otherwise from another Central law), deemed effective from the date the agreement came into force. The other options invent different sources or dates.

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