CA Final · Direct Tax Laws & International Taxation · Double Taxation Relief
An agreement notified under section 159 uses the term 'fees for technical services' but does not define it, though the Income-tax Act, 2025 defines the term. Another term, 'enterprise', is defined in the agreement itself. As per section 159(7), which meaning applies?
'Enterprise' carries the meaning given in the agreement, while 'fees for technical services' carries the meaning in the Income-tax Act, 2025 together with any explanation by the Central Government. Section 159(7)(a) gives priority to the agreement's own definition and then to the Act for terms the agreement leaves undefined.
- AFor both terms, the Act's meaning, since domestic law prevails
- BFor 'fees for technical services' the meaning in the Act and the Central Government's explanation, if any; for 'enterprise' the meaning in the agreementCorrect
- CFor both terms, the meaning in the agreement, and undefined terms are void
- DFor 'fees for technical services' the meaning in any other Central Act; for 'enterprise' the meaning in the Act
Explanation
Under section 159(7)(a), a term defined in the agreement has the meaning given there. A term not defined in the agreement but defined in the Act has the Act's meaning plus any explanation given by the Central Government. So 'enterprise' takes the agreement's meaning and 'fees for technical services' takes the Act's.
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