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CA Final · Direct Tax Laws & International Taxation · Double Taxation Relief

Under a notified agreement, a term used in the agreement is not defined in the agreement but is defined in the Income-tax Act, 2025. A separate Central Government notification also gives a meaning to that term. Which statement follows from section 159(7)?

The term takes the meaning given in the Act, along with any explanation given by the Central Government. Other notifications or Central laws apply only if the term is defined neither in the agreement nor in the Act, as section 159(7) sets out.

  1. AThe term takes the meaning assigned in the Act, together with the Central Government's explanation, if anyCorrect
  2. BThe term takes the meaning in any other law of the Central Government
  3. CThe term must be given the meaning in the foreign country's law
  4. DThe term has no meaning and the clause is void

Explanation

Under section 159(7)(a), where a term is not defined in the agreement but is defined in the Act, it has the meaning assigned in the Act and the explanation, if any, given by the Central Government. Clauses (b) and (c) apply only when the term is not defined in the Act or the agreement. Foreign law is not referred to.

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