Skip to content

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

Under section 159 of the Income-tax Act, 2025, a term used in a treaty is not defined in the treaty but is defined in the Act. What meaning applies?

The term takes the meaning assigned in the Income-tax Act, along with any explanation given by the Central Government. The treaty definition applies first if there is one, and only if the Act is also silent do notifications and other Central laws come into play.

  1. AThe meaning given in the Act, along with any explanation issued by the Central GovernmentCorrect
  2. BThe meaning given in the law of the other country
  3. CThe meaning in any other law of the Central Government, ignoring the Act
  4. DThe meaning that is least favourable to the assessee

Explanation

Section 159(7)(a) says a term defined in the treaty takes the treaty meaning; if it is not defined there but is defined in the Act, it has the Act meaning and the explanation, if any, given by the Central Government. The other options do not follow this order.

Did you get it right without looking?

One question tells you little. A timed set on Double Taxation Avoidance Agreements (DTAA) shows your real accuracy, how long you take and where you lose marks.

Practise Double Taxation Avoidance Agreements (DTAA)Free diagnostic mock

More Double Taxation Avoidance Agreements (DTAA) questions