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

Under section 159(4) of the Income-tax Act, 2025, when India has a notified agreement granting relief to an assessee, how do the provisions of the Act apply to that assessee?

Where an agreement applies to the assessee, the Act's provisions apply only to the extent they are more beneficial to him. The assessee therefore gets the more favourable of the treaty or domestic law, subject to the exception that Chapter XI applies even if not beneficial.

  1. AThey apply to the extent they are more beneficial to the assesseeCorrect
  2. BThey always apply in full, overriding the agreement
  3. CThey never apply once a treaty covers the assessee
  4. DThey apply only where the agreement is silent on the subject

Explanation

Section 159(4) provides that the provisions of the Act apply to the extent more beneficial to the assessee, so the assessee gets the better of the Act or the treaty. Option D wrongly limits the Act to cases of treaty silence, ignoring the beneficial comparison. Note that Chapter XI applies even if not beneficial, under sub-section (6).

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