Skip to content

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

Under the Income-tax Act, 2025, an agreement under section 159 applies to a non-resident assessee, and some provisions of the Act are more beneficial to him than the agreement. Which statement is correct?

Where an agreement applies, the Act's provisions apply to the extent they are more beneficial to the assessee, under section 159(4). However, section 159(6) provides that Chapter XI applies irrespective of that, even if it is not beneficial to the assessee.

  1. AThe agreement always prevails, even if the Act is more beneficial
  2. BThe Act's provisions apply to the extent more beneficial, but Chapter XI applies even if not beneficial to himCorrect
  3. CThe Act's provisions apply only if the agreement is silent, and Chapter XI is then overridden
  4. DThe Act's provisions never apply once an agreement exists, including Chapter XI

Explanation

Section 159(4) says the Act applies to the extent more beneficial to the assessee. Section 159(6) overrides this for Chapter XI, which applies even if not beneficial. The third option wrongly says Chapter XI is overridden.

Did you get it right without looking?

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

Practise Double Taxation Avoidance Agreement (DTAA)Free diagnostic mock

More Double Taxation Avoidance Agreement (DTAA) questions