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CMA Final · Direct Tax Laws and International Taxation · Assessment of Mutual Associations

Under the Income-tax Act, 2025, where an agreement under section 159 applies to an assessee, the provisions of the Act apply to him:

The provisions of the Act apply to the assessee only to the extent they are more beneficial to him than the agreement. Chapter XI is an exception and applies even where it is not beneficial.

  1. AOnly to the extent they are more beneficial to the assesseeCorrect
  2. BAlways in preference over the agreement
  3. COnly if the agreement is silent, whether or not beneficial
  4. DNever, as the agreement completely overrides the Act

Explanation

Section 159(4) provides that where an agreement applies for granting relief or avoiding double taxation, the Act's provisions apply to the extent they are more beneficial to the assessee. The Act does not apply regardless of benefit, though Chapter XI applies even if not beneficial.

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