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CHAPTER IX
DOUBLE TAXATION RELIEF
Agreement with foreign countries or specified territories.
3190. (1) The Central Government may enter into an agreement with the Government of any country outside
India or specified territory outside India,—
(a) for the granting of relief in respect of—
(i) income on which have been paid both income-tax under this Act and income-tax in that country
or specified territory, as the case may be, or
(ii) income-tax chargeable under this Act and under the corresponding law in force in that country or
specified territory, as the case may be, to promote mutual economic relations, trade and
investment, or
(b) for the avoidance of double taxation of income under this Act and under the corresponding law in force
in that country or specified territory, as the case may be, without creating opportunities for non-taxation
or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements
aimed at obtaining reliefs provided in the said agreement for the indirect benefit to residents of any
other country or territory), or
(c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under
this Act or under the corresponding law in force in that country or specified territory, as the case may
be, or investigation of cases of such evasion or avoidance, or
(d) for recovery of income-tax under this Act and under the corresponding law in force in that country or
specified territory, as the case may be,
and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing
the agreement.
(2) Where the Central Government has entered into an agreement with the Government of any country
outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief
of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such
agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that
assessee.
(2A) Notwithstanding anything contained in sub-section (2), the provisions of Chapter X-A of the Act shall
apply to the assessee even if such provisions are not beneficial to him.
(3) Any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless
the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have
the same meaning as assigned to it in the notification issued by the Central Government in the Official
Gazette in this behalf.
(4) An assessee, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be
entitled to claim any relief under such agreement unless a certificate32 of his being a resident in any country
outside India or specified territory outside India, as the case may be, is obtained by him from the Government
of that country or specified territory.
(5) The assessee referred to in sub-section (4) shall also provide such other documents and information, as
may be prescribed33.
Explanation 1.—For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign
company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as
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less favourable charge or levy of tax in respect of such foreign company.
Explanation 2.—For the purposes of this section, "specified territory" means any area outside India which
may be notified as such by the Central Government.
Explanation 3.—For the removal of doubts, it is hereby declared that where any term is used in any
agreement entered into under sub-section (1) and not defined under the said agreement or the Act, but is
assigned a meaning to it in the notification issued under sub-section (3) and the notification issued thereunder
being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which
the said agreement came into force.
Explanation 4.—For the removal of doubts, it is hereby declared that where any term used in an agreement
entered into under sub-section (1) is defined under the said agreement, the said term shall have the same
meaning as assigned to it in the agreement; and where the term is not defined in the said agreement, but
defined in the Act, it shall have the same meaning as assigned to it in the Act and explanation, if any, given to
it by the Central Government.
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