“Education cess” is “additional surcharge” & is included
in “tax” under DTAA. If DTAA caps the rate of “tax” payable, cess is not payable by foreign assessee
The assessee, a Singapore company, offered interest and royalty
income to tax at the rate of 15% & 10% as specified in Articles 11
& 12 of the India-Singapore DTAA respectively. The AO held that the
assessee was
also liable to pay surcharge and education cess in addition to the tax. The CIT (A) upheld the assessee’s claim that
surcharge was not leviable though he rejected the claim with regard to cess. On further appeal by the assessee, HELD allowing the appeal:
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