Assessing Officer Circle (International Taxation) 2(2)(2) New Delhi vs. M/S Nestle SA
The Supreme Court of India recently delivered a judgment in a case that pertained to the interpretation of Section 90 of the Income Tax Act. This section deals with the power of the Central Government to enter into agreements with foreign countries or specified territories to avoid double taxation of income.
The issue before the court was whether a Double Taxation Avoidance Agreement (DTAA) can be enforced by an assessee unless it has been notified by the Central Government under Section 90 of the Income Tax Act. The Revenue contended that the provisions of the Income Tax Act would prevail over the provisions of the DTAA, and that the assessee could not rely on the provisions of the DTAA unless it had been notified by the Central Government.
The assessees, on the other hand, argued that the provisions of the DTAA would prevail over the provisions of the Income Tax Act, and that they could rely on the provisions of the DTAA even if it had not been notified by the Central Government.
The Apex Court, after a detailed analysis of the relevant statutory provisions, international perspectives and practices, and the arguments of the parties, held that a DTAA cannot be enforced by an assessee unless it has been notified by the Central Government under Section 90 of the Income Tax Act.
Furthermore, the Hon’ble Court observed that Section 90 of the Income Tax Act explicitly empowers the Central Government to enter into agreements with foreign countries or specified territories to prevent double taxation of income. These agreements can only be implemented through an official notification in the Official Gazette, and that the provisions of a DTAA would prevail over the provisions of the Income Tax Act only to the extent that they are more beneficial to the assessee, and that the provisions of the Income Tax Act would continue to apply in cases where they are more beneficial to the assessee.
This decision of the Hon’ble Supreme Court is significant as it clarifies the legal position on the enforceability of DTAAs in India. It also highlights the importance of the Central Government’s role in implementing DTAAs, and the need for assessees to be aware of the provisions of DTAAs and their notification status.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/

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