DDIT (IT) 1(1),kolkata, Kolkata V. The BOC Group Limited, Kolkata

ITA 571/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100113 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2013
• Court: TRIBUNAL
• Department Lawyers: D NASKAR JCIT LD
• Assessee Lawyers: PRATYUSH JH UNJHUNWALA LE
• Keywords: Double taxation relief
• Section: 90

Judgement Text

ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH,JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A NO. 571/KOL/2013 A.Y : 2010-11 D.D.IT (IT)-1(1), KOLKATA VS. THE BOC GROUP L IMITED PAN: AACCT 6 494J (APPELLANT) (RESPONDENT) FOR THE APPELLANT/ SHRI D.NASKAR, JCIT, LD.D R FOR THE RESPONDENT/: SHRI PRATYUSH JH UNJHUNWALA, ADVOCATE (LEAD BY SHRI J.P KHAITAN) DATE OF HEARING: 18-11 -2015 DATE OF PRONOUNCEMENT: 30 -1 1-2015 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CIT(A)-VI, KOLKATA IN APPEAL NO. 23/CIT(A)-VI/KOL/ACIT-CPC/201 0-11 DATED 28-12-2012 AGAINST THE INTIMATION DATED 23.2.2001 U/S 143(1) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER SURCHARGE AND EDUCATION CESS COULD BE CHARGED WHEN THE TAX IS DET ERMINED TO BE PAYABLE UNDER THE DOUBLE TAXATION AVOIDANCE AGREEMENT. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE IS A FOREIGN COMPANY AND IS A TAX RESIDENT OF UNITED KINGDOM. THE RETURN OF INCOME F OR THE ASST YEAR 2010-11 WAS FILED BY THE ASSESSEE COMPANY ON 12.10.2010 DECLARI NG TAXABLE INCOME FROM BUSINESS OR PROFESSION TO THE TUNE OF RS. 11,98,03,921/- SUB JECTING THE SAME TO TAX AT THE RATE OF ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 2 15% IN TERMS OF DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) AS AGAINST THE REGULAR TAX RATE APPLICABLE TO A FOREIGN COMPANY AT THE RATE OF 40%. THE ASSESSEE FELT THAT THE PROVISIONS OF DTAA WOULD PREVAIL OVER THE ACT WHEREVER THEY ARE INCONSISTENT. WHILE FILING THE RETURN, THE ASSESSE E DID NOT CALCULATE SURCHARGE AND EDUCATION CESS ON THE TAX RATE OF 15% AS PER DTAA , AS ACCORDING TO ASSESSEE, THE TAX SPECIFIED IN ARTICLE 2 OF THE DOUBLE TAXATION CONVE NTION ENTERED INTO BETWEEN UNITED KINGDOM (UK) AND INDIA ON 25.10.1993, WHEREIN THE T ERMS INDIAN TAX IS DEFINED AS INCOME TAX INCLUDING ANY SURCHARGE THEREON. IT FEL T THAT EDUCATION CESS IS ONLY AN ADDITIONAL SURCHARGE AND HENCE IT TAKES THE CHARACT ER OF SURCHARGE. SINCE THE ARTICLE 2 WHICH DEFINES TAX STATES INCOME TAX INCLUDING SURCH ARGE, ASSESSEE FELT THAT SEPARATELY SURCHARGE AND EDUCATION CESS IS NOT TO BE APPLIED O N THE TAX RATE OF 15% WHICH IS INCLUSIVE OF ALL AND WAS OF THE OPINION THAT NO OTH ER TAX OTHER THAN 15% IS PAYABLE. 4. THE ASSESSMENT WAS COMPLETED U/S 143(1) OF THE ACT DATED 23.2.2011 ACCEPTING THE INCOME RETURNED IGNORING THE DTAA RATES. THE T AX WAS DETERMINED TO BE PAYABLE AT THE RATE OF 40% BEING THE RATE APPLICABLE TO FOR EIGN COMPANY. THEREAFTER, SURCHARGE AND EDUCATION CESS WAS ALSO APPLIED ON THE SAID RAT E. THIS WAS CHALLENGED BY THE ASSESSEE IN FIRST APPEAL. BEFORE THE LEARNED CI TA, THE ASSESSEE INTER ALIA STATED THAT SIMILAR ISSUE CAME UP BEFORE THE LEARNED CITA FOR A SST YEAR 2007-08 AND THE SAME WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE ASSESS EE PLEADED THAT THE LEARNED AO HAD IGNORED TO APPLY THE PROVISIONS OF SECTION 90 OF TH E ACT CONTAINING DTAA PROVISIONS WHICH OVERRIDES THE PROVISIONS OF THE INCOME TAX AC T WHEREVER THEY ARE INCONSISTENT AND HENCE THE CORRECT RATE OF TAX TO BE APPLIED IN THE FACTS OF THE CASE WOULD BE THE TAX RATE PRESCRIBED UNDER DTAA WHICH IS 15% WITHOUT ADD ING ANY SURCHARGE AND EDUCATION CESS AND ALSO STATED THAT IN TERMS OF SEC TION 90(2) OF THE ACT WHICH PROVIDES THAT WHERE THE CENTRAL GOVERNMENT HAS ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT OF A FOREIGN COUNTRY FOR AVOIDANCE OF DO UBLE TAXATION, THEN IN RELATION TO THE ASSESSEE TO WHOM SUCH AGREEMENT APPLIES, THE PR OVISIONS OF THIS ACT SHALL APPLY TO THE EXTENT THEY ARE ARE MORE BENEFICIAL TO THAT ASS ESSEE. THE LEARNED CITA OBSERVED ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 3 THAT THE ASSESSEE HAD RECEIVED THE INCOME IN THE NA TURE OF FEES FOR TECHNICAL SERVICES AND IN TERMS OF ARTICLE 13(2)(A) AND 13(4)(C) OF T HE INDIA UK DTAA CONVENTION, THE TAX RATE APPLICABLE WOULD BE 15% . THE LEARNED CI TA HELD THAT THE TAX RATE TO BE APPLICABLE TO THE ASSESSEE AS PER DTAA IS 15% ON WH ICH POINT, THE REVENUE IS NOT IN APPEAL BEFORE US. THE APPLICABILITY OF ARTICLE 13 OF DTAA IS NOT THE DISPUTE BEFORE US. WHETHER THE SURCHARGE AND EDUCATION CESS WOULD HAVE TO BE APPLIED ON THE TAX DETERMINED AT 15% AS PER DTAA IS THE SUBJECT MATTER OF DISPUTE. THE LEARNED CITA HELD THAT THE SURCHARGE AND EDUCATION CESS IS NOT T O BE LEVIED ON THE TAX RATE PRESCRIBED UNDER DTAA AT 15% ON FEES FOR TECHNICAL SERVICES BY RELYING ON THE DECISION OF KOLKATA TRIBUNAL IN THE CASE OF DIC ASIA PACIFIC PTE LTD VS ASST DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION IN ITA NO. 1458 (KOL) O F 2011 DATED 20.6.2012 FOR ASST YEAR 2009-10 REPORTED IN (2012) 52 SOT 447 (KOL ITA T) . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- I. THAT ON THE FACTS OF THE CASE AND IN LAW THE L D.CIT(A) FAILED TO APPRECIATED THE LEGAL POSITION THAT SURCHARGEAND EDUCATION CESSAE TO BE CHARGED ON INCOME-TAX LEVIABLE IN THIS CASE. II. THAT ON THE FACTS OF THE CASE AND IN LAW THE L D.CIT(A) ERRED IN LAW BY NOT TAKING COGNIZANCE OF THE DECISION OF THE HON BLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT, DEHRADUN VS. ARTHUSA OFFSHORE CO REPORTED IN 216 CTR 86 WHERE THE HONBLE COURT HAS HELD THAT SURCHARGE AND CESS ARE CHARGEABLE IN ADDITION TO T HE INCOME-TAX AS PER THE RATE SPECIFIED IN THE DTTA. 5. THE LEARNED DR RELIED ON THE DECISION OF UTTARAKHAND HIGH COURT IN THE CASE OF CIT VS ARTHUSA OFFSHORE CO.REPORTED IN 216 CTR 86 , WHEREIN IT WAS HELD THAT SURCHARGE IS LEVIABLE TO THE TAX DETERMINED UNDER D TAA. IN RESPONSE TO THIS, THE LEARNED AR REITERATED THE FINDINGS GIVEN BY THE LEA RNED CITA AND ARGUED THE RELEVANT PORTIONS OF THE ARTICLE 2, 3 & 13 OF THE DTAA BETWE EN INDIA AND UK AND FURTHER ARGUED THAT THE DECISION OF UTTARAKHAND HIGH COURT WAS RENDERED IN THE CONTEXT OF INDIA US TREATY , WHEREAS THE ASSESSEE IS GOVERNED BY THE INDIA UK TREATY WHEREIN THE RELEVANT CLAUSES ARE SIGNIFICANTLY DIFFERENT FR OM EACH OTHER. HE ALSO RELIED ON THE ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 4 FOLLOWING DECISIONS OF MUMBAI TRIBUNAL WHICH HAD BE EN RENDERED AFTER CONSIDERING UTTARAKHAND HIGH COURT DECISION AND ULTIMATELY DECI DING IN FAVOUR OF THE ASSESSEE:- SUNIL V. MOTIANI VS ITO (INTERNATIONAL TAXATION) RE PORTED IN (2013) 33 TAXMANN.COM 252 (MUMBAI TRIB) PARKE DAVIS AND COMPANY LLC VS ACIT REPORTED IN (20 14) 41 TAXMANN.COM 193 (MUMBAI TRIB) 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD AND THE VARIOUS CASE LAWS RELIED UPON BY THE COUNSELS OF BOTH THE SIDES. WE FIND THAT THE ASSESSEE HEREIN IS GOVERNED BY INDIA UK TREATY WHEREIN THE RELEVANT CLAUSES ARE REPRODUCED HEREUNDER FOR THE SAKE OF CO NVENIENCE:- ARTICLE 2 TAXES COVERED-1. THE TAXES WHICH ARE THE SUBJECT OF THIS CONVENTION ARE (A) IN THE UNITED KINGDOM: (I) THE INCOME-TAX; (II) THE CORPORATION TAX; (III) THE CAPITAL GAINS TAX; AND (IV) THE PETROLEUM REVENUE TAX; (HEREINAFTER REFERRED TO AS UNITED KINGDOM TAX); (B) IN INDIA THE INCOME-TAX INCLUDING ANY SURCHARGE THEREON; (HEREINAFTER REFERRED TO AS INDIAN TAX) 2. THIS CONVENTION SHALL ALSO APPLY TO ANY IDENT ICAL OR SUBSTANTIALLY SIMILAR TAXES WHICH ARE IMPOSED BY EITHER CONTRACTI NG STATE AFTER THE DATE OF SIGNATURE OF THIS CONVENTION IN ADDITION TO, OR IN PLACE OF, THE TAXES OF THAT CONTRACTING STATE REFERRED TO IN PARAGRAPH 1 O F THIS ARTICLE. THE COMPETENT AUTHORITIES OF THE CONTRACTING STATES SHA LL NOTIFY EACH OTHER OF ANY SUBSTANTIAL CHANGES WHICH MADE IN THEIR RESPECT IVE TAXATION LAWS. ARTICLE 3- GENERAL DEFINITIONS- 1. IN THIS CONVENTION, UNLESS THE CONTEXT OTHERWISE RE QUIRES: (A) THE TERM UNITED KINGDOM MEANS GREAT BRITAIN AND NOR THERN IRELAND; (B) THE TERM INDIA MEANS THE REPUBLIC OF INDIA; (C) THE TERM TAX MEANS UNITED KINGDOM TAX OR INDIAN TAX , AS THE CONTEXT REQUIRES,, BUT SHALL NOT INCLUDE ANY AMOUNT WHICH IS PAYABLE IN RESPECT OF ANY DEFAULT OR OMISSION IN RE LATION TO THE ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 5 TAXES TO WHICH THIS CONVENTION APPLIES OR WHICH RE PRESENTS A PENALTY IMPOSED RELATING TO THOSE TAXES; ARTICLE 13- ROYALTIES AND FEES FOR TECHNICAL SERVIC ES -1. ROYALTIES AND FEES FOR TECHNICAL SERVICES ARISING IN A CONTROLL ING STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE MAY BE TAX ED IN THAT OTHER STATE. 2. HOWEVER, SUCH ROYALTIES AND FEES FOR TECHNICAL SERV ICES MAY ALSO BE TAXED IN THE CONTRACTING STATE IN WHICH THEY ARISE AND ACCORDING TO THE LAW OF THAT STATE; BUT IF THE BENEFICIAL OWNER OF T HE ROYALTIES OR FEES FOR TECHNICAL SERVICES IS A RESIDENT OF THE OTHER CONT RACTING STATE, THE TAX SO CHARGED SHALL NOT EXCEED: (A) IN THE CASE OF ROYALTIES WITHIN PARAGRAPH 3(A) OF THIS ARTICLES, AND FEES FOR TECHNICAL SERVICES WITHIN PARAGRAPHS 4(A) AND ( C) OF THIS ARTICLE, (I) DURING THE FIRST FIVE YEARS FOR WHICH THIS CONVENTI ON HAS EFFECT; (AA) 15 PER CENT OF THE GROSS AMOUNT OF SUCH ROYAL TIES OR FEES FOR TECHNICAL SERVICES WHEN THE PAYER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES IS THE GOVERNMENT OF THE FIRST MENTIONED CONTRACTING STATE OR A POLITICAL SUB-DIVISION OF THAT STATE, AND (BB) 20 PER CENT OF THE GROSS AMOUNT OF SUCH ROYAL TIES OR FEES FOR TECHNICAL SERVICES IN ALL OTHER CASES; AND (II) DURING SUBSEQUENT YEARS, 15 PER CENT OF THE GROSS AMOUNT OF SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES; AND (B) IN THE CASE OF ROYALTIES WITHIN PARAGRAPH 3(B) OF THIS ARTICLE AND FEES FOR TECHNICAL SERVICES DEFINED IN PARAGRAPH 4( B) OF THIS ARTICLE, 10 PER CENT OF THE GROSS AMOUNT OF SUCH ROYALTIES A ND FEES FOR TECHNICAL SERVICES. THE EXPRESSION TAX IS DEFINED IN ARTICLE 2(1) TO INCLUDE INCOME TAXAND IS STATED TO INCLUDE SUR CHARGE THEREON, SO FAR AS I NDIA IS CONCERNED. ARTICLE 2(2) FURTHER EXTENDS THE SCOPE OF THE TAX BY LAYI NG DOWN THAT IT SHALL ALSO COVER ANY IDENTICAL OR SUBSTANTIALLY SIMILAR TAXE S WHICH ARE IMPOSED BY EITHER CONTRACTING STATE AFTER THE DATE OF SIGNATUR E OF THE PRESENT AGREEMENT IN ADDITION TO, OR IN PLACE OF, THE TAXES REFERRED TO IN PARAGRAPH 1. 7. WE FIND THAT EDUCATION CESS WAS INTRODUCED IN IN DIA BY THE FINANCE ACT, 200, AND SECTION 2(11) OF THE FINANCE ACT, 200 4 DESCRIBED IT AS FOLLOWS: (11) THE AMOUNT OF INCOME-TAX AS SPECIFIED IN SUB-S ECTIONS (4) TO (10) AND AS INCREASED BY A SURCHARGE FOR PURPOSES OF THE UNI ON CALCULATED IN THE MANNER PROVIDED THEREIN, SHALL BE FURTHER INCREASE D BY AN ADDITIONAL SURCHARGE FOR PURPOSES OF THE UNION, TO BE CALLED T HE EDUCATION CESS ON INCOME-TAX, SO AS TO FULFILL THE COMMITMENT OF THE GOVERNMENT TO PROVIDE ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 6 AND FINANCE UNIVERSALIZED QUALITY BASIC EDUCATION, CALCULATED AT THE RATE OF TWO PER CENT OF SUCH INCOME-TAX AND SURCHARGE [EMP HASIS SUPPLIED] 8. IT IS THUS CLEAR THAT THE EDUCATION CESS, AS INT RODUCED IN INDIA INITIALLY IN 2004, WAS NOTHING BUT IN THE NATURE OF AN ADDITIONAL SURCHARGE. IT WAS DESCRIBED AS SUCH IN THE FINANCE ACT INTRODU CING THE SAID CESS. 9. WE HAVE ALSO NOTED THAT ARTICLE 2(1) OF THE APPL ICABLE TAX TREATY PROVIDES THAT THE TAXES COVERED SHALL INCLUDE TAX A ND SURCHARGE THEREON. ONCE WE COME TO THE CONCLUSION THAT EDUCATION CESS IS NOTHING BUT AN ADDITIONAL SURCHARGE, IT IS ONLY COROLLARY THERETO THAT THE EDUCATION CESS WILL ALSO BE COVERED BY THE SCOPE OF ARTICLE 2. IN ANY CASE, EDUCATION CESS WAS INTRODUCED BY THE FINANCE ACT 2004, WITH EFFECT FROM ASSESSMENT YEAR 2005-06 WHICH WAS MUCH AFTER THE SIGNING OF INDIA S IMNGAPORE TAX TREATY ON 24 TH JANUARY 1994. IN VIEW OF THE SPECIFIC PROVISIONS T O THE EFFECT, THAT THE SCOPE OF ARTICLE 2 SHALL ALSO COVER ANY IDENTI CAL OR SUBSTANTIALLY SIMILAR TAXES WHICH ARE IMPOSED BY EITHER CONTRACT ING STATE AFTER THE DATE OF SIGNATURE OF THE PRESENT AGREEMENT IN ADDITION T O, OR IN PLACE OF, THE TAXES REFERRED TO IN PARAGRAPH 1, AND IN VIEW OF T HE FACT THAT EDUCATION CESS IS ESSENTIALLY OF THE SAME NATURE AS SURCHARGE , BEING AN ADDITIONAL SURCHARGE, THE SCOPE OF ARTICLE 2 ALSO EXTENDS TO T HE EDUCATION CESS. 6.1. WE FIND THAT THE ARTICLE 2 OF THE INDIA UK T REATY PROVIDES THAT INCOME TAX INCLUDING ANY SURCHARGE THEREON AND IT FURTHER PROV IDES THAT THIS CONVENTION SHALL ALSO APPLY TO ANY IDENTICAL OR SUBSTANTIALLY SIMILAR TAX ES WHICH ARE IMPOSED BY EITHER CONTRACTING STATE AFTER THE DATE OF SIGNATURE OF TH IS CONVENTION IN ADDITION TO OR IN PLACE OF THE TAXES OF THE CONTRACTING STATE REFERRED TO I N PARAGRAPH 1 OF THIS ARTICLE. HENCE BY THIS , IT CAN SAFELY BE CONCLUDED THAT THE LEVY OF EDUCATION CESS THOUGH INTRODUCED FROM FINANCE ACT, 2004 WHICH IS MUCH AFTER THE DATE OF S IGNING OF THIS CONVENTION WOULD ALSO BE MADE APPLICABLE WHILE DETERMINING THE TAX R ATES UNDER THE CONVENTION. IT IS WELL SETTLED THAT THE EDUCATION CESS IS NOTHING BUT AN ADDITIONAL SURCHARGE. WHEN THE ARTICLE 2 STATES THAT SURCHARGE IS INCLUDED IN INCO ME TAX AND THE TAX RATE OF 15% FOR FEE FOR TECHNICAL SERVICES IS PRESCRIBED IN ARTICLE 13 SHALL HAVE TO BE DEEMED TO INCLUDE SURCHARGE AND SINCE CESS IS NOTHING BUT AN ADDITION AL SURCHARGE, THE TAX PRESCRIBED UNDER DTAA @ 15% IN THE INSTANT CASE SHALL BE DEEME D TO INCLUDED SURCHARGE AND EDUCATION CESS. HENCE WE HOLD THAT WHEN THE TAX R ATE IS DETERMINED UNDER DTAA, THEN THE TAX RATE PRESCRIBED THEREON SHALL HAVE TO BE FOLLOWED STRICTLY WITHOUT ANY ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 7 ADDITIONAL TAXES THEREON IN THE FORM OF SURCHARGE O R EDUCATION CESS. RELIANCE IN THIS REGARD IS ALSO PLACED ON THE FOLLOWING DECISIONS IN SUPPORT OF OUR CONTENTIONS:- A) DIC ASIA PACIFIC PTE LTD VS ASST DIRECTOR OF IN COME TAX, INTERNATIONAL TAXATION IN ITA NO. 1458 (KOL) OF 2011 DATED 20.6.2 012 FOR ASST YEAR 2009-10 REPORTED IN (2012) 52 SOT 447 (KOL ITAT) THIS WAS A CASE OF TREATY BETWEEN INDIA AND SINGAPO RE. ISSUE INVOLVED WAS TAXABILITY OF INTEREST AND ROYALTY INCOME UNDER THE RELEVANT A RTICLE OF THE TREATY AND THE LEVY OF SURCHARGE AND EDUCATION CESS TO THE TAX PRESCRIBED UNDER DTAA IN THE RELEVANT ARTICLE. IT WAS HELD THAT :- A PLAIN READING OF ARTICLE 2, 11 AND 12 OF THE TRE ATY SHOW THAT WHILE INTEREST AND ROYALTIES CAN INDEED BE TAXED IN THE S OURCE STATE, THE TAX SO CHARGED ON THE SAME, UNDER ARTICLES 11 AND 12, CANN OT EXCEED 15% AND 10% RESPECTIVELY. THE EXPRESSION TAX IS DEFINED IN ARTICLE 2(1) TO INCLUDE INCOME TAX AND IS STATED TO INCLUDE SURCHARGE T HEREON, SO FAR AS INDIA IS CONCERNED. ARTICLE 2(2) FURTHER EXTENDS THE SCOPE OF THE TAX BY LAYING DOWN THAT IT SHALL ALSO COVER ANY IDENTICAL OR SUB STANTIALLY SIMILAR TAXES WHICH ARE IMPOSED BY EITHER CONTRACTING STATE AFTER THE DATE OF SIGNATURE OF THE PRESENT AGREEMENT IN ADDITION TO, OR IN PLACE O F, THE TAXES REFERRED TO IN PARAGRAPH 1. IT IS CLEAR THAT THE EDUCATION CESS, AS INTRODUCED IN INDIA INITIALLY IN 2004, WAS NOTHING BUT IN THE NATURE OF AN ADDITIONA L SURCHARGE. IT WAS DESCRIBED AS SUCH IN THE FINANCE ACT 2004 INTRODUCI NG THE SAID CESS. WE HAVE ALSO NOTED ARTICLE 2(1) OF THE APPLICABLE T AX TREATY PROVIDES THAT THE TAXES COVERED SHALL INCLUDE TAX AND SURCHA RGE THEREON. ONCE WE COME TO THE CONCLUSION THAT EDUCATION CESS IS NOTHI NG BUT AN ADDITIONAL SURCHARGE, IT IS ONLY COROLLARY THERETO THAT THE ED UCATION CESS WILL ALSO BE COVERED BY THE SCOPE OF ARTICLE 2. ACCORDINGLY, TH E PROVISIONS OF ARTICLE 11 AND 12 MUST FIND PRECEDENCE OVER THE PROVISIONS OF THE INCOME TAX ACT AND RESTRICT THE TAXABILITY, WHETHER IN RESPECT OF INCO ME TAX OR SURCHARGE OR ADDITIONAL SURCHARGE WHATEVER NAME CALLED, AT THE RATES SPECIFIED IN THE RESPECTIVE ARTICLE. IN ANY CASE, EDUCATION CESS WA S INTRODUCED BY THE FINANCE ACT 2004, WITH EFFECT FROM ASSESSMENT YEAR 2005-06 WHICH WAS MUCH AFTER THE SIGNING OF INDIA SINGAPORE TRATY ON 24 TH JANUARY 1994. IN VIEW OF THE SPECIFIC PROVISIONS TO THE EFFECT THAT THE SCOPE OF ARTICLE 2 SHALL ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 8 ALSO COVER ANY IDENTICAL OR SUBSTANTIALLY SIMILAR TAXES WHICH ARE IMPOSED BY EITHER CONTRACTING STATE AFTER THE DATE OF SIGNA TURE OF THE PRESENT AGREEMENT IN ADDITION TO, OR IN PLACE OF , THE TAXE S REFERRED TO IN PARAGRAPH 1, AND IN VIEW OF THE FACT THAT EDUCATION CESS IS ESSENTIALLY OF THE SAME NATURE AS SURCHARGE, BEING AN ADDITIONAL SURCHARGE, THE SCOPE OF ARTICLE 2 ALSO EXTENDS TO THE EDUCATION CESS. FOR THE REASONS SET OUT ABOVE, WE ARE OF THE CONSI DERED VIEW THAT THE EDUCATION CESS CANNOT INDEED BE LEVIED IN RESP ECT OF TAX LIABILITY OF THE APPELLANT COMPANY. THE ASSESSEE, THEREFORE, DESERV ES TO SUCCEED ON THIS ISSUE. B) SUNIL V. MOTIANI VS ITO (INTERNATIONAL TAXATION ) REPORTED IN (2013) 33 TAXMANN.COM 252 (MUMBAI TRIB) THIS JUDGEMENT WAS RENDERED BY THE MUMBAI TRIBUNAL IN THE CONTEXT OF INDIA UAE TREATY AFTER CONSIDERING THE DECISION OF THE UTTARA KHAND HIGH COURT IN THE CASE OF CIT VS ARTHUSA OFFSHORE CO REPORTED IN 216 CTR 86 WHIC H DEALT WITH INDIA US TREATY. IT WAS HELD THAT :- 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTEN TIONS HAVE CAREFULLY BEEN CONSIDERED. WE FOUND THAT THE ISSUE RAISED BY THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFOREMENTIONED DEC ISIONS OF TRIBUNAL IN THE CASE OF SUNIL V. MOTIANI (SUPRA). C) PARKE DAVIS AND COMPANY LLC VS ACIT REPORTED I N (2014) 41 TAXMANN.COM 193 (MUMBAI TRIB) THIS JUDGEMENT WAS RENDERED IN THE CONTEXT OF INDIA USA TREATY AFTER CONSIDERING THE DECISION OF THE UTTARAKHAND HIGH COURT IN THE CASE OF CIT VS ARTHUSA OFFSHORE CO REPORTED IN 216 CTR 86 WHICH DEALT WITH INDIA US T REATY. IT WAS HELD THAT :- 2. AT THE OUTSET IT WAS SUBMITTED BY LD. AR THAT T HE ONLY ISSUE RAISED BY THE ASSESS IN THE PRESENT APPEAL IS THAT THE EDUCAT ION CESS AND SECONDARY AND HIGHER SECONDARY EDUCATION CESS OF RS.50,104/- IS NOT LIABLE TO BE PAYABLE WHEN TAX IS DETERMINED AS PER INDIA US TAX TREATY . IT WAS SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF ITAT IN THE CASE OF SUNIL V. MOTIANI V. ITO [2013 3 3 TAXMANN.COM 252/59 SOT 37 (MUMBAI-TRIB). HE HAS PLACED A COPY OF THE S AID ORDER ON OUR ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 9 RECORD AND A COPY WAS ALSO GIVEN TO LD. DR. HE DRE W OUR ATTENTION TOWARDS THE OBSERVATION OF THE TRIBUNAL IN PARA-5. 3. ON THE OTHER HAND, LD. DR SUBMITTED THAT EDUCATION CESS AND SECONDARY AND HIGHER SECONDARY EDUCATION CESS ARE C ONSIDERED TO BE TAX PAYABLE EVEN WHEN THE TAX IS DETERMINED ON THE BASI S OF DTAA. FOR THIS PURPOSE SHE RELIED UPON THE DECISION OF HONBLE UTT ARAKHAND HIGH COURT IN THE CASE OF CIT V. ARTHUSA OFFSHORE CO. [2008] 169 TAXMAN 484 AND DECISION OF ADVANCE RULLING AUTHORITY IN THE CASE O F AIRPORTS AUTHORITY OF INDIA, IN RE[2008] 299 ITR 102/168 TAXMAN 158(AAR-N EW DELHI). 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTION S HAVE CAREFULLY BEEN CONSIDERED. WE FOUND THAT THE ISSUE RAISED BY THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFOREMENTIONED DEC ISIONS OF TRIBUNAL IN THE CASE OF SUNIL V. MOTIANI (SUPRA). D) ITO (INTL TAXN) VS M/S M FAR HOTELS LTD IN ITA NOS. 430 TO 435 / COCH / 2011 DATED 5.4.2013 (COCHIN TRIBUNAL) THIS JUDGEMENT WAS RENDERED IN THE CONTEXT OF INDIA FRANCE TREATY. ISSUE INVOLVED WAS TAXABILITY OF MANAGEMENT FEES AND INTEREST INCOME U NDER THE RELEVANT ARTICLE OF THE TREATY AND THE LEVY OF SURCHARGE AND EDUCATION CESS TO THE TAX PRESCRIBED UNDER DTAA IN THE RELEVANT ARTICLE. IT WAS HELD THAT :- IF THE PROVISIONS OF DTAA ARE MORE BENEFICIAL TO T HE TAXPAYER, THEN THE PROVISIONS OF DTAA WOULD PREVAIL OVER THE INDIAN IN COME TAX ACT. SINCE THE DTAA IS SILENT ABOUT THE SURCHARGE AND EDUCATIO N CESS FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE TAXPAYER MAY TAKE ADVANTAGE OF THAT PROVISION I N THE DTAA FOR DEDUCTION OF TAX. THE CITA HAS ONLY DELETED THE TA X COMPONENT TO THE EXTENT OF SURCHARGE AND EDUCATION CESS AT THE RATE APPLICABLE UNDER THE DTAA. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INF IRMITY IN THE ORDERS OF LOWER AUTHORITY. ACCORDINGLY, THE SAME ARE CONFIRM ED. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECE DENTS, WE HOLD THAT THE SURCHARGE AND EDUCATION CESS IS NOT LEVIABLE WHEN THE TAX RAT E IS PRESCRIBED UNDER DTAA. HENCE ITA NO. 571/KOL/2013-C-AM THE BOC GROUP LTD 10 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LE ARNED CITA IN THIS REGARD. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 30 / 11 /2015 1. . THE APPELLANT: THE DDIT (IT) 1(1) KOLKATA ROOM NO. 210, 2 ND FL., AAYKAR BHAWAN POORVA, 110 SHANTI PALLY, KOL-107. . 2 THE RESPONDENT-THE BOC GROUP LIMITED C/O SHRI NIME SH KUMAR, PRICEWATERHOUSE COOPERS PVT. LTD PLOT NO. 56 & 57 BLOCK-DN, SECTOR- V SALT LAKE, KOLKATA-91. 3 / THE CIT, 4.THE CIT(A) 5 . DR, KOLKATA BENCH 6 . GUARD FILE . TRUE COPY, BY ORDER, ASSTT REGISTRAR SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 30 /11/2015 COPY OF THE ORDER FORWARDED TO:-