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2020 (10) TMI 367 - KARNATAKA HIGH COURTLiability to pay interest u/s 234B - interest accrue or is leviable in the case of the assessee which is a foreign company and no advance tax is liable to be paid by it as its income is liable to tax deduction at source - HELD THAT:- This substantial question of law has already been answered against the revenue by this Court in M/S. TEXAS INSTRUMENTS INCORPORATED [2020 (9) TMI 873 - KARNATAKA HIGH COURT] Determining the rate of tax u/clauses of Section 115(A)(1)(b) - Taxation of Income by way of Royalty or Fees for Technical Services - tax payable on royalty income received in pursuance of agreement entered into on or after 01.06.2005 and provisions of Article 12 of the Indo-US DTAA for computing the tax payable on royalty income received in pursuance of agreements entered into on or before 01.06.2005 - HELD THAT:- The contracts or agreements being source of income had been entered into on different dates and the statute recognizes such differentiation and provides for separate tax rates for each stream. Therefore, the tax on royalty income cannot be levied on an aggregate basis and taxability of royalty under sub- clauses (A), (AB), (BB) and (C) of Section 115(a)(b) are separate and distinct. The assessee therefore can compute tax at the rate beneficial to it which is in accordance of provisions of Section 90(2) of the Act, wherein the expression 'to the extent' makes it evident that provisions of the Act or Treaty, whichever is beneficial, is applicable to the assessee. Tribunal has rightly held that the date of agreement while determining the rate of tax under the aforesaid clauses of Section 115(A)(1)(b) are separate and independent. It is also pertinent to note that the explanatory note to the provisions of Finance Act, 2013, were issued by Circular No.3/2014 dated 24.01.2014. in order to correct the anomaly prevalent in Section 115A with regard to rates of taxes in case of non-resident tax payer, in respect of income by way of royalty and piece for technical services as provided under Section 115A, was increased by way of amendment from 10% to 25%. Thus, from perusal of the aforesaid explanatory notes, it is evident that different rates of taxes in respect of royalty and piece for technical services were provided under different agreements. Therefore, the Tribunal has rightly taken the view that for the purposes of computing tax payable on the royalty income received, it has to be taxed with reference to the provisions of the agreement. - Decided against revenue.
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