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2009 (10) TMI 595 - AT - Income TaxDouble Taxation Avoidance Agreement - Tax Rate - The ld. CIT(A) has erred in directing to tax @ 43% of the total income in terms of Article 24(2) of the Indo-Mauritian DTAA instead of @ 55% charged in the assessment - Since, Indian domestic bank and PE of the assessee bank were engaged in banking activities but the activities were not the same; they might only be similar - Co-operative societies are charged with different rates looking to their social involvement and upliftment of poor and the prospects of their betterment though co-operative sector. Clauses (6),(1)and (8) of Model Conventions on article 25(2) provide that it will not be a discrimination, if the Contracting State provides special privilege to public bodies, or whose activities are performed for public benefit, or to its own bodies being Integral part of the State, etc - Therefore, it was not acceptable to compare co-operative societies with non-resident banking companies upon whom there is no such social burden. Further, Explanation to section 90, so introduced with effect from 1-4-1962 is an integral part of section - It clearly lays down that charging of foreign company at a higher rate would not be treated as less favourable - Thus, set aside the order of the learned CIT(A) and decide the issue in favour of the revenue. Disallowance - Travelling and entertainment expenses - the restriction has been clearly provided that the expenditure is to be allowed subject to limitation of the Taxation Laws of the Contracting States but no such restriction is incorporation in the DTAA with Mauritius and, therefore, restriction provided u/s. 37(2) of the Income-tax Act, cannot be enforced - Thus, allowed the expenditure.
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