TMI Blog2012 (6) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... tends the scope of the ‘tax’ by laying down that it shall also cover “any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Agreement in addition to, or in place of, the taxes referred to in paragraph 1”. "Education cess, introduced by the Finance Act, 2004, described in Section 2(11) of the Finance Act 2004, is nothing but in the nature of an additional surcharge. Accordingly, the “education cess” being in the nature of an “additional surcharge” is covered by Article 2. Accordingly, education cess cannot indeed be levied in respect of tax liability of the appellant company - Decided in favor of appellant. - I.T.A. No. 1458/Kol/2011 - - - Dated:- 20-6-2012 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said tax liability. Aggrieved, inter alia, by the levy of surcharge and education cess, assessee carried the matter in appeal before the CIT(A) but without complete success on this issue. While learned CIT(A) upheld the assessee s grievance against levy of surcharge, learned CIT(A) was of the view that there is no specific provision in the DTAA or it is provided anywhere that cess will not be charged.. , and, accordingly, he held that education cess has been rightly levied. To this extent, assessee s grievance was rejected. The assessee is not satisfied and is in further appeal before us. 4. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of the interest in all other cases. ( remaining portion of this article is not relevant for the present purposes) ARTICLE 12 : ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 10 per cent. (remaining portion of this article is not relevant for the present purposes) 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was described as such in the Finance Act introducing the said cess. 9. We have also noted that Article 2(1) of the applicable tax treaty provides that the taxes covered shall include tax and 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. Accordingly, the 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 income tax or surcharge or additional surcharge whatever name called, at the rates specified in the respective article. In any case, education cess was introduced by the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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