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TMI Blog2012 (6) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in upholding the levy of 'education cess' and 'higher education cess' at the rates of 2% and 1% respectively, in addition to the tax rates prescribed in the India Singapore Double Taxation Avoidance Agreement (209 ITR Statue 1; 'applicable tax treaty', in short). 3. The material facts are not in dispute. The assessee being a company incorporated under the laws of, and fiscally domiciled in, the Republic of Singapore, is eligible for the benefits of the India Singapore tax treaty. The assessee filed a return of income disclosing interest income of Rs. 28,84,476 and royalty income of Rs. 5,87,02,687, and claimed that, under the provisions of Article 11 and Article 12 of the applicable tax treaty, these incomes are taxable @ 15% and 10% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation laws. ARTICLE 11 : INTEREST 1. Interest 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 interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed : (a) 10 per cent of the gross amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng State after the date of signature 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 India by the Finance Act, 2004, and Section 2(11) of the Finance Act 2004 described it as follows: (11) The amount of income-tax as specified in sub-sections (4) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the "Education Cess on income-tax", so as to fulfil the commitment of the Government to provide and finance universalised quality basic education, calculated at the rate of two per cent of such income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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