DTAA also reduces cases of tax evasion. The DBA applies to the U.S. Federal Income Tax or, in other words, U.S. income tax. However, the agreement does not apply to the following taxes: whether the amounts levied by the Japanese petronet group for the supply of equipment and materials at sea were taxable under the Indian Income Tax Act and the Indo-Japan Double Taxation Convention. The Ruling Authority (Income Tax) decided that the Japanese company was required to pay direct taxes under the agreement. That`s why the company transferred the Supreme Court. It argued that the transactions took place outside the country. The contract was divisible and therefore not taxable for offshore services and offshore supplies….