Document Fragment View

Matching Fragments

A plain reading of the above tax treaty provision makes it clear that it deals with discrimination on the ground of nationality alone. To put it in simple words, it provides that nationals of France in India will not be subjected to any taxation, or any requirement connected with such taxation, which is more burdensome than similar taxation or requirement in connection therewith on an Indian national in India. The same principle would naturally also apply on Indian nationals in France vis-รก- vis French nationals in France. As second limb of the non-discrimination clause lays down, this non discrimination clause is particularly aimed at "exemption, deduction, credit or other allowance accorded in consideration of the family circumstances", such as allowances in respect of dependants etc., which anyway do not find place in the Indian tax laws. The non-discrimination clause seeks to ensure that the Contracting States do not decline any such allowance only on the ground of tax payer's nationality. That will be the situation, for example, in a case in which dependant allowance in computation of total income is allowed only to the nationals of that country and the same is not extended to the nationals of the other country who are residents in the first country. In the Indian perspective, such a situation may arise when, for example, deduction under section 80DD, for deduction in respect of maintenance of a dependant with disability, is restricted to Indian nationals only. In such an eventuality, in view of the provisions of Article XXI, the ITA Nos.8693 of 1995 and 507 of 2000 Banque Nationale DE Paris Bombay benefits of that provision would have been available to the French nationals as well. Another situation in which the provisions of Article XXI may affect the provisions of the Income-tax Act is perhaps the entitlement for deduction under section 80R which is available only to an Indian citizen. Since one of the necessary conditions for entitlement of deduction under section 80R, in respect of remuneration from certain foreign incomes in the case of professors and teachers etc., is an Indian citizenship, this section appears to discriminate on the ground of nationality. It is interesting to note that while section 80R and 80RRA deal with the citizenship also, many similar sections such as section 80QQB, section 80RR, section 80RRB, there is no reference to citizenship, and the requirements are only with respect of residence. It is also very important to appreciate that such Indian and French nationals, as are compared for the purpose of finding out whether or not taxation etc. of one of which is more burdensome than the other, must be 'in the same circumstances'. Elaborating upon the scope of expression 'in the same circumstances', OECD commentary, inter alia, observes as follows: