Non-availability of indexation benefit to a non-resident does not amount to non-discrimination

Authority for Advance Rulings (Income-tax) (“AAR”) has rendered an important ruling in the case of Trans world Garnet Company Ltd. [2011-TII- 02-ARA-INTL] dealing with the issue of whether or not the non-availability of the indexation benefit under the provisions Second proviso to section 48 of the Income-tax Act, 1961 (the “Act”) to non-residents amounts to discrimination under the India-Canada Double Tax Avoidance Agreement (the “tax treaty”).  After considering the various provisions of the Act and Article 24 of the tax treaty, the AAR held that the deni...