Profits / losses on futures and options contracts (derivative transactions) would be in the nature of ‘Business Income’: AAR

Recently, the Authority for Advance Rulings (AAR) in the case of Royal Bank of Canada (A.A.R No. 816 of 2009) has held that the profits/ losses on futures and options contracts (derivative transactions) carried out by Canadian entity would be in the nature of ‘Business Income’. Further since the entity did not have a Permanent Establishment (PE) in India, as per Article 5 of the India-Canada tax treaty (the tax treaty), the Business Income of the applicant would not be taxable in India. While pronouncing the ruling, the AAR has also made some important observations on the taxation of incom...