In this case, it was argued that double tax agreements can only ever be ‘shields not swords’. That is, DTAs can only limit domestic taxing rights, and cannot operate to grant extra taxing powers.
The court disagreed (at ), saying it was an error to approach construction of the Indian DTA from the basis of some assumption drawn from outside the text of the instrument. Nothing in the purpose or objects of the DTA in question supported reading the agreement in this way. To do otherwise would not give primacy to the text of the treaty5. iTip – as with domestic legislation, the same basic rule applies to DTAs … always begin with the text!
This case is from Episode 47 of interpretationNOW!