Interpretation of the Term “May Be Taxed”

In this article, the author examines the way in which India’s courts and Income Tax Appellate Tribunal have applied the term “may be taxed” in India’s double taxation treaties. He finds that, despite a notification issued by the Central Board of Direct Taxes in 2008, which prescribes how the term is to be interpreted, many judicial decisions have failed to apply the ruling, and to address commentaries explaining the meaning of the term. Since this has led to uncertainty in application of the treaties, the author advocates early reconsideration of the issue by India’s Supreme Court.