Indian Tribunal rules domestic/foreign company classification under Indian tax legislation does not contravene non-discrimination clause of India-France treaty

The Indian Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 28 February 2004 (reported in July 2005) in the case of Credit Lyonnais v. Deputy Commissioner of Income Tax (94 TTJ 1074) on whether a foreign company could claim a deduction for dividends received and re-distributed to its shareholders.

(a) Facts. The taxpayer (i.e. Credit Lyonnais), a company resident in France, claimed a deduction under Sec. 80M of the Indian Income Tax Act 1961 (ITA) in respect of certain inter…