Interpretation Of Double Tax Avoidance Agreements

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4.1 INTRODUCTION During the contemporary tax scenario, where the trade and investment barriers have been totally dismantled and there is huge inflow of foreign capital in almost every sector of the economy, the need for Direct Tax Avoidance Agreements (‘DTAAs’) is rising day by day. Owing to the special nature and scope of these DTAAs [which can also be mentioned as Direct tax Treaties (‘DTT’) or Direct Tax Conventions (‘DTC’)] the professionals, who have to deal with these provisions on a regular basis, and provide professional advice to their clients seldom face a problem as these DTAAs have two very different purposes which have to be harmonised, they are; curtailing of or curbing of economic double taxation as against each and every State’s appetite for more tax revenues.
It is impossible to interpret an international agreement by the application of domestic rules as it is the case for the international forum which cannot be bound by principles of the constitution of participating states. Thus for interpreting effectively it is very important to harmonise various national methods of interpretation. Need for interpretation arises because of the conflict in opinion of the states who are parties to a contract and also due to the application.
This conflict of opinion can be harmonised by the States by themselves. But, if the conflict continues to exist the same can be referred to the International Court of Justice (ICJ),
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