Harmonization of International Treaty Obligations and Domestic Legislation

Tax treaties negotiated at a diplomatic level reflect broad sovereign compromises, policy allocations of tax revenues, and international economic commitments. While Section 90(2) historically ensured that treaty provisions prevail over domestic tax law to the extent they are more beneficial to the assessee, subsequent legislative interventions—such as Chapter X-A and indirect transfer provisions—redefined this hierarchy. Parliament possesses the constitutional competence to modify, clarify, or alter statutory definitions to remove the basis of prior judicial decisions and prevent treaty abuse, thereby ensuring that international obligations and domestic fiscal protection exist in harmonious balance.(The authority for advance rulings Vs Tiger Global International II holdings) | 2026 INSC 60)