These three appeals, two by revenue and one by assessee, involve common issue. short and neatly identified legal issue that we are required to adjudicate in all these appeals is whether or not limitation on deduction of head office expenditure, as set out in section 44C of Indian Income-tax Act, will apply in case of non-resident companies governed by India-Canada Double Taxation Avoidance Agreement (164 ITR Stat. 87), particularly in light of non-discrimination clause in said DTAA. This issue is raised by revenue by way of following solitary ground of appeal: On facts and in circumstances of case, CIT(A) has erred in holding that provisions of section 44C of Act will not be applicable and quantum of expenditure will be allowed without restriction imposed by section 44C. assessee has raised grievance by way of following grounds of appeal: 'The Commissioner of Income-tax erred in upholding Assessing Officer's view that deduction for expenses incurred at head office was allowable in accordance with provisions of section 44C of Income-tax Act. appellant submits that it is governed by provisions of Double Taxation Avoidance Agreement (DTAA) entered into by Government of India with Government of Canada, and provisions of section 44C of Income-tax Act (which restrict head office expenses allowable in case of non-resident) are inapplicable. CIT(A) erred in holding that provisions of Articles XXIV (1) and (2) of DTAA are subject to Article VII(4) of DTAA and as such view taken by Assessing Officer in applying provisions of section 44C are not only within express provisions of Income-tax and relevant Finance Act, but also well within various provisions contained in DTAA.' 2. assessee-respondent is company incorporated in Canada. assessment years involved in these appeals are 1993-94, 1994-95 and 1996-97. T h e assessee entered into agreement with Indian company for erectioning, commissioning and running of HRC project at Hazira in Gujarat. In course of assessment proceedings, Assessing Officer noticed that assessee had claimed deduction in respect of allocation of overhead expenses incurred by head office. In response to Assessing Officer's requisition to show cause as to why limitation on deduction of expenses, as set out in section 44C of Act, will not apply on facts of this case, it was submitted that in light of provisions of Article 24 of applicable India-Canada Double Taxation Avoidance Agreement ('the treaty' in short) section 44C will have no application in this case inasmuch as provisions of section 44C are discriminatory in favour of Indian enterprise vis-a-vis permanent establishment of Canadian enterprise. Assessing Officer rejected plea of assessee on ground that in terms of Article 7(4) of treaty profits of permanent establishment are to be computed in accordance with provisions of and subject to limitations of taxation laws of that State and, therefore, limitation set out in section 44C could not be ignored. Assessing Officer was also of view that there is no question of discrimination in present context because domestic Indian enterprise and non-resident companies cannot be said to be 'in same circumstances' which is sine qua non for application of non-discrimination clause. Assessing Officer was of view that comparison of non-resident company with resident taxpayer in India is not at all contemplated by treaty. It was in this backdrop that Assessing Officer concluded that 'the main article in Article 7(4) of treaty read in conjunction with section 44C of Income-tax Act' will apply in this case. Aggrieved, assessee carried matter in appeal before CIT(A). In one of years before us, CIT(A) upheld action of Assessing Officer but in remaining two years CIT(A) upheld contentions of assessee. While confirming order of Assessing Officer, view of CIT(A) was that 'the provisions of Articles XXIV(1) and (2) [i.e. of non-discrimination clause] are to be read subject to other provisions of Convention, including Articles VII(4) and XXIV(4) [i.e., computation of business profits and exclusion of applicability of different tax rates between domestic companies and enterprise of other State by non-discrimination clause]'. CIT(A) further added that provisions of section 44C 'only provide for mode of computation of income'. It was noted that head office expenses incurred by non-resident companies cannot be allocated with accuracy and question, therefore, remains one of estimate on one basis or other, and that 'the provisions of section 44C embody fair method of estimation'. CIT(A) thus confirmed action of Assessing Officer for assessment year 1993-94. In two subsequent years, however, CIT(A) decided same issue in favour of assessee by holding that 'the special provisions of Article XXIV will override general provisions of Article VII(4)'. Reliance was also placed on decision of Tribunal in case of Standard Chartered Bank v. IAC [1991] 39 ITD 57 (Bom.). CIT(A) thus upheld contention of assessee in principle but remitted matter to file of Assessing Officer to enable Assessing Officer to re-examine quantum of allowable expenditure on basis of information and allocations etc. provided by appellant (the assessee before us). assessee is aggrieved of CIT(A)'s order for assessment year 1993-94 and revenue is aggrieved of CIT(A)'s orders for assessment years 1994-95 and 1996-97. That is how both parties are in appeal, though for different years, before us. As matter of convenience, we have heard all appeals together and we are disposing of all three appeals by way of this consolidated order. 3. We have heard rival contentions, perused material on record, n d duly considered factual matrix of case as also applicable legal position. 4. We may, first of all, reproduce relevant extracts from provisions of Articles 7 and 24 of applicable Indo-Canadian Double Taxation Avoidance Agreement for ready reference: 'Article 7 - Business Profits 1. profits of enterprise of Contracting State shall be taxable only in that State unless enterprise carries on business in other Contracting State through permanent establishment situated therein. If enterprise carries on or has carried on business as aforesaid, profits of enterprise may be taxed in other Contracting State but only so much of them as is attributable to: (a) that permanent establishment, and (b) sales of goods and merchandise of same or similar kind as those sold, or from other business activities of same or similar kind as those effected, through that permanent establishment. 2. Subject to provisions of paragraph 3, where enterprise of Contracting State carries on business in other Contracting State through permanent establishment situated therein, there shall in each Contracting State, be attributed to that permanent establishment, profits which it might be expected to make if it were distinct and separate enterprise engaged in same or similar activities under same or similar conditions and dealing wholly independently with enterprise of which it is permanent establishment. In any case, where correct amount of profits attributable to permanent establishment is incapable of determination or ascertainment thereof presents exceptional difficulties, profits attributable to permanent establishment may be estimated on reasonable basis provided that result shall be in accordance with principles laid down in this article. 3. In determination of profits of permanent establishment, there shall be allowed those deductible expenses which are incurred for purposes of business of permanent establishment including executive and general administrative expenses, whether incurred in State in which permanent establishment is situated or elsewhere as are in accordance with provisions of and subject to limitations of taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than as reimbursement of actual expenses) by permanent establishment to head office of enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for use of patents, know-how or other rights, or by way of commission or other charges, for specific services performed or for management, or, except in case of banking enterprise, by way of interest on moneys lent to permanent establishment. Likewise, no account shall be taken in determination of profits of permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by permanent establishment to head office of enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in case of banking enterprise by way of interest on moneys lent to head office of enterprise or any of its other offices. Article 24 - Non-discrimination 2. taxation on permanent establishment which enterprise of Contracting State has in other Contracting State shall not be less favourably levied in that other State than taxation levied on enterprises of that other State carrying on same activities.' 5. core issue, as we have noted earlier as well, is whether or not limitation on deduction of head office expenditure, as set out in section 44C of Indian Income-tax Act, will apply in case of non-resident companies governed by India-Canada Double Taxation Avoidance Agreement, particularly in light of non-discrimination clause in said DTAA. As corollary to this question, we must decide whether restriction on admissibility of deduction on account of head office expenditure, as contemplated by section 44C of Act, constitutes 'taxation on permanent establishment which enterprise of Contracting State has in other Contracting State' as 'less favourably levied in that other State than taxation levied on enterprises of that other State carrying on same activities'. Another aspect which requires to be considered by us is whether provisions of computation of business profits in Article 7 are to viewed as subject to application of non- discrimination clause in Article 24(2), or is it other way round i.e. non- discrimination clause to be read as subject to clause regarding computation of business profits. There are other peripheral or subsidiary issues raised before us, such as, whether provisions of section 44C can be viewed as restriction on admissibility of deduction of head office expenditure at, and, whether provisions of section 44C only provide for fair method of estimation of deductible head office expenses and are enabling provisions in nature. 6. Article 24(2) of Indo-Canadian DTAA is worded on lines on Article 24(3) of OECD Model Convention. In fact, it is verbatim extract from Model Convention. While elaborating upon scope of said clause, OECD Model Convention commentary, inter alia, states as follows: '24. Effect of tax bases - With regard to basis of assessment of tax, principle of equal treatment normally has following implications: (a) Permanent establishment must be accorded same right as resident enterprises to deduct trading expenses that are, in general, athorised by taxation law to be deducted from taxable profits in addition to right to attribute to permanent establishment proportion of overheads of head office of enterprise. Such deductions should be allowed without any restriction other than those imposed on resident enterprise.' It is thus clear that according to scope of this clause, as explained by OECD commentary, includes deduction on account of head office expenditure. In addition to deduction on normal business expenditure of permanent establishment as permissible under domestic taxation laws, deduction is also required to be allowed for proportion of overheads of head office and such deduction is to be allowed without any restriction other than those imposed on resident enterprise. This makes two things clear - (a) that restriction on admissibility of expenditure in accordance with domestic law is, according to OECD Commentary, is in respect of normal business expenditure incurred by permanent establishment; and (b) that deduction on account of overheads of head office is to be allowed without placing any restriction on such deduction save and except such restrictions as may also be placed on resident enterprises. As provisions of Article 24(2) of Indo-Canadian DTAA and of provisions of Article 24(3) of OECD Model Convention are in pari materia, OECD Model Convention Commentary has key role in determining scope and connotations of Article 24(2) of Indo-Canadian DTAA. Hon'ble Andhra Pradesh High Court, in case of CIT v. Vishakhapatnam Port Trust [1983] 144 ITR 146, referred to OECD Commentary on technical expressions and clauses in model conventions, and referred to, with approval, Lord Redcliffe's observation in Ostime v. Australian Mutual Provident Society [1960] 39 ITR 210, 219 (HL) which have described language employed in those documents as 'international tax language'. These documents are thus in nature of contemporanea expositio inasmuch as meaning indicated, in these documents, to clauses and expressions in tax treaties can be inferred as meaning normally understood in, to use words of Lord Redcliffe, 'international tax language' developed by organizations like OECD. This is so held in case of Graphite India Ltd. v. Dy. CIT [2003] 86 ITD 384 (Kol.). When expression or clause is picked up from OECD Model Convention, normal presumption is that persons using said clause or expression are also aware about meanings assigned to said clause or expression by OECD and have used it in same sense and for same purpose. Unless contrary intention is specifically expressed, say by protocol attached to DTAA, it is only axiomatic that clause or expression will have same meaning as normally assigned in tax literature by OECD. Therefore, when expression or clause from OECD Model Convention is used even in bilateral tax treaty involving non-OECD country, one has to proceed on basis that it is used in same meaning and with same connotations as assigned to it by OECD Model Convention Commentary. As per OECD Commentary, placing restriction on deduction on account of overheads of head office, except when same restriction is also placed on resident enterprises, does constitute discrimination under Article 24. taxation on permanent establishment of Canadian company, by reason of placing restriction on deduction of head office expenditure which is not applicable in case of resident companies, does, therefore, constitute less favourable tax treatment in India than taxation levied on Indian enterprise carrying on same activities in India. Viewed in this perspective, it is clear that limitation on deduction of head office expenditure, as stipulated by section 44C of Act, will be hit by non-discrimination clause in Indo-Canadian DTAA. In any event, on plain reading of provisions of Article 24(2), we are of considered view that restriction on admissibility of head office overheads of permanent establishment of Canadian company constitutes discrimination against such PE vis-a-vis domestic Indian entity because no such restriction is applicable for deduction of head office or controlling office overheads of Indian entity. It puts PE of Canadian company to unfair disadvantage inasmuch as even legitimate business expenses attributable to PE and deductible under section 37(1) cannot be allowed as deduction in light of restriction placed under section 44C of Act, whereas all legitimate business expenses of Indian entity operating in India will be allowed as deduction. scope of deduction under section 37(1) thus stands curtailed for PE of Canadian company. 7. In Indo-Canadian DTAA, Articles 24 to 28 are clubbed together under Chapter VI titled 'Specific Provisions', whereas provisions of Articles 6 to 21 are contained in Chapter III titled 'Taxation of Income'. It is thus clear that provisions of Article 24 are specific provisions whereas provisions of Article 7 are in nature of general provisions. While taxation of business profits under Article 7 refers to general principles on basis of which business profits are to be computed. Article 24(2) refers to specific provision that permanent establishment of residents on one State shall not be subjected to any taxation which is less favourable vis-a-vis taxation levied on enterprises of that other State carrying on same activities. On issue whether general provisions will prevail over special provision, or vice versa, law is fairly well-settled. As aptly conveyed by legal maxim 'generalibus specialia derogant', i.e. special things derogate from general things. As observed by Co-ordinate Bench, in case of ITO v. Titagarh Steels Ltd. [2001] 79 ITD 532 (Cal.) and relying upon Hon'ble Supreme Court judgment in case of South India Corporation (P.) Ltd. v. Secretary, Board of Revenue AIR 1964 SC 207 'a special provision normally excludes operations of general provision'. provisions of Article 7 being general in nature, are, therefore, required to be read as subject of provisions of Article 24. Revenue's argument that since business profits are to be computed 'in accordance with provisions of and subject to limitations of taxation laws of that State' under Article 7(3) and, therefore, limitation placed under section 44C of Indian Income-tax Act cannot be ignored, cannot, therefore, be accepted. What Article 24(2) seeks to remove is discrimination to permanent residents of Indian and Canadian residents in other States vis-a-vis domestic business entities of that other State. When domestic tax laws permit such discrimination, such legal provisions have to be treated as overridden by provisions of Indo-Canadian DTAA. There is no dispute about fact that when provisions of Income-tax Act and DTAA are in conflict, provisions of Act will be applicable only to extent same are more beneficial to assessee. In other words, provisions of treaty prevail over provisions of Act. Therefore, restriction placed on allowability of head office expenditure by section 44C of Act is to be ignored in light of provision of Article 24(2) of Indo-Canadian DTAA. 8. next contention of revenue is that provisions of section 44C are not in nature of restriction but provide only fair method of allocation of head office overheads. It is also contended that in absence of provision of section 44C, head office expenses cannot be allowed at all for want of verification of expenses. We see no substance in this plea either. In case of CIT v. Deutsche Bank AG [IT Reference No. 139 of 1997, dated July 24, 2003], upholding action of this Tribunal, Hon'ble Bombay High Court held that in case where section 44C is held to be not applicable, head office expenditure was allowable under section 37(1) of Act and that section 44C puts ceiling on deduction of head office expenditure. Whatever be object of said section, it is clear that it is in nature of disabling provision which puts ceiling on admissibility of deduction. It does constitute restriction - and restriction which is not similarly placed for domestic enterprise. head office expenses, to extent same can be fairly allocated to permanent establishment are admissible as deduction under section 37(1) and this is so held by Hon'ble jurisdictional High Court in Deutsche Bank's case (supra). 9. We have noted that CIT(A) has, in assessment years 1994-95 and 1996-97, has restored matter to file of Assessing Officer for examining claim of expenditure as attributable to permanent establishment in India, and assessee is not in appeal against these directions. Therefore, beyond dispute, only such expenses are to be allowed as deduction on account of head office expenses as can be fairly allocated to permanent establishment. only impact of applicability of non- discrimination clause will be that scope of deduction under section 37(1) will not stand curtailed by restriction placed under section 44C of Act. In our considered view, this direction of CIT(A) is justified and calls for no considered view, this direction of CIT(A) is justified and calls for no interference. 10. As far as assessment year 1993-94 is concerned, CIT(A) has held that provisions of section 44C will apply, but then, for reasons set out above, we are of considered view that section 44C has no application in matter and that assessee is to be allowed deduction of such head office expenses as can be fairly allocated to permanent establishment. Accordingly, as for assessment year 1993-94, matter is to be restored to file of Assessing Officer for adjudication de novo in light of above observations. 11. In result, appeals filed by revenue are dismissed and appeal filed by assessee is allowed for statistical purposes. *** METCHEM CANADA INC. v. DEPUTY COMMISSIONER OF INCOME TAX