The concept of double taxation has been the subject matter engaging the attention of the courts in India and abroad from time to time. The Supreme Court in Laxmipat Singhnia v. CIT has made it clear – “it is a basic rule of the law of taxation that unless otherwise expressly provided income cannot be taxed twice. Again it is not open to the Income Tax Officer, if the income has accrued to the assessee and is liable to be included in the total income of a particular year, to ignore the accrual and thereafter to tax it as the income of another year on the basis of receipt.” This principle enunciated by the Supreme Court has also been given statutory recognition in the Income Tax Act through Explanation 2 to Section 5 of the Income Tax Act. A separate branch in the law of taxation has been developed in India after a number of DTAAs (Double Taxation Avoidance Agreements) entered into by India with several foreign countries. The reason for these Agreements coming into play was in cases where a person having source of income in India was the resident of another country. For the purpose of DTAA, the income is considered as sourced in a country if the tax-payer is based there. Both the countries would like to tax the income of a person arising from the same transaction, because the desire of a country for taxation can never be satisfied. That’s where the DTAA comes into play. It may vest right to tax a particular type of income in one of the contesting States. A right to tax a particular income under the DTAA may depend on certain conditions. For example, business income is generally taxable in the source state if the enterprise has a permanent establishment therein. (By source state is meant the state where the income arises or the state the residents of which make payment to the residents of the other contracting state.)