@samartur , while your CA tries to get a positive response from Indian IT, it is a reasonable possibility that India would argue that article 19 does not apply here . The treaty is between US federal taxing authority and Indian taxing authority. Thus the State of CA and its govt. instrumentalities are NOT a cognizant party for p[urposes of article 19 of the tax treaty. Therefore I would suggest that you be ready to file an amended US federal return claiming "foreign tax credit" under the "avoidance of double taxation" article.
Also I want to make sure that you recognized this CA state pension as a 1099-R ( pension ) and not "other investment income" mentioned in your reply.
Is there more I can do for you ?
Namaste ji
pk
