Yes. I think if the argument object's reference count is increased because of the exception traceback or other cases, it has nothing to do with the PyObject_CallObject itself. Both of the Py_INCREF(arg) and Py_DECREF(arg) will always run once through the PyObject_CallObject() call. 
The “reference-count-neutral” means the code of PyObject_CallObject() itself can guarantee the "reference-count-neutral", but not include the callable called by PyObject_CallObject().