Home Acts & Rules DTAA Agreements France This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
Article 31 - Termination - FranceExtract ARTICLE 31 - Termination - 1. This Convention shall remain in force indefinitely. However, either Contracting State may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State through diplomatic channels, written notice of termination and, in such event, this Convention shall cease to have effect : (a) in India : (i) in respect of income arising in any fiscal year beginning on or after the first day of April following the calendar year in which the notice of termination is given ; (ii) in respect of capital which is held on the last day of any fiscal year beginning on or after the first day of April following the calendar year in which the notice of termination is given ; (b) in France : (i) in respect of income arising in any calendar year or accounting period beginning on or after the first day of January following the calendar year in which the notice of termination is given ; (ii) in respect of capital owned on the first day of any calendar year following the calendar year in which the notice of termination is given. In witness whereof the undersigned, being duly authorised thereto, have signed the present Convention. Done in duplicate at Paris on this twenty nineth day of September, one thousand nine hundred and ninety two in the Hindi, French and English languages, all the texts being equally authentic. PROTOCOL At the time of proceeding to the signature of the Convention between France and India for the avoidance of double taxation with respect to taxes on income and on capital, the undersigned have agreed on the following provisions which shall form an integral part of the Convention : 1. For the purposes of this Convention, it is understood that the words political sub-division wherever they occur shall mean political sub-division of India. 2. With respect to paragraph 1 of Article 7 (Business Profits), it is understood that if in both Indias new tax Conventions, Agreements or Protocols, with the United Kingdom and Federal Republic of Germany, it is provided that the profits of an enterprise of a Contracting State carrying on business through a permanent establishment in the other Contracting State may be taxed in that other Contracting State as are attributable directly or indirectly to that permanent establishment or attributable to: (a) Sales in that other Contracting State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (b) other business activities carried on in that other State, of the same or similar kind as those effected through that permanent establishment, such provisions shall also apply to the extent so provided to the present Convention with respect from the date from which the later of those two Conventions, Agreements or Protocols between India and United Kingdom and the Federal Republic of Germany enters into force. It is understood that only the provisions included in both new Conventions, Agreements or Protocols between India and U.K. and F.R.G. shall apply to the present Convention. 3. In respect of paragraphs 1 and 2 of Article 7, where an enterprise of one of the Contracting States sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received by the enterprise, but shall be determined only on the basis of the remuneration which is attributable to the actual activity of the permanent establishment for such sales or business. Especially, in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but shall be determined only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the Contracting State where the permanent establishment is situated. The profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the ContractingState of which the enterprise is a resident. 4. It is understood that with respect to paragraph 2 of Article 7, no profits shall be attributed to a permanent establishment by reason of the facilitation of the conclusion of foreign trade or loan agreements or the mere signing thereof. 5. Where the law of the Contracting State in which a permanent establishment is situated imposes in accordance with the provisions of sub-paragraph (a) of paragraph 3 of Article 7 a restriction on the amount of the executive and general administrative expenses which may be allowed as a deduction in determining the profits of such permanent establishment, it is understood that in determining the profits of such permanent establishment, the deduction in respect of such executive and general administrative expenses in no case shall be less than what is allowable under the Indian Income-tax Act as on the date of signature of this Convention. 6. Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Article 11, 12 or 13, applications for the refund of the excess amount of tax have to be lodged with the competent authority of the Contracting State having levied the tax, within a period of three years after the expiration of the calendar year in which the tax has been levied. 7. In respect of articles 11 (Dividends), 12 (Interest) and 13 (Royalties, fees for technical services and payments for the use of equipment), if under any Convention, Agreement or Protocol signed after 1-9-1989, between India and a third State which is a member of the OECD, India limits its taxation at source on dividends, interest, royalties, fees for technical services or payments for the use of equipment to a rate lower or a scope more restricted than the rate of scope provided for in this Convention on the said items of income, the same rate or scope as provided for in that Convention, Agreement or Protocol on the said items income shall also apply under this Convention, with effect from the date on which the present Convention or the relevant Indian Convention, Agreement or Protocol enters into force, whichever enters into force later. 8. It is understood that any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty imposed relating to those taxes is not considered as an interest for the purposes of article 12 (Interest) and is not considered as tax for the purpose of article 25 (Elimination of double taxation). 9.In respect of Article 13 (Royalties, fees for technical services and payments for the use of equipments) notwithstanding the provisions of paragraph 2 of this Article, royalties, fees for technical services and payments for the use of equipment arising in France and paid to a resident of India, shall not be taxable in France. 10. It is understood that in case India applies a levy, not being a levy covered by Article 2, such as the Research and Development Cess on payments meant in Article 13, and if after the signature of this Convention under any Convention or Agreement or Protocol between India and third State which is a member of the OECD, India should give relief from such levy, directly by reducing the rate or the scope of the levy, either in full or in part, or, indirectly by reducing the rate or the scope of the Indian tax allowed under the Convention, Agreement or Protocol in question on payments as meant in Article 13 of this Convention with the levy, either in full or in part, then, as from the date on which the relevant Indian Convention, Agreement or Protocol enters into force, such relief as provided for in that Convention, Agreement or Protocol shall also apply under this Convention. 11. As regards article 16 (Dependent Personal Services), it is understood that the provisions of this article apply to remuneration derived by a resident of a Contracting State in his capacity as an official in a top level managerial position of a company which is a resident of the other Contracting State. It is clear that in respect of the remuneration due from a resident of this other Contracting State, the provisions of paragraph 2 of article 16 shall not apply. 12. As regards the application of paragraph 1 of Article 26, it is understood that an individual, legal person, partnership or association which is a resident of a Contracting State shall not be deemed to be in the same circumstances as an individual, legal person, partnership or association which is a resident of the other Contracting State. This shall also apply where such individuals, legal persons, partnership or association are, in applying paragraph 1.1 of Article 3 (General definitions), deemed to be nationals of the ContractingState of which they are residents. 13. In respect of article 25 (Elimination of double taxation), it is understood that for the purposes of sub-paragraph 2(a)(ii), income which is exempt totally or partially in India shall also be considered as income taxable in India. Done in duplicate at Paris on this 29th day of September, one thousand nine hundred and ninety-two, in Hindi, French and English languages, all the texts being equally authentic. Judicial analysis Note the following case laws : n See Advance Ruling P. No. 13 of 1995, In re [1997] 94 Taxman 171 (AAR - New Delhi) n Income earned in France by Indian resident assessee is includible in his total income for rate purposes - Third ITO v. S.K. Sengupta [1983] 5 ITD 326 (Indore - Trib.) n Provisions of section 40A(5) were applicable to assessee-company which was French resident and had permanent establishment in India and it could not be said to be in violation of article III(3) of Double Taxation Avoidance Agreement entered into between Government of India and FranceBanque National de Paris v. IAC [1991] 39 ITD 224 (Bom. - Trib.). n Specific provisions made in Double Taxation Avoidance Agreement between Government of French Republic and Indian Government would prevail over general provision contained in section 44DCompagnie Francaise DEtudes Et De Construction v. IAC [1984] 8 ITD 215 (Delhi - Trib.). n Where article III of DTAA between India and France provided that consideration for acquisition of technical know-how would not be royalty but would be treated as commercial profit exempt from tax in India, lump sum payment made in instalments for acquisition of technical know-how, apart from royalty charges payable separately, was not taxable in India in view of article IIIGraphite Vicarb India Ltd. v. ITO [1992] 43 ITD 28 (Cal. - Trib.) (SB). n Where the Government of India, through ITI, a Government undertaking, entered into four different agreements with assessee, a foreign company, for development and manufacture of electronic digital telephone switching equipment in India including supervision of installation and the assessee-company further entered into an agreement with an Indian company MCPL under which MCPL was to provide support services to French Engineers who were visiting India quite often, expenditure incurred by assessee-company had to be allowed as deduction in view of article XVI of Double Taxation Avoidance Agreement and there was no reason to restrict it to 50 per cent as was done by IAC (Assessment)Dy. CIT v. Alcatel [1993] 47 ITD 275 (Delhi - Trib.). n Where foreign company provided technical service on rigs owned by Indian company rigs could not be treated as place of management of foreign enterprise so as to conclude that foreign enterprise carried on business in India within meaning of article III of Double Taxation Avoidance Agreement between India and FranceBoulder Christian v. ITO [1993] 46 ITD 114 (Delhi - Trib.).
|