Agreement between the Government of the Republic of India and the Government of the United Arab Emirates for the avoidance of double taxation of income derived from international air transport - 0969(E) - Income Tax

Agreement between the Government of the Republic of India and the Government of the United Arab Emirates for the avoidance of double taxation of income derived from international air transport Notification Number: 0969(E) Dated 08-11-1989 File Number: 501/1/88-FTD Whereas the annexed Agreement between the Government of the Republic of India and the Government of the United Arab Emirates for the avoidance of double taxation of income derived from international air transport will enter into force on December 1, 1989, on the notification by both the Contracting States to each other of the completion of the procedures required by their respective laws, as required by article 6 of the said Agreement; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs that all the provisions of the said Agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME DERIVED FROM INTERNATIONAL AIR TRANSPORT The Government of the Republic of India and the Government of the United Arab Emirates, Desiring to conclude an Agreement for the avoidance of double taxation of income derived from international air transport, Have agreed as follows:- Article 1 TAXES COVERED 1. The taxes to which this Agreement shall apply are:- (a) In the case of the United Arab Emirates, the income-tax as imposed by the Federal Government of the United Arab Emirates (hereinafter referred to as " United Arab Emirates Tax "). (b) In the case of India:- (i) the income-tax including any surcharge thereon; and (ii) the surtax (hereinafter referred to as " Indian tax "). 2. This agreement shall also apply to any identical or substantially similar taxes on income which are imposed at Federal or State level by either Contracting State in addition to, or in place of, the taxes referred to in paragraph 1 of this article. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation laws. Article 2 DEFINITIONS 1. For the purpose of this Agreement, unless the context otherwise requires:- (a) The term " a Contracting State " and " the other Contracting State " means the United Arab Emirates or India as the context requires; (b) The term " tax " means United Arab Emirates tax or Indian tax as the context requires; (c) The term " enterprise of India " means Air India and Indian Airlines and any other enterprises designated by the Government of India; (d) The term " enterprise of The United Arab Emirates " means Gulf Air and Emirates Air lines and any other enterprises designated by the Government of the United Arab Emirates; (e) The term " international traffic " means any transport by an aircraft operated by an enterprise of a Contracting State, except when the aircraft is operated solely between places in the other Contracting State; (f) The expression " operation of aircraft " means business of carriage by air of passengers, livestock, goods or mail carried on by the owners or lessees or charterers of aircraft including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. (g) The term " competent authority " means: (i) in the case of India, the Central Government in the Ministry of Finance (Department of Revenue), or its authorised representative; (ii) in the case of the United Arab Emirates, The Minister of Finance and Industry or his authorised representative. 2. In the application of the provisions of this Agreement by one of the Contracting States, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws in force in that State relating to the taxes which are the subject of this Agreement. Article 3 AVOIDANCE OF DOUBLE TAXATION 1. Income which an enterprise of the United Arab Emirates derives from the operation of aircraft in international traffic shall be exempted in India from Indian tax. 2. Income which an enterprise of India derives from the operation of aircraft in international traffic shall be exempted in the United Arab Emirates from United Arab Emirates tax. 3. The provisions of paragraphs 1 and 2 shall also apply to income from the participation in a pool, a joint business or an international operating agency. 4. For the purpose of paragraphs 1 and 2, interest on funds directly connected with the operation of aircraft in international traffic shall be regarded as income from the operation of such aircraft. 5. Gains derived by an enterprise of a Contracting State from the alienation of aircraft owned and operated by the enterprise including gains from the alienation of spares and equipment used by the enterprise in the operation of such aircraft shall be taxable only in that State. 6. Salaries, wages and other remuneration in respect of an employment exercised aboard an aircraft operated in international traffic shall be taxable only in the Contracting State where the air transport enterprise is managed and controlled, provided that the employee concerned is not a resident in the other Contracting State in accordance with the tax laws of that other State. Article 4 RESIDUAL PROVISIONS The laws in force in either of the Contracting States will continue to govern the assessment and taxation of income in the Contracting States except where express provision to the contrary is made in this Agreement. Article 5 MUTUAL AGREEMENT PROCEDURE 1. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. 2. Consultation may be requested at any time by the competent authority of a Contracting State for the purpose of application or interpretation of the article. Such consultation shall begin within 90 days from the date of receipt of any such request and decisions shall be by mutual consent. Article 6 ENTRY INTO FORCE 1. Each State shall notify to the other the completion of the procedure required by its law for the bringing into force of this Agreement. The Agreement shall enter into force on the first day of the second month following the month in which the latter of these notifications has been given. 2. The provisions of this Agreement shall have effect in respect of income derived on or after the 1st day of January, 1971. 3. No action would be taken to reopen assessments in respect of the period prior to the 1st day of January, 1971. 4. In case a Contracting State collects taxes relating to the above-mentioned period, on income derived from the operation of aircraft by an enterprise of the other Contracting State, then such taxes shall be refunded together with interest if any, in accordance with the laws of the first-mentioned Contracting State. Article 7 TERMINATION This Agreement shall continue in effect indefinitely but either Contracting State may, on or before the thirtieth day of June in any calendar year after the year 1993, give notice of termination to the other Contracting State and in such event this Agreement shall cease to be effective:- (a) in the United Arab Emirates in respect of any tax year commencing on or after the 1st day of January of the second calendar year following the year in which the notice is given; (b) in India in respect of any assessment year commencing on or after the 1st day of April of the second calendar year following the year in which the notice is given. In witness whereof, the undersigned, duly authorised thereto have signed this Agreement. Done at New Delhi this third day of March one thousand nine hundred and eighty-nine in two originals in the Hindi, Arabic and English languages, all texts being equally authentic. In case of dispute as to interpretation and application of this Agreement, the English text shall prevail. For the Government of the For the Government of the Republic of India, United Arab Emirates, (Sd.) P. K. Appachoo, (Sd.) Mohamed Khalfan Khirbash, Joint Secretary to the Government of India, Director of Investment Department, Ministry of Finance. Ministry of Finance and Industry.