Protocol Modifying and Supplementing the Agreement between Japan and India for the Avoidance of Double Taxation in Respect of Taxes on Income.

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[Title] Protocol Modifying and Supplementing the Agreement between Japan and India for the Avoidance of Double Taxation in Respect of Taxes on Income.

[Source] United Nations Treaty Collection

[Notes] Came into force on 15 November 1970, the thirtieth day after the date of the exchange of instruments of ratification, which took place at Tokyo on 16 October 1970, in accordance with article VIII.

Desiring to modify and supplement the Agreement between Japan and India for the Avoidance of Double Taxation in respect of Taxes on Income, signed at New Delhi on January 5, I960,

1. By deleting the expression "the Indian Income-tax Act, 1922 (11 of 1922)" and replacing it by the expression "the Income-tax Act, 1961 (43 of 1961)",

3. By inserting the expression "and the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964)" immediately before the expression "(hereinafter referred to as 'Indian tax')".

Sub-paragraph (i) of paragraph (1) of Article II shall be amended by inserting the following immediately after sub-paragraph (iii) thereof:

"(iii a) An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State if it maintains a fixed place of business solely for the purpose of advertising, for the supply of information or for scientific research, being activities solely of a preparatory or auxiliary character in the trade or business of the enterprise;"

Article III shall be amended by inserting the following immediately after paragraph (4):

"(4 A) No profit shall be attributed to a permanent establishment of an enterprise of one of the Contracting States situated in the other Contracting State through or from operations which are confined merely to the purchase of goods for the purpose of export from such other Contracting State."

1. In the application of Article V of the Agreement, the rate of reduction shall be fifty-five per cent instead of fifty per cent.

2. Paragraph (3) of Article V shall be amended by deleting the expression "Section 44 A and 44 B of the Indian Income-tax Act, 1922 (11 of 1922), effective on the date of signature of the present Agreement" and the expression "Section 44 C of the said Act, effective on the date of signature of the present Agreement" occurring in paragraph (3) thereof, and replacing them, respectively, by the expression "Section 172 of the Income-tax Act, 1961 (43 of 1961), effective on the date of signature of the present Protocol" and the expression "Section 172 of the said Act, effective on the date of signature of the present Protocol".

Paragraph (a) of Article X shall be amended by inserting the expression "Subject to the provisions of paragraph (4 A) of Article III," at the beginning of the provisions thereof.

Sub-paragraph (b) of paragraph (3) of Article XI shall be deleted and replaced by the following:

"(b) For the purposes of the credit referred to in sub-paragraph (a) above, there shall be deemed to have been paid by the taxpayer the amount which would have been paid if the Indian tax had not been reduced or relieved in accordance with the special incentive measures designed to promote economic development in India, effective on the date of signature of the present Protocol or which may be introduced in future in the Indian tax laws in modification of or in addition to the existing measures, provided that an agreement is made between the two Governments in respect of the scope of the benefit accorded to the taxpayer by the said measures."

Protocol which constitutes an integral part of the Agreement between Japan and India for the Avoidance of Double Taxation in respect of Taxes on Income, signed at New Delhi on January 5, 1960, shall be abrogated.

1. The present Protocol shall be ratified and the instruments of ratification shall be exchanged at Tokyo as soon as possible.

2. The present Protocol shall enter into force on the thirtieth day after the date of exchange of instruments of ratification and shall be applicable-

(i) on the part of India, in respect of any assessment year commencing on or after the 1st day of April, 1967; and

(ii) on the part of Japan, in respect of any taxable years beginning on or after the 1st day of January, 1966.

3. The present Protocol shall continue in force as long as the aforesaid Agreement remains in force. However, the provisions of paragraph 1 of Article IV of the present Protocol shall be applicable for a period of five years from the date on which the present Protocol shall become applicable as long as the aforesaid Agreement remains in force, provided that on expiry of such period, the two Governments will consult each other with a view to extending further such period by mutual agreement.

IN WITNESS WHEREOF, the representatives of the two Governments duly authorized for the purpose, have signed the present Protocol.

DONE at New Delhi in duplicate in the English language this eighth day of April, 1969.