[Title] Exchange of Notes, Protocol Modifying and Supplementing the Agreement between Japan and India for the Avoidance of Double Taxation in Respect of Taxes on Income.
I a
New Delhi, April 8, 1969
Excellency,
I have the honour to refer to the Protocol Modifying and Supplementing the Agreement between India and Japan for the Avoidance of Double Taxation in respect of Taxes on Income, which was signed today and to state the following on behalf of the Government of India.
1. With reference to paragraph 3 of Article I of the Protocol:
the surtax has been the subject of the Agreement before modification under the provisions of paragraph (2) of Article I of the Agreement before modification, since its introduction in India by the Companies (Profits) Surtax Act of 1964.
2. With reference to sub-paragraph (i) (ii) of paragraph (1) of Article II of the Agreement:
for the purposes of the said sub-paragraph, where a resident of one of the Contracting States fulfils an order for the sale of plant or machinery to a resident of the other Contracting State and it is incidental to the sale of the plant or machinery that a person or persons employed by the resident of the first-mentioned Contracting State should proceed to that other Contracting State for assisting in the installation of the plant or machinery therein, such activity shall not be deemed to constitute a permanent establishment unless it is carried on for a period exceeding ninety days or the expenses incurred on such activity are more than 10 per cent of the total sale price for the order.
3. With reference to sub-paragraph (i) (iii a) of paragraph (1) of Article II of the Agreement:
for the purposes of the said paragraph, the provisions thereof shall not apply where the enterprise maintains any other fixed place of business in that other Contracting State for any purpose or purposes other than the purposes specified in the said paragraph.
4. With reference to paragraph (2) of Article XI of the Agreement:
for the purposes of the said paragraph, where the resident of India is a company by which the surtax is payable, the credit to be allowed against Indian tax shall be allowed in the first instance against the income-tax payable by the company in India and, as to the balance, if any, against the surtax payable by it in India.
I have further the honour to request Your Excellency to confirm the foregoing understanding on behalf of the Government of Japan.
Accept, Your Excellency, the assurances of my highest consideration.
P. C. SETHI
His Excellency Mr. Shinsaku Hogen
Ambassador Extraordinary and Plenipotentiary of Japan to India
II a
New Delhi, April 8, 1969
Excellency,
I have the honour to acknowledge the receipt of Your Excellency's Note of today's date which reads as follows:
[See note I a]
I have further the honour to confirm that the foregoing understanding is also the understanding of the Government of Japan.
Accept, Your Excellency, the assurances of my highest consideration.
SHINSAKU HOGEN
Ambassador Extraordinary and Plenipotentiary of Japan to India
His Excellency Mr. P. C. Sethi
Minister of State in the Ministry of Finance
Government of India
New Delhi
I b
New Delhi, April 8, 1969
Excellency,
I have the honour to refer to sub-paragraph (b) of paragraph (3) of Article XI of the Agreement between India and Japan for the Avoidance of Double Taxation in respect of Taxes on Income, signed at New Delhi on January 5, 1960, as amended by the Protocol Modifying and Supplementing the Agreement which was signed today and to propose, on behalf of the Government of India, that the two Governments shall agree that the measures set forth in the following sections of the Income-tax Act, 1961 (43 of 1961) of India, effective on the date of signature of the aforesaid Protocol are "the special incentive measures designed to promote economic development in India, effective on the date of signature of the present Protocol" referred to in the said sub-paragraph.
(i) Section 10 (4)-relating to exemption from tax on interest payable to a non-resident on any security notified by the Government of India;
(ii) Section 10 (15) (iv)-relating to exemption from tax of (a) a non-resident in respect of moneys lent by him to the Government or a local authority in India; (b) an approved foreign financial institution in respect of interest on moneys lent by it to an industrial undertaking in India under a loan agreement; and (c) a non-resident in respect of interest on moneys lent or credit facilities allowed by him to an industrial undertaking in India for the purchase outside India of raw materials or capital plant and machinery;
(iii) Section 10 (28)-relating to exemption from tax on the amount of tax credit certificates granted under the provisions of Chapter XXII-B;
(iv) Section 33-relating to development rebate in respect of ships, machinery or plant;
(v) Section 33 A-relating to development allowance for planting or replanting of tea bushes;
(vi) Section 54 A-relating to refund of the tax on capital gains to an individual who is not a citizen of India or to a non-Indian company where the capital gains are reinvested in approved investments;
(vii) Section 80 E and Section 80 I (which replaces Section 80 E with effect from April 1, 1968)-relating to deduction of 8 per cent of profits and gains from specified priority industries in computing the total income of certain domestic companies;
(viii) Section 84 and Section 80 J (which replaces Section 84 with effect from April 1, 1968)-relating to exemption from tax of, or deduction in respect of, profits and gains from eligible industrial undertakings or ships or hotels;
(ix) Section 85 and Section 80 K (which replaces Section 85 with effect from April 1, 1968)-relating to exemption from tax of, or deduction in respect of, dividends attributable to profits and gains from eligible industrial undertakings or ships or hotels;
(x) Section 85 A and Section 80 M (which replaces Section 85 A with effect from April 1, 1968)-relating to deduction in respect of certain dividends received by a company from an Indian company or any other company declaring and paying dividends within India.
I have further the honour to propose that, this Note and Your Excellency's reply confirming, on behalf of the Government of Japan, the foregoing shall constitute an agreement between the two Governments, which shall enter into force on the date of the entry into force of the aforesaid Protocol and be applicable in respect of any assessment year commencing on or after the first day of April, 1967.
Accept, Your Excellency, the assurances of my highest consideration.
P. C. SETHI
His Excellency Mr. Shinsaku Hogen
Ambassador Extraordinary and Plenipotentiary of Japan to India
II b
New Delhi, April 8, 1969
Excellency,
I have the honour to acknowledge the receipt of Your Excellency's Note of today's date which reads as follows:
[See note I b]
I have the honour to confirm the foregoing on behalf of the Government of Japan and to agree that Your Excellency's Note and this reply shall constitute an agreement between the two Governments, which shall enter into force on the date of the entry into force of the aforesaid Protocol and be applicable in respect of any assessment year commencing on or after the first day of April, 1967.
Accept, Your Excellency, the assurances of my highest consideration.
SHINSAKU HOGEN
Ambassador Extraordinary and Plenipotentiary of Japan to India
His Excellency Mr. P. C. Sethi
Minister of State in the Ministry of Finance
Government of India
New Delhi