Article 29 - Termination - Japan

Article 29 TERMINATION This Convention shall continue in effect indefinitely but either Contracting State may, on or before the thirtieth day of June of any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give to the other Contracting State, through the diplomatic channel, written notice of termination and, in such event, this Convention shall cease to have effect : (a) in Japan : as regards income for any taxable year beginning on or after the first day of January of the calendar year next following that in which the notice of termination is given; and (b) in India : as regards income for any previous year beginning on or after the first day of April of the calendar year next following that in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention. DONE at New Delhi in duplicate on this seventh day of March, 1989 in the Hindi, Japanese and English languages, all the three texts being equally authentic. In case of any divergence of interpretations, the English text shall prevail. For the Government of the Republic of India Sd/- (G.N. Gupta) For the Government of Japan Sd/- (Eijiro Noda) (INDIAN NOTE) Excellency, I have the honour to refer to sub-paragraph (c) of paragraph 3 of article 23 of the Convention between the Government of the Republic of India and the Government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed today and to confirm, on behalf of the Government of the Republic of India the following understanding reached between the Government of the Republic of India and the Government of Japan : The measures set forth in the following sections of the Income-tax Act, 1961 (43 of 1961), of India, are the special incentive measures designed to promote economic development in India, effective on the date of signature of this Convention referred to in the said sub-paragraph: (i) Section 10(15)(iv) --relating to exemption from tax on certain interest; (ii) Section 10A --relating to special provision in respect of newly established industrial undertakings in free-trade zones; (iii) Section 32AB --relating to investment deposit account, etc., with respect to investment in plant and machinery, etc.; (iv) Section 80HH --relating to reduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas; (v) Section 80-I --relating to reduction in respect of profits and gains from industrial undertakings after a certain date, etc. I have further the honour to request Your Excellency to be good enough to confirm the foregoing undertaking on behalf of the Government of Japan. I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration. ( JAPANESE NOTE) Excellency , I have the honour to acknowledge the receipt of Your Excellency's Note of today's date which reads as follows : (INDIAN NOTE) I have further the honour to confirm the undertaking contained in Your Excellency's Note, on behalf of the Government of Japan. I avail myself of this opportunity to renew to Your Excellency, the assurance of my highest consideration. (JAPANESE NOTE) Excellency, I have the honour to refer to the Convention between the Government of Japan and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed today and to confirm, on behalf of the Government of Japan, the following understanding reached between the two Governments. 2. With reference to sub-paragraph (d) of paragraph 1 of article 3 of the Convention, the term tax shall not include 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 these taxes. 3. With reference to sub-paragraph (e) of paragraph 1 of article 3 of the Convention, in the case of India, the term person shall include a partnership and a Hindu Undivided Family. 4. With reference to paragraph 5 of article 5 of the Convention, the term services or facilities referred to therein shall include the supply of plant and machinery on hire or to be used in the exploration, exploitation or extraction of mineral oils. 5. It is understood that the provisions of paragraph 6 ofarticle 5 of the Convention shall apply to the use of facilities solely for the purpose of delivery of goods or merchandise belonging to the enterprise or to the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of delivery unless sales of such goods or merchandise are effected in that other Contracting State. 6. With reference to paragraph 1 of article 7 of the Convention, it is understood that by using the term directly or indirectly attributable to the permanent establishment , profits arising from transactions in which the permanent establishment has been involved shall be regarded as attributable to the permanent establishment to the extent appropriate to the part played by the permanent establishment in those transactions. It is also understood that profits shall be regarded as attributable to the permanent establishment to the above-mentioned extent, even when the contract or order relating to the sale or provision of goods or services in question is made or placed directly with the overseas head office of the enterprise rather than with the permanent establishment. 7. With reference to paragraph 3 of article 7 of the Convention, it is understood that in India the deductions in respect of the executive and general administrative expenses as referred to in the said paragraph shall be allowed in accordance with the domestic law of India, but such deductions shall in no case be less than what are allowable under the Indian Income-tax Act as effective on the date of signature of this Convention. 8. With reference to paragraph 3 of article 7 of the Convention no deduction shall be allowed in respect of amounts paid or charged (other than reimbursement of actual expenses) by a permanent establishment of an enterprise to the head office of the enterprise or any other offices thereof, by way of : (a) royalties, fees or other similar payments in return for the use of patents or other rights, or for the use of know-how; (b) commission or other charges, for specific services performed or for management; and (c) interest on moneys lent to the permanent establishment, except where the enterprise is a banking institution. 9. With reference to article 8 of the Convention,-- (i) interest on funds temporarily deposited in connection with the operation of ships or aircraft in international traffic shall be regarded as income from the operation of such ships or aircraft and the provisions of article 11 shall not apply in relation to such interest; and (ii) income from the operation of ships or aircraft includes income derived from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international traffic. 10. With reference to paragraph 5 of article 8 of the Convention, if a local authority of India thereof introduces any taxes of a character substantially similar to the enterprise-tax in Japan after the date of signature of this Convention, the two Governments shall consult with a view to amending paragraph 5 of article 8 on a reciprocal basis in such manner as may be considered appropriate. I have further the honour to request Your Excellency to be good enough to confirm the foregoing understanding on behalf of Your Excellency's Government. I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration. (INDIAN NOTE) Excellency, I have the honour to acknowledge the receipt of Your Excellency's note of today's date which reads as follows : (JAPANESE NOTE) I have further the honour to confirm the understanding contained in Your Excellency's Note, on behalf of the Government of the Republic of India. I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration. IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention. DONE at New Delhi in duplicate on this seventh day of March, 1989, in the Hindi, Japanese and English languages, all the three texts being equally authentic. In case of any divergence of interpretations, the English text shall prevail. (Sd/-) G.N. Gupta For the Government of the Republic of India (Sd/-) Eijiro Noda For the Government of Japan New Delhi, March 7, 1989 Excellency, I have the honour to refer to sub-paragraph (c) of paragraph 3 of article 23 of the Convention between the Government of the Republic of India and the Government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed today and to confirm, on behalf of the Government of the Republic of India, the following understanding reached between the Government of the Republic of India and the Government of Japan. The measures set forth in the following sections of the Income-tax Act, 1961 (43 of 1961), of India are the special incentive measures designed to promote economic development in India, effective on the date of signature of this Convention referred to in the said sub-paragraph : (i) Section 10(15)(iv) --relating to exemption from tax on certain interest; (ii) Section 10A --relating to special provision in respect of newly established industrial undertakings in free-trade zones; (iii) Section 32AB --relating to investment deposit account, etc., with respect to investment in plant and machinery, etc.; (iv) Section 80HH --relating to deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas; (v) Section 80-I --relating to deduction in respect of profits and gains from industrial undertakings after a certain date, etc. I have further the honour to request Your Excellency to be good enough to confirm the foregoing understanding on behalf of the Government of Japan. I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration. (Sd/-) His Excellency Mr. Eijiro Noda, Ambassador Extraordinary andChairman, Plenipotentiary of Japan to India. G.N. Gupta, Central Board of Direct Taxes, Ministry of Finance. New Delhi, March 7, 1989. Excellency, I have the honour to acknowledge the receipt of Your Excellency's note of today's date which reads as follows : I have the honour to refer to sub-paragraph (c) of paragraph 3 of article 23 of the Convention between the Government of the Republic of India and the Government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed today and to confirm, on behalf of the Government of the Republic of India, the following understanding reached between the Government of the Republic of India and the Government of Japan : The measures set forth in the following sections of the Income-tax Act, 1961 (43 of 1961), of India are the special incentive measures designed to promote economic development in India, effective on the date of signature of this Convention referred to in the said sub-paragraph : (i) Section 10(15)(iv) --relating to exemption from tax on certain interest; (ii) Section 10A --relating to special provision in respect of newly established industrial undertakings in free-trade zones; (iii) Section 32AB --relating to investment deposit account, etc., with respect to investment in plant and machinery, etc.; (iv) Section 80HH. --relating to deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas; (v) Section 80-I --relating to deduction in respect of profits and gains from industrial undertakings after a certain date, etc. I have further the honour to request Your Excellency to be good enough to confirm the foregoing understanding on behalf of the Government of Japan. I have further the honour to confirm the understanding contained in Your Excellency's note on behalf of the Government of Japan. I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration. (Sd/-) Fijiro Noda, Ambassador Extraordinary and Plenipotentiary of Japan to India. His Excellency Mr. G.N. Gupta, Chairman, Central Board of Direct Taxes, Ministry of Finance. New Delhi, March 7, 1989. Excellency, I have the honour to refer to the Convention between the Government of Japan and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed today and to confirm, on behalf of the Government of Japan, the following understanding reached between the two Governments: 1. With reference to sub-paragraph (b) of paragraph 1 of article 2 of the Convention, any taxes which are identical or substantially similar to the surtax imposed under the Companies (Profits) Surtax Act, 1964, but abolished subsequently, and which are imposed in India after the date of signature of the Convention shall be regarded as the identical or substantially similar taxes referred to in paragraph 2 of article 2 of the Convention. 2. With reference to sub-paragraph (d) of paragraph 1 of article 3 of the Convention, the term tax shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which the Convention applies or which represents a penalty imposed relating to these taxes. 3. With reference to sub-paragraph (e) of paragraph 1 of article 3 of the Convention, in the case of India, the term person shall include a partnership and a Hindu Undivided Family. 4. With reference to paragraph 5 of article 5 of the Convention, the term services or facilities referred to therein shall include the supply of plant and machinery on hire used or to be used in the exploration, exploitation or extraction of mineral oils. 5. It is understood that the provisions of paragraph 6 of article 5 of the Convention shall apply to the use of facilities solely for the purpose of delivery of goods or merchandise belonging to the enterprise or to the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of delivery unless sales of such goods or merchandise are effected in that other Contracting State. 6. With reference to paragraph 1 of article 7 of the Convention, it is understood that by using the term directly or indirectly attributable to that permanent establishment , profits arising from transactions in which the permanent establishment has been involved shall be regarded as attributable to the permanent establishment to the extent appropriate to the part played by the permanent establishment in those transactions. It is also understood that profits shall be regarded as attributable to the permanent establishment to the above-mentioned extent, even when the contract or order relating to the sale or provision of goods or services in question is made or placed directly with the overseas head office of the enterprise rather than with the permanent establishment. 7. With reference to paragraph 3 of article 7 of the Convention, it is understood that in India, the deductions in respect of the executive and general administrative expenses as referred to in the said paragraph shall be allowed in accordance with the domestic law of India, but such deductions shall in no case be less than what are allowable under the Indian Income-tax Act as effective on the date of signature of the Convention. 8. With reference to paragraph 3 of article 7 of the Convention, no deduction shall be allowed in respect of amounts paid or charged (other than reimbursement of actual expenses) by a permanent establishment of an enterprise to the head office of the enterprise or any other offices thereof, by way of : (a) royalties, fees or other similar payments in return for the use of patents or other rights, or for the use of know-how; (b) commission or other charges, for specific services performed or for management; and (c) interest on moneys lent to the permanent establishment, except where the enterprise is a banking institution. 9. With reference to article 8 of the Convention,-- (i) interest on funds temporarily deposited in connection with the operation of ships or aircraft in international traffic shall be regarded as income from the operation of such ships or aircraft and the provisions of article 11 shall not apply in relation to such interest; and (ii) income from the operation of ships or aircraft includes income derived from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international traffic. 10. With reference to paragraph 5 of article 8 of the Convention, if a local authority of India introduces any taxes of a character substantially similar to the enterprise-tax in Japan after the date of signature of the Convention, the two Governments shall consult with a view to amending paragraph 5 of article 8 on a reciprocal basis in such manner as may be considered appropriate. I have further the honour to request Your Excellency to be good enough to confirm the foregoing understanding on behalf of Your Excellency's Government. I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration. (Sd/-) Fijiro Noda, Ambassador, Extraordinary and Plenipotentiary His Excellency Mr G.N. Gupta, of Japan to India Chairman, Central Board of Direct Taxes, Ministry of Finance New Delhi, March 7, 1989. Excellency, I have the honour to acknowledge the receipt of Your Excellency's note of today's date which reads as follows : I have the honour to refer to the Convention between the Government of Japan and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed today and to confirm, on behalf of the Government of Japan, the following understanding reached between the two Governments: 1. With reference to sub-paragraph (b) of paragraph 1 of article 2 of the Convention, any taxes which are identical or substantially similar to the surtax imposed under the Companies (Profits) Surtax Act, 1964, but abolished subsequently, and which are imposed in India after the date of signature of the Convention shall be regarded as the identical or substantially similar taxes referred to in paragraph 2 of article 2 of the Convention 2. With reference to sub-paragraph (d) of paragraph 1 of article 3 of the Convention, the term tax shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which the Convention applies or which represents a penalty imposed relating to these taxes. 3. With reference to sub-paragraph (e) of paragraph 1 of article 3 of the Convention, in the case of India, the term person shall include a partnership and a Hindu Undivided Family. 4. With reference to paragraph 5 of article 5 of the Convention, the term services or facilities referred to therein shall include the supply of plant and machinery on hire used or to be used in the exploration, exploitation or extraction of mineral oils. 5. It is understood that the provisions of paragraph 6 of article 5 of the Convention shall apply to the use of facilities solely for the purpose of delivery of goods or merchandise belonging to the enterprise or to the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of delivery unless sales of such goods or merchandise are effected in that other Contracting State. 6. With reference to paragraph 1 of article 7 of the Convention, it is understood that by using the term directly or indirectly attributable to that permanent establishment , profits arising from transactions in which the permanent establishment has been involved shall be regarded as attributable to the permanent establishment to the extent appropriate to the part played by the permanent establishment in those transactions. It is also understood that profits shall be regarded as attributable to the permanent establishment to the above-mentioned extent, even when the contract or order relating to the sale or provision of goods or services in question is made or placed directly with the overseas head office of the enterprise rather than with the permanent establishment. 7. With reference to paragraph 3 of article 7 of the Convention, it is understood that in India the deductions in respect of the executive and general administrative expenses as referred to in the said paragraph shall be allowed in accordance with the domestic law of India, but such deductions shall in no case be less than what are allowable under the Indian Income-tax Act as effective on the date of signature of the Convention. 8. With reference to paragraph 3 of article 7 of the Convention, no deduction shall be allowed in respect of amounts paid or charged (other than reimbursement of actual expenses) by a permanent establishment of an enterprise to the head office of the enterprise or any other offices thereof, by way of : (a) royalties, fees or other similar payments in return for the use of patents or other rights, or for the use of know-how; (b) commission or other charges, for specific services performed or for management; and (c) interest on moneys lent to the permanent establishment, except where the enterprise is a banking institution. 9. With reference to article 8 of the Convention: (i) interest on funds temporarily deposited in connection with the operation of ships or aircraft in international traffic shall be regarded as income from the operation of such ships or aircraft and the provisions of article 11 shall not apply in relation to such interest; and (ii) income from the operation of ships or aircraft includes income derived from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international traffic. 10. With reference to paragraph 5 of article 8 of the Convention, if a local authority of India introduces any taxes of a character substantially similar to the enterprise-tax in Japan after the date of signature of the Convention, the two Governments shall consult with a view to amending paragraph 5 of article 8 on a reciprocal basis in such manner as may be considered appropriate. I have further the honour to request Your Excellency to be good enough to confirm the foregoing understanding on behalf of Your Excellency's Government. I have further the honour to confirm the understanding contained in Your Excellency's note, on behalf of the Government of the Republic of India. I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration. His Excellency Mr. Fijiro Noda, Ambassador Extraordinary and Plenipotentiary of Japan to India. (Sd/-) G.N. Gupta, Chairman, Central Board of Direct Taxes, Ministry of Finance