Agreement between the Government of India and the Government of Italy for the Avoidance of Double Taxation of Income of Enterprises Operating Aircraft - G.S.R. 201(E) - Income Tax

Notification No. G.S.R. 201(E) Dated April 16, 1975 WHEREAS the annexed Agreement between the Government of India and the Government of Italy for the avoidance of double taxation of income of enterprises operating aircraft has been ratified and the instruments of ratification exchanged, as required by paragraph (1) of Article V 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 INDIA AND THE GOVERNMENT OF ITALY FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME OF ENTERPRISES OPERATING AIRCRAFT Whereas the Government of India and the Government of Italy desire to conclude an agreement for the avoidance of double taxation of income of enterprise operating aircraft chargeable to tax in the said countries in accordance with their respective laws; Now, therefore, the said two Governments do hereby agree as follows-. ARTICLE 1 1. The taxes to which this Agreement shall apply are: (a) in the case of India: (i) the income-tax including any surcharge on income-tax imposed under the Income-tax Art, 1961 (43 of 1961), as amended; and (ii) the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964), as amended (hereinafter referred to as Indian tax ); (b) in the case of Italy: (i) the tax on income from movable wealth (imposta sui redditi di ricchezza mobile); (ii) the complementary tax (imposta complementare progressiva sul reddito); (iii) the tax on companies in so far as the tax is charged on income and not on capital (imposta sulle societa, per la parte che grava sul redditoe non sul partimonio); and (iv) the taxes on income imposed on behalf of Provinces, Municipalities, Chambers of commerce (imposte provinciali, comunali, e camerali sul reddito). (hereinafter referred to as Italian tax ), 2. This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of the signature of this Agreement in addition to, or in place of, the existing taxes. ARTICLE 2 1. In this Agreement, unless the context otherwise requires: (a) the term India shall have the meaning assigned to it in Article 1 of the Constitution . of India; (b) the term Italy means the Italian Republic; (c) the terms a Contracting State and other Contracting State mean India or Italy, as the context requires; (d) the term tax means Indian tax or Italian tax , as the context requires; (e) the term enterprise of a Contracting State means: (i) an airline designated by the Government of that State in pursuance of the Agreement dated the 16th July, 1959, as may be amended or revised from time to time, between the Government of India and the Government of Italy relating to air services; or (ii) an airline which is authorised by the Government of that State by a general or special arrangement between the two Contracting States to operate chartered flights between or beyond their territories. (f) the expression operation of aircraft means a business of transportation by air of persons, livestock, goods or mail, carried on by the owners or leasers or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises and any other activity directly connected with such transportation. 2. In the application of the provisions of this Agreement by one of the Contracting States, any term used but 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 to which this Agreement applies. ARTICLE 3 1. Income derived from the operation of aircraft in international traffic by an enterprise of one of the Contracting States shall be exempt from tax in the other Contracting State. 2. Paragraph (1) shall likewise apply in respect of participations in pools of any kind by enterprises engaged in air transport. ARTICLE 4 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 provisions to the contrary is made in this Agreement. ARTICLE 5 1. This Agreement shall be ratified and the instruments of ratification shall be exchanged at New Delhi as soon as possible. 2. This Agreement shall enter into force on the date of the exchange of the instruments of ratification and its provisions shall have effect: (a) in India, in respect of income assessable for the year of assessment commencing on or after the 1st day of April, 1960; (b) in Italy, in respect of income assessable for the year of assessment commencing on or after the 1st day of January, 1960. ARTICLE 6 This Agreement shall continue in effect indefinitely but either of the Contracting States may, within the 30th day of June of any calendar year after the year 1973, give notice of termination to the other Contracting State and in such event this Agreement shall cease to be effective: (a) in India in respect of income assessable for the year of assessment commencing on or after the 1st day of April of the calendar year following that year in which the notice is given; (b) in Italy, in respect of income assessable for the year of assessment commencing on or after the 1st day of January of the calendar year following that year in which the notice is given. IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed the present Agreement. DONE at Rome, on the 3rd day of February, 1970, in two originals, each in the English and Italian languages, both texts being equally authoritative. Excellency, With reference to the Agreement which is being signed today between the Government of India and the Government of Italy for the avoidance of double taxation of income of enterprises operating aircraft, I have the honour to make the following proposals on behalf of the Government of India: Since the above-mentioned agreement envisages the exemption from taxation in either Contracting State, in the matter of income derived from international air transport by an enterprise belonging to the other Contracting State; and since such exemption is to have effect in India for the assessment year 1960-61 and subsequent years, and in Italy for the assessment year 1960 and subsequent years, the two Contracting States agree as follows: 1. Alitalia, being an enterprise of Italy, any taxes paid by it or any deposits made by it towards its tax dues in India in respect of its income relating to any assessment year for which it is exempt from tax in accordance with the Agreement aforesaid shall be refunded by the Government of India to Alitalia on an application in this behalf by Alitalia within six months from the date on which the Agreement aforesaid enters into force, and any proceeding already initiated for the taxation of such income shall be terminated. 2. Air India being an enterprise of India, any taxes paid by it or any deposits made by it towards its tax dues in Italy in respect of its income relating to any assessment year for which it is exempt from tax in accordance with the Agreement aforesaid shall be refunded by the Government of Italy to Air India on an application in this behalf by Air India within six months from the date on which the Agreement aforesaid enters into force, and any proceeding already initiated for the taxation of such income shall be terminated. I shall be grateful if Your Excellency will let me know if he agrees on what has been stated above; and, in such case, this note and the reply Your Excellency will kindly send me, shall be deemed to be part of the agreement aforesaid. Please accept, Your Excellency, the assurances of my highest consideration. Excellency, I have the honour to acknowledge receipt of your letter of today reading as follows: With reference to the Agreement which is being signed today between the Government of India and the Government of Italy for the avoidance of double taxation of income of enterprises operating aircraft, I have the honour to make the following proposals on behalf of the Government of India: Since the above-mentioned agreement envisages the exemption from taxation in either Contracting State, in the matter of income derived from international air transport by an enterprise belonging to the other Contracting State; and since such exemption is to be effective in India for the assessment year 1960-61 and subsequent years, and in Italy for the assessment year 1960 and subsequent years, the two contracting States agree as follows: 1. Alitalia, being an enterprise of Italy, any taxes paid by it or any deposits made by it towards its tax dues in India in respect of its income relating to any assessment year for which it is exempt from tax in accordance with the Agreement aforesaid shall be refunded by the Government of India to Alitalia on an application in this behalf by Alitalia within six months from the date on which the Agreement aforesaid enters into force, and any proceeding already initiated for the taxation of such income shall be terminated. 2. Air India being an enterprise of India, any taxes paid by it or any deposits made by it towards its tax dues in Italy in respect of its income relating to any assessment year for which it is exempt from tax in accordance with the Agreement aforesaid shall be refunded by the Government of Italy to Air India on an application in this behalf by Air India within six months from the date on which the Agreement aforesaid enters into force, and any proceeding already initiated for the taxation of such income shall be terminated. I shall be grateful if Your Excellency will let me know if he agrees on what has been stated above; and, in such case, this note and the reply Your Excellency will kindly send me, shall be deemed to be part of the agreement aforesaid. I have the honour to inform you that my Government agrees on the foregoing. Please accept, Excellency, the assurances of my highest consideration.