Agreement between the Government of India and the Government of Sultanate of Oman for the avoidance of double taxation of income derived from international air transport - 0313(E) - Income Tax

Agreement between the Government of India and the Government of Sultanate of Oman for the avoidance of double taxation of income derived from international air transport Notification Number: 0313(E) Dated 27-03-1985 File Number: 484/36/77-FTD Whereas the annexed agreement between the Government of India and the Government of the Sultanate of Oman for the avoidance of double taxation of income derived from international air transport has come into force on the notification by both the Contracting States to each other of completion of the procedures required by their respective laws, as required by article 5 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. Agreement between the Government of India and the Government of the Sultanate of Oman for the avoidance of double taxation of income derived from international air transport. The Government of India and the Government of the Sultanate of Oman. 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 existing taxes to which this agreement shall apply are: (a) in the case of the Sultanate of Oman: the income-tax imposed under the Income-tax Decree, 1971, and the company income-tax imposed under the Company Income-tax Law, 1981, (hereinafter referred to as " Omani tax "); (b) in the case of India: (i) the income-tax including any surcharge thereon imposed, under the Income-tax Act, 1961 (43 of 1961); (ii) the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964), (hereinafter referred to as " Indian tax "). 2. This agreement shall also apply to any identical or substantially imilar taxes which are imposed after the date of signature of this agreement 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 " Sultanate of Oman " means the territory of Oman including the territorial sea and air space above it as well as any other maritime zone referred to in decree 15/1981, concerning the territorial waters, the continental shelf and the exclusive economic zone in which Oman has sovereign rights and to the extent that those rights can be exercised therein as if such maritime zone is part of the territory of Oman; (b) the term " India " means the territory of India and includes the territorial sea and airspace above it as well as any other maritime zone referred to in the territorial waters, continental shelf, exclusive economic zone and other Maritime Zones Act, 1976 (Act No. 80 of 1976), in which India has sovereign rights and to the extent that these rights can be exercised therein as if such maritime zone is a part of the territory of India; (c) the term " a Contracting State " and the " other Contracting State " means Sultanate of Oman or India as the context requires; (d) the term " tax " means " Omani tax " or " Indian tax " as the context requires; (e) the term " enterprise of India " includes enterprises designated by the Government of India; (f) the term " enterprise of Oman " includes enterprises designated by the Government of the Sultanate of Oman; (g) 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; (h) 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. 2. The list of enterprises designated by each Government in terms of sub-paragraphs (e) and (f) of paragraph 1, as given in the annex to this agreement, may be modified by mutual agreement through exchange of letters between both States. 3. 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 which are the subject of this agreement. Article 3 AVOIDANCE OF DOUBLE TAXATION 1. Income which an enterprise of Oman 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 Oman from Omani 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 aircraft. 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 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. Article 6 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, give notice of termination to the other Contracting State and in such event this agreement shall cease to be effective. (a) In the Sultanate of Oman, 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 twenty-third day of October, one thousand nine hundred and eighty-four 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. Sd. C. K. TIKKU For the Government of India. Sd. MR. ABDULLA BIN SAEED BIN RASHID AL-BALUSHI For the Government of the Sultanate of Oman . ANNEX LIST OF DESIGNATED ENTERPRISES, VIDE ARTICLE 2, PARAGRAPH 2 Enterprises designated by the Government of India: AIR-INDIA Enterprises designated by the Government of the Sultanate of Oman: GULF AIR COMPANY (KNOWN AS GULF AIR) Eng. Mohamed Rajab Al-Ba'Omar. Head of Delegation of the Government of the Sultanate of Oman . Dear Sir, The agreement between the Government of India and the Government of the Sultanate of Oman for the avoidance of double taxation of income derived from international air transport being signed today, I have the honour on behalf of the Government of India to inform you that the provisions of article 3 of the said agreement are based on the understanding that the enterprise of India is not taxed on its income derived from international air transport in the States of Bahrain, Oman, Qatar and United Arab Emirates who are the joint owners of Gulf Air. However, in the event of the States of Bahrain, Qatar and United Arab Emirates or any one of them charging to tax the enterprise of India for any year in respect of its income derived from international air transport, the exemption available in India to the enterprise of Oman on its income derived from the operation of aircraft in international traffic shall be reduced by a proportion appropriate to the share of the revenues of the enterprise of India in the State which imposes such tax. I should be grateful if you confirm your agreement to the above understanding of the provisions of article 3 of the said agreement, and that in such case this note and your reply thereto shall be deemed to be part of the agreement. Please accept, Sir, the assurances of my highest consideration. MUSCAT, 27th October, 1982. JAGDISH CHAND Head of Delegation of the Government of India Mr. Jagdish Chand, Head of Delegation of the Government of India . Dear Sir, With reference to the agreement, signed today, between the Government of India and the Government of the Sultanate of Oman for the avoidance of double taxation of income derived from the international air transport you have informed of the following: " The agreement between the Government of India and the Government of the Sultanate of Oman for the avoidance of double taxation of income derived from international air transport being signed today, I have the honour on behalf of the Government of India to inform you that the provisions of article 3 of the said agreement are based on the understanding that the enterprise of India is not taxed on its income derived from international air transport in the States of Bahrain, Oman, Qatar and United Arab Emirates who are the joint owners of Gulf Air. However, in the event of the States of Bahrain, Qatar and United Arab Emirates or any one of them charging to tax the enterprise of India for any year in respect of its income derived from international air transport, the exemption available in India to the enterprise of Oman on its income derived from the operation of aircraft in international traffic shall be reduced by a proportion appropriate in the share of the revenues of the enterprise of India in the State which imposes such tax. I should be grateful if you confirm your agreement to the above understanding of the provisions of article 3 of the said agreement, and that in such case this note and your reply thereto shall be deemed to be part of the agreement. " I have the honour to confirm on behalf of the Government of the Sultanate of Oman the understandings outlined in your note. Please accept, Sir, the assurances of my highest consideration. MUSCAT , 27th October, 1982 . ENG. MOHAMED RAJAB AL-BA'OMAR, Head of Delegation of the Government of the Sultanate of Oman .