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TMI BlogSection 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries - Georgia.X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st April of the calendar year next following the year in which the Agreement enters into force; and in respect of other taxes of income, and taxes on capital, to taxes chargeable for any fiscal year beginning on or after 1st April of the calendar year next following the year in which the Agreement enters into force; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement, as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from 1st day of April, 2012. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF GEORGIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL. The Government of the Republic of India and the Government of Georgia, desiring to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital and with a view to promoting economic cooperation between the two countries, have agreed as follows: Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of which Georgia may exercise its sovereign rights and jurisdiction in accordance with the international law. ( c ) the terms "a Contracting State" and "the other Contracting State" mean the Republic of India or Georgia, as the context requires; ( d ) the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; ( e ) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; ( f ) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; ( g ) the term "enterprise" applies to the carrying on of any business; ( h ) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; ( i ) the term "competent authority" means: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations are closer (centre of vital interests); ( b ) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode; ( c ) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; ( d ) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement. 3. Where by reason of the provision of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement. In the absence of such agreement, such person shall not be considered to be a resident of either Contracting State fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sub-paragraphs ( a ) to ( e ), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 5 . Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 7 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person: ( a ) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph, or ( b ) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; ( c ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other form of immovable property. 4 . The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 : BUSINESS PROFITS - 1 . The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2 . Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7 . Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 : SHIPPING AND AIR TRANSPORT - 1 . Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 2 . The provision of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 : ASSOCIATED ENTERPRISES - 1 . Where ( a ) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or ( b ) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a resident through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 5 . Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 11 : INTEREST - 1 . Interest arising in a Contracting State and paid to a resident of the other Contracting State may be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7 . Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 12 : ROYALTIES AND FEES FOR TECHNICAL SERVICES - 1 . Royalties and fees for technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. ( b ) Where under the sub-paragraph (a) royalties or fees for technical services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical services relate to services performed, in one of the Contracting States, the royalties or fees for technical services shall be deemed to arise in that Contracting State. 6 . Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties and fees for technical services, having regard to the use, right or information for which they are paid, exceeds the amount which wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or ( b ) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any period of 12-months; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2 . The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Article 15 : DEPENDENT PERSONAL SERVICE - 1 . Subject to the provisions of Articles 16, 18, 19 and 20 and 21 of this Agreement, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the entertainer or sportsperson is a resident. Article 18 : PENSIONS - Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. Article 19 : GOVERNMENT SERVICE - 1. ( a ) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political administrative sub-division, or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State; ( b ) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who: ( i ) is a national of that State; or ( ii ) did not become a resident of that State solely for the purpose of rendering the services. 2. ( a ) Notwithstanding the provisions of paragraph 1, any pension paid by, or out of funds created by, a Contracting State or a political-administrative sub-division or a political sub-division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. Article 22 : OTHER INCOME - 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as follows: ( a ) Where a resident of Georgia derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in India, Georgia shall allow: ( i ) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in India; ( ii ) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in India. Such deduction in either case shall not, however, exceed the sums of tax, which would have accrued according to the rules and rates on this income and capital effective in Georgia. ( b ) Where in accordance with any provision of the Agreement income derived or capital owned by a resident of a Georgia is exempt from tax in Georgia, Georgia may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital. Article 25 : NON-DISCRIMINATION - 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which other similar enterprises of the first-mentioned State are or may be subjected. 5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to the taxes of every kind and description. Article 26 : MUTUAL AGREEMENT PROCEDURE - 1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement. 2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation: ( a ) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; ( b ) to supply information (including documents or certified copies of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State, ( c ) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection. 5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State. 6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss activities shall be covered by the provisions of this Article. 4. Where by reason of this Article a resident of a Contracting State is denied the benefits of this Agreement in the other Contracting State, the competent authority of the other Contracting State shall notify the competent authority of the first-mentioned Contracting State. Article 31 : ENTRY INTO FORCE - 1. Each of the Contracting States shall notify to the other, through the diplomatic channels, the completion of the procedures required by its domestic law for the bringing into force of this Agreement. 2. This Agreement shall enter into force on the date of the later notification indicating the completion of legal procedures necessary for the entry into force of this Agreement. 3. The provisions of this Agreement shall have effect: ( a ) In India: ( i ) in respect of taxes withheld at source, to income paid or credited on or after 1st April of the calendar year next following the year in which the Agreement enters into force, ( ii ) in respect of other taxes on income, and taxes on capital, to taxes chargeable for any fiscal year beginning on or after 1st April of the calendar year ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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