France - Legal Draft

Double Taxation

Avoidance AgreementIncome-Tax

Act,1961:Notification under section 90:Convention between the Government of the

Republic of India and the Government of the French Republic for the avoidance

of double taxation and the prevention of fiscal evasion with respect to taxes

on income and on capitalNotification

No. G.S.R.681(E),dtd.07.09.19941. Whereas the annexed

Convention between the Government of the Republic of India and the Government

of the French Republic for the avoidance of double taxation and the prevention

of fiscal evasion with respect to taxes on income and on capital has come into

force on the 1st day of August, 1994, on the notification by both the

Contracting States to each other of the completion of the procedures required under

their law for bringing into force of the said Convention in accordance with

paragraph 1 of article 30 of the said Convention;2. Now, therefore, in

exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43

of 1961), section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964)

and 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby

directs that all the provisions of the said Convention shall be given effect to

in the Union of India.ANNEXURECONVENTION

BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE

FRENCH REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITALThe

Government of the Republic of India and the Government of the French Republic,

desiring to conclude a Convention for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income and on capital;Have

agreed as follows:Article

1PERSONAL

SCOPEThis

Convention shall apply to persons who are residents of one or both of the

Contracting States.Article

2TAXES

COVERED1. The taxes to which

this Convention shall apply are:a. In India:i.

the

income-tax including any surcharge thereon;ii.

the

surtax; andiii.

the

wealth-tax,(hereinafter

referred to as "Indian tax");a.b. In France:i.

the

income-tax (1'impot sur le revene' including any withholding tax, pre-payment

(precompte) or advance payment with respect thereto;ii.

the

corporation tax (1'impot sur les soietes) including any withholding tax

pre-payment (precompte) or advance payment with respect thereto; andiii.

the

wealth-tax (1'impot de solidarite sur la fortune).(hereinafter

referred to as "French tax").2.

The

Convention shall also apply to any identical or substantially similar taxes

which are imposed by either Contracting State after the date of signature of

the present Convention in addition to, or in place of, the taxes referred to in

paragraph 1. The competent authorities of the Contracting States shall notify

each other of any substantial changes which are made in their respective

taxation laws.Article

3GENERAL

DEFINITIONSIn

this Convention, unless the context otherwise requires:a. the term

"India" means the territory of India and includes the territorial sea

and air space above it, as well as any other maritime zone in which India,

according to the Indian law, has sovereign rights, other rights and

jurisdictions in accordance with international law;b. the term

"France" means the European and overseas departments of the French

Republic including the territorial sea and the air space above it as well as

the areas within which, in accordance with International law, the French

Republic has sovereign rights for the purpose of exploring and exploiting the

natural resources of the sea-bed and its sub-soil and of the superjacent watersc. the terms "a

Contracting State" and "the other Contracting State" mean India

or France as the context requires;d. (d)the term

"person" includes an individual, a company 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 company or body corporate under the taxation laws in force in the respective

Contracting States;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

"competent authority" means, in the case of India, the Central

Government in the Ministry of Finance (Department of Revenue) or their

authorised representative; and in the case of France, the Minister in charge of

the Budget or his authorised representative;h. (h)the term

"national" means any individual possessing the nationality of a

Contracting State and any legal person, partnership or association deriving its

status from the laws in force in that Contracting State;i. 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;j. (j)the term

"fiscal year" in relation to Indian tax means "previous year"

as defined in the Income-tax Act, 1961 (43 of 1961) and in relation to French

income-tax means calendar year;k. (k) the term

"tax" means Indian tax or French tax as the context requires.As

regards the application of the Convention by a Contracting State, any term not

defined therein shall, unless the context otherwise requires, have the meaning

which it has under the law of that Contracting State concerning the taxes to

which the Convention applies.Article

4RESIDENTFor

the purposes of this Convention, the term "resident of a Contracting

State" means any person who, under the laws of that Contracting State, is

liable to tax therein by reason of his domicile, residence, place of management

or any other criterion of a similar nature.Where

by reason of the provisions of paragraph 1, an individual is a resident of both

Contracting States, then his status shall be determined as follows:a. he shall be deemed to

be a resident of the Contracting State in which he has a permanent home

available to him; if he has a permanent home available to him in both

Contracting States, he shall be deemed to be a resident of the Contracting

State with which his personal and economic relations are closer (centre of

vital interests);b. if the Contracting

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 Contracting State, he

hall be deemed to be a resident of the Contracting State in which he has an

habitual abode;c. if he has an habitual

abode in both Contracting States or in neither of them, he shall be deemed to

be a resident of the Contracting State of which he is a national;d. if he is a national

of both Contracting States or of neither of them, the competent authorities of

the Contracting States shall settle the question by mutual agreement.Where

by reason of the provisions 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 of the Contracting State in which its place of effective management is

situated.Article

5PERMANENT

ESTABLISHMENT1. For the purposes of

this Convention, the term "permanent establishment" means a fixed

place of business through which the business of an enterprise is wholly or

partly carried on.2. The term

"permanent establishment" includes especially:a. a place of

management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;g. a warehouse in

relation to a person providing storage facilities for others;h. a premises used as a

sales outlet;i. an installation or

structure used for the exploration of natural resources provided that the

activities continue for more than 183 days.3. A building site or

construction, installation or assembly project constitutes a permanent

establishment only where such site or project continues for a period of more

than six months.4. Notwithstanding the

preceding provisions of this Article, the term "permanent

establishment" shall be deemed not to include:a. the use of facilities

solely for the purpose of storage or display of goods or merchandise belonging

to the enterprise;b. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of storage or display;c. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of processing by another enterprise;d. the maintenance of a

fixed place of business solely for the purpose of purchasing goods or

merchandise or of collecting information, for the enterprise;e. the maintenance of a

fixed place of business solely for the purpose of advertising for the supply of

information, for scientific research, or for other activities which have a

preparation or auxiliary character, for the enterprise;f. the maintenance of a

fixed place of business solely for any combination of activities mentioned in

sub-paragraphs (a) to (e), provided that the overall activity of the fixed

place of business resulting from this combination is of 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 6 applies is acting in one of the

Contracting States 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, if:a. he has and habitually

exercises in that Contracting State an authority to conclude contracts on

behalf of the enterprise, unless, his activities are limited to the purchase of

goods or merchandise for the enterprise; orb. he has no such

authority, but habitually maintains in the first mentioned Contracting State a

stock of goods or merchandise from which he regularly delivers goods or

merchandise on behalf of the enterprise.6. An enterprise of one

of the Contracting States shall not be deemed to have a permanent establishment

in the other Contracting State merely because it carries on business in that

other Contracting State through a broker, general commission agent or any other

agent of an independent status, provided that such persons are acting in the

ordinary course of their business. However, when the activities of such an

agent are devoted wholly or almost wholly on behalf of that enterprise, he will

not be considered an agent of an independent status within the meaning of this

paragraph if it is shown that the transactions between the agent and the

enterprise were not made under at arm's length conditions.7. The fact that a

company which is a resident of one of the Contracting States controls or is

controlled by a company, which is a resident of the other Contracting State, or

which carries on business in that other Contracting State (whether through a

permanent establishment or otherwise), shall not of itself constitute either

company a permanent establishment of the other.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

resident of a Contracting State from immovable property (including income from

agriculture or forestry) situated in the other Contracting State may be taxed

in that other Contracting State.2. The term

"immovable property" shall have the meaning which it has under the

law of the Contracting State in which the property in question is situated. The

term shall in any case include property accessory to immovable property, rights

to which the provisions of general law respecting landed property apply,

usufruct of immovable property and rights to variable or fixed payments as

consideration for the working of, or the right to work, mineral deposits,

sources and other natural resources. Ships, boats and aircraft shall not be

regarded as immovable property.3. The provisions of

paragraph 1 shall also apply to income derived from the direct use, letting, or

use in any 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

7BUSINESS

PROFITS1. The profits of an

enterprise of one of the Contracting States shall be taxable only in that

Contracting 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 Contracting 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 one of the Contracting States

carries on business in the other Contracting State through a permanent

establishment situated therein, there shall in each Contracting State be

attributed 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 which it is a permanent establishment. In

any case where the correct amount of profits attributable to a permanent

establishment is incapable of determination or the determination thereof

presents exceptional difficulties, the profits attributable to the permanent

establishment may be estimated on the basis of an apportionment of the total profits

of the enterprise to its various parts, provided, however, that the result

shall be in accordance with the principles contained in this Article.3.a. In determining the

profits of a permanent establishment, there shall be allowed as deductions

expenses which are incurred for the purposes of the permanent establishment,

including executive and general administrative expenses so incurred, whether in

the Contracting State in which the permanent establishment is situated or

elsewhere, in accordance with the provisions of and subject to the limitations

of the taxation laws of that Contracting State. Provided that where the law of

the Contracting State in which the permanent establishment is situated imposes

a restriction on the amount of the executive and general administrative

expenses which may be allowed, and that restriction is relaxed or overridden by

any Convention, Agreement or Protocol signed after 1st January, 1990, between

that Contracting State and a third State which is a member of the OECD, the competent

authority of that Contracting State shall notify the competent authority of the

other Contracting State of the terms of the corresponding paragraph in the

Convention, Agreement or Protocol with that third State immediately after the

entry into force of that Convention, Agreement or Protocol and, if the

competent authority of the other Contracting State so requests, the provisions

of that paragraph shall apply under this Convention from that entry into force.b. However, no such

deduction shall be allowed in respect of amounts, if any, paid (otherwise than

towards reimbursement of actual expenses) by the permanent establishment to the

head office of the enterprise or any of its other offices, by way of royalties,

fees or other similar payments in return for the use of patents or other

rights, or by way of commission for specific services performed or for

management, or, except in the case of a banking enterprise, by way of interest

on moneys lent to the permanent establishment. Likewise, no account shall be

taken, in the determination of the profits of a permanent establishment, for

amounts charged (otherwise than towards reimbursement of actual expenses), by

the permanent establishment to the head office of the enterprise or any of its

other offices, by way of royalties, fees or other similar payments in return

for the use of patents or other rights, or by way of commission for specific

services performed or for management, or, except in the case of a banking

enterprise, by way of interest on moneys lent to the head office of the

enterprise or any of its other offices.4. No profits shall be

attributed to a permanent establishment by reason of the mere purchase by that

permanent establishment of goods or merchandise for the enterprise.5. For the purpose of

the preceding paragraphs, 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.6. Where profits include

items of income which are dealt with separately in other Articles of this

convention, then the provisions of those Articles shall not be affected by the

provisions of this Article.Article

8AIR

TRANSPORT1. Profits derived by an

enterprise of a Contracting State from the operation of aircraft in international

traffic shall be taxable only in that Contracting State.2. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency.3. For the purpose of

this article, interest on funds connected with the operation of aircraft in

international traffic shall be regarded as profits derived from the operation

of such aircraft, and the provisions of article 12 shall not apply in relation

to such interest.4. The term

"operation of aircraft" shall mean business of transportation by air

of passengers, mail, livestock or goods 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.Article

9SHIPPING1. Profits derived by an

enterprise of a Contracting State from the operation of ships in international

traffic shall be taxable only in that Contracting State.2. Notwithstanding the

provisions of paragraph 1, such profits may be taxed in the other Contracting

State from which they are derived provided that the tax so charged shall not

exceed:a. during the first five

fiscal years after the entry into force of this Convention, 50 per cent., andb. during the subsequent

five fiscal years, 25 per cent.,of the tax otherwise imposed by the internal

law of that Contracting State. Subsequently, only the provisions of paragraph 1

shall be applicable.2.3. The provisions of

paragraphs 1 and 2 shall also apply to profits from the participation in a

pool, a joint business or an international operating agency engaged in the

operation of ships.4. For the purposes of

this article interest arising on funds connected with the operation of ships in

international traffic shall be regarded as profits derived from the operation

of such ships, and the provisions of Article 12 shall not apply in relation to

such interest.Article

10ASSOCIATED

ENTERPRISESWhere: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, orb. 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 made or imposed between the two enterprises in

their commercial or financial relations which differ from those which would be

made between independent enterprises, then any profits which would, but for

those conditions, have accrued to one of the enterprises, but, by reason of

those conditions have not so accrued, may be included in the profits of that

enterprise and taxed accordingly.Article

11DIVIDENDS1. Dividends paid by a

company which is resident of a Contracting State to a resident of the other

Contracting State may be taxed in that other Contracting State.2. However, such

dividends may also be taxed in the Contracting State of which the company

paying the dividends is a resident and according to the laws of that

Contracting State, but if the recipient is the beneficial owner of the

dividends the tax so charged shall not exceed 15 per cent. of the gross amount

of the dividends.This

paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.1.2.3.a. A resident of India

who receives dividends from a company which is a resident of France which, if

received by a resident of France, would entitle such resident to a tax credit

(avoir fiscal), shall be entitled from the French Treasury to a payment equal

to such tax credit (avoir fiscal) subject to the deduction of tax as provided

for under paragraph 2 of this Article.b. The provisions of

sub-paragraph (a) of this paragraph shall apply only to a resident of India who

isi.

an

individual; orii.

a

company which holds directly or indirectly less than 10 per cent. of the

capital of the French company paying the dividends.a.b.c. The provisions of

sub-paragraph (a) of this paragraph shall not apply if the recipient of the

payment from the French Treasury provided for in sub-paragraph (a) of this

paragraph is not subject to Indian tax in respect of the payment.d. Payments from the

French Treasury provided for under sub-paragraph (a) of this paragraph shall be

deemed to be dividend for the purpose of this Convention.4. When the prepayment

(pre-compute) is levied in respect of dividends paid by a company which is a

resident of France to a resident of India who is not entitled to the payment

from the French Treasury referred to in paragraph 3 of this article with

respect to such dividends, such resident shall be entitled to the refund of

that prepayment, subject to the deduction of the withholding tax with respect

to the refunded amount in accordance with paragraph 2 of this Article.5. As used in this

Article the term "dividends" means income from shares or other

rights, not being debt-claims participating in profits, as well as income from

other corporate rights treated in the same manner as income from shares by the

taxation laws of the Contracting State of which the company making the

distribution is a resident and any other item (other than interest which falls

within the provisions of Article 12) treated as a dividend or distribution

under that law.6. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,

being a resident of a Contracting State, carries on business in the other

Contracting State of which the company paying the dividends is a resident,

through a permanent establishment situated therein or performs in that other

Contracting 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 15, as the case may be, shall

apply.7. Where a company which

is a resident of a Contracting State derives profits or income from the other

Contracting State, that other Contracting State may not impose any tax on the

dividends paid by the company except in so far as such dividends are paid to a

resident of that other Contracting State or in so far 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 Contracting 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 Contracting

State.Article

12INTEREST1. Interest arising in a

Contracting State and paid to a resident of the other Contracting State may be

taxed in that other Contracting State.2. However, such

interest may also be taxed in the Contracting State in which it arises and

according to the laws of that State, but if the recipient is the beneficial

owner of the interest, the tax so charged shall not exceed:a. 10 per cent. of the

gross amount of the interest on loans made or guaranteed by a bank or other

financial institution carrying on bona fide banking or financing business or by

an enterprise which holds directly or indirectly at least 10 per cent. of the

capital of the company paying the interest;b. 15 per cent. of the

gross amount of the interest in all other cases.3. Notwithstanding the

provisions of paragraph 2:a. Interest arising in a

Contracting State shall be exempt from tax in that Contracting State provided

it is derived and beneficially owned by:i. the Government, a

political sub-division or local authority of the other Contracting State; orii. the "Reserve

Bank of India" in the case of India and the 'Banque de France" in the

case of France; oriii. any other institution

as may be agreed from time to time between the competent authorities of the

Contracting States;a. interest arising in a

Contracting State shall be exempt from tax in that Contracting State if it is

beneficially owned by a resident of the other Contracting State and is derived

in connection with a loan or credit extended or endorsed by:i. in the case of

France, the Banque Francaise du Commerce Exterieur, or the Compagnie Francaise

d'Assurance pour le Commerce Exterieur (COFACE);ii. in the case of India,

the Export-Import Bank of India;iii. any institution of

the other Contracting State in charge of the public financing of external

trade.4. The term

"interest" as used in this Article means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a

right to participate in the debtor's profits, and in particular, income from

Government securities and income from bonds or debentures, including premiums

and prizes attaching to such securities, bonds or debentures. Penalty charges

for late payment shall not be regarded as interest for the purpose of this

Article.5. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,

being a resident of a Contracting State, carries on business in the other

Contracting State in which the interest arises, through a permanent

establishment situated therein, or performs in that other Contracting State

independent personal services from a fixed base situated therein, and the

debit-claim in respect of which the interest is paid is effectively connected

with such permanent establishment or fixed base. In such case, the provisions

of Article 7 or Article 15, as the case may be, shall apply.6. Interest shall be

deemed to arise in a Contracting State when the payer is that Contracting State

itself, a political sub-division, a local authority or a resident of that

Contracting 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 Contracting 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 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 Convention.Article

13ROYALTIES

AND FEES FOR TECHNICAL SERVICES AND PAYMENTS FOR THE USE OF EQUIPMENT1. Royalties, fees for

technical services and payments for the use of equipment arising in a

Contracting State and paid to a resident of the other Contracting State may be

taxed in that other Contracting State.2. However, such

royalties, fees and payments may also be taxed in the Contracting State in

which they arise and according to the laws of that Contracting State, but, if

the recipient is the beneficial owner of these categories of income the tax so

charged shall not exceed 20 per cent. of the gross amount of such royalties,

fees and payments.3. The term

"royalties" as used in this Article means payments of any kind

received as a consideration for the use of, or the right to use, any copyright

of literary, artistic or scientific work including cinematograph films, or

films or tapes used for radio or television broadcasting, any patent, trade

mark, design or model, plan, secret formula or process, or for information

concerning industrial, commercial or scientific experience.4. The term "fees

for technical services" as used in this Article means payments of any kind

to any person, other than payments to an employee of the person making the

payments and to any individual for independent personal services mentioned in

Article 15, in consideration for services of a managerial, technical or

consultancy nature.5. The term

"payments for the use of equipment" as used in this Article means

payments of any kind received as a consideration for the use of, or the right

to use, industrial, commercial or scientific equipment.6. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties,

fees for technical services or the payments for the use of equipment being a

resident of a Contracting State, carries on business in the other Contracting

State in which the royalties, fees for the technical services or the payments for

the use of equipment arises, through a permanent establishment situated

therein, or performs in that other Contracting State independent personal

services from a fixed base situated therein, and the royalties, fees for

technical services or the payments for the use of equipment are effectively

connected with such permanent establishment or fixed base. In such case the

provisions of Article 7 or Article 15, as the case may be, shall apply.7. Royalties, fees for

technical services or payments for the use of equipment shall be deemed to

arise in a Contracting State when the payer is that Contracting State itself, a

political sub-division, a local authority or a resident of that Contracting

State. Where however, the person paying the royalties, fees for technical

services or the payments for the use of equipment, 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 contract under which the

royalties, fees for technical services or the payments for the use of equipment

are paid was concluded, and such royalties, fees for technical services or

payments for the use of equipment are borne by such permanent establishment or

fixed base, then such royalties, fees for technical services or payments for

the use of equipment shall be deemed to arise in the Contracting State in which

the permanent establishment or fixed base is situated.8. 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, fees for technical

services or the payments for the use of equipment, having regard to the

royalties, technical services or the use of equipment for which they are 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 payment shall remain taxable according to the laws of each

Contracting State, due regard being had to the other provisions of this

Convention.Article

14CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property,

referred to in Article 6, and situated in the other Contracting State may be

taxed in that other Contracting State.2. Gains from the

alienation of movable property forming part of the business property of a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State or of movable property pertaining to a fixed base

available to a resident of a Contracting State in the other Contracting State

for the purpose of performing independent personal services, including such

gains from the alienation of such a permanent establishment (alone or together

with the whole enterprise) or of such fixed, base, may be taxed in that other

Contracting State.3. Gains, from the

alienation of ships or aircraft operated, in international traffic or, movable

property pertaining to the operation of such ships or aircraft shall be taxable

only in the Contracting State of which the alienator is a resident.4. Gains from, the

alienation of shares of the capital stock of a company the property of which

consists directly or indirectly principally of immovable property situated in a

Contracting State may be taxed in that Contracting State. For the purposes of

this, provision, immovable property pertaining to the industrial or commercial

operation of such company shall not be taken into account.5. Gains from the

alienation of shares other than those mentioned in paragraph 4 representing a

participation of at least 10 per cent. in a company which is a resident of, a

Contracting State may be taxed in that Contracting State.6. Gains, from the

alienation of any property other than that mentioned in paragraphs: 1, 2, 4 and

5 shall be taxable only in the Contracting State of which the alienator is a

resident.Article

15INDEPENDENT

PERSONAL SERVICES1. Income derived, by an

individual or, a partnership of individuals who is, a resident of a Contracting

State from the performance of professional services or other independent

activities of a similar character shall be taxable only in that Contracting

State except in the following, circumstances when such income may also be taxed

in the other Contracting State:a. if he has a fixed

base regularly available 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 Contracting State;

orb. if his stay in the

other Contracting State is for a period or periods amounting to or exceeding in

the aggregate 183 days in the relevant "fiscal year"; in that case,

only so much of the income as is derived from his activities performed in that

other Contracting State may be taxed in that other Contracting State.1.2. The term

"professional services" includes independent scientific, literary,

artistic, educational or teaching activities, as well as the independent

activities of physicians, surgeons, lawyers, engineers, architects, dentists

and accountants.Article

16DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 17, 18, 19, 20, 21 and 22, 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 Contracting State unless the

employment is exercised in the other Contracting State. If the employment is so

exercised, such remuneration as is derived therefrom may be taxed in that other

Contracting State.2. Notwithstanding the

provisions of paragraph 1, remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other Contracting State

shall be taxable only in the first mentioned Contracting State if:a. the recipient is

present in the other Contracting State for a period or periods not exceeding in

the aggregate 183 days in the relevant "fiscal year"; andb. the remuneration is

paid by, or on behalf of, an employer who is not a resident of the other

Contracting State; andc. the remuneration is

not borne by a permanent establishment or a fixed base which the employer has

in the other Contracting State.1.2.3. Notwithstanding the

preceding provisions of this Article, remuneration derived in respect of an

employment exercised aboard a ship or aircraft operated in international

traffic by an enterprise of a Contracting State may be taxed in that

Contracting State.Article

17DIRECTORS'

FEESDirectors'

fees and similar payments derived by a resident of a Contracting State in his

capacity as a member of the board of directors of a company which is a resident

of the other Contracting State may be taxed in that other Contracting State.Article

18INCOME

EARNED BY ENTERTAINERS AND ATHLETES1. Notwithstanding the

provisions of Articles 15 and 16, income derived by a resident of a Contracting

State as an entertainer such as a theatre, motion picture, radio or television

artiste or a musician or as an athlete, from his personal activities as such

exercised in the other Contracting State may be taxed in that other Contracting

State.2. Where income in

respect of personal activities exercised by an entertainer or athlete in his

capacity as such accrues not to the entertainer or athlete himself but to

another person, that income may, notwithstanding the provisions of Articles 7,

15 and 16, be taxed in the Contracting State in which the activities of the

entertainer or athlete are exercised.3. Notwithstanding the

provisions of paragraph 1, income derived by an entertainer or an athlete who

is a resident of a Contracting State from his personal activities as such

exercised in the other Contracting State, shall be taxable only in the

first-mentioned Contracting State, if the activities in the other Contracting

State are supported wholly or substantially from the public funds of the

first-mentioned Contracting State, including any of its political sub-divisions

or local authorities.4. Notwithstanding the

provisions of paragraph 2 and Articles 7, 15 and 16, where income in respect of

personal activities exercised by an entertainer or an athlete in his capacity

as such in a Contracting State accrues not to the entertainer or athlete

himself but to another person, that income shall be taxable only in the other

Contracting State, if that other person is supported wholly or substantially

from the public funds of that other Contracting State, including any of its

political sub-divisions or local authorities.Article

19REMUNERATION

AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.a. Remuneration, other

than a pension, paid by a Contracting State or a political sub-division or a

local authority thereof or out of public funds of that Contracting State to an

individual in respect of services rendered to that Contracting State or

sub-division or authority shall be taxable only in that Contracting State.b. However, such

remuneration shall be taxable only in the other Contracting State if the

services are rendered in that other Contracting State and the individual is a

resident of that other Contracting State who is a national of that other

Contracting State without being a national of the Contracting State to which

the services are rendered.2. Any pension paid by,

or out of funds created by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that Contracting State or subdivision or authority shall be taxable only in

that Contracting State.3. The provisions of

Articles 16, 17 and 20 shall apply to remuneration and pensions in respect of

services rendered in connection with a business carried on by a Contracting

State or a political sub-division or local authority thereof.Article

20NON-GOVERNMENT

PENSIONS AND ANNUITIES1. Any pension, other

than a pension referred to in Article 19, or any annuity derived by a resident

of a Contracting State from sources within the other Contracting State shall be

taxable only in the first-mentioned Contracting State.2. The term

"pension" means a periodic payment made in consideration of past

services or by way of compensation for injuries received in the course of

performance of services.3. The term

"annuity" means a stated sum payable periodically at stated times

during life or during a specified or ascertainable period of time, under an

obligation to make the payments in return for adequate and full consideration

in money or money's worth.4. Notwithstanding the

provisions of paragraph 1, pensions paid and other payments made under a public

scheme which is a part of the social security system of a Contracting State or

a political sub-division or a local authority thereof shall be taxable only in

that Contracting State.Article

21PAYMENTS

RECEIVED BY STUDENTS AND APPRENTICESA

student or business apprentice who is or was a resident of one of the

Contracting States immediately before visiting the other Contracting State and

who is present in that other Contracting State solely for the purpose of his

education or training, shall be exempt from tax in that other Contracting State

on payments made to him by persons residing outside that other Contracting

State for the purposes of his maintenance, education or training.Article

22PAYMENTS

RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. A professor, teacher,

or a research scholar who is or was a resident of one of the Contracting States

immediately before visiting the other Contracting State for the purpose of

teaching or engaging in research, or both, at a university college, school or

other approved institution in that other Contracting State shall be taxable

only in the first-mentioned Contracting State on any remuneration for such

teaching or research for a period not exceeding two years from the date of his

arrival in that other Contracting State.2. This Article shall

not apply to income from research if such research is undertaken primarily for

the private benefit of a specific person or persons.3. For the purposes of

this Article and Article 21, an individual shall be deemed to be a resident of

a Contracting State if he is resident in that Contracting State in the

"fiscal year" in which he visits the other Contracting State or in

the immediately preceding "fiscal year".4. For the purposes of

paragraph 1, "approved institution" means an institution which has

been approved as an educational or research institution by the appropriate

authority of the concerned Contracting State.Article

23OTHER

INCOME1. Subject to the

provisions of paragraph 2, items of income of a resident of a Contracting

State, wherever arising, which are not expressly dealt with in the foregoing

Articles of this Convention, shall be taxable only in that Contracting 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 Contracting 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 15, as the

case may be, shall apply.3. Notwithstanding the

provisions of paragraphs 1 and 2, items of income of a resident of a

Contracting State not dealt with in the foregoing Articles of this Convention,

and arising in the other Contracting State may be taxed in that other

Contracting State.Article

24CAPITAL1. Capital represented

by immovable property referred to in article 6 or rights treated as immovable

property, owned by a resident of a Contracting State and situated in the other

Contracting State, may be taxed in that other Contracting State.2. Capital represented

by shares of the capital stock of a, company the property of which consists

directly or indirectly principally of immovable property situated in a

Contracting State may be taxed in that Contracting State. For the purposes of

this provision, immovable property pertaining to the industrial or commercial

operation of such company shall not be taken into account.3. Capital represented

by movable property forming part of the business property of a permanent

establishment which an enterprise of a Contracting State has in the other

Contracting State or by movable property pertaining to a fixed base available

to a resident of a Contracting State in the other Contracting State for the

purpose of performing independent personal services may be taxed in that other

Contracting State.4. Capital represented

by ships and aircraft operated in international traffic and by movable property

pertaining to the operation of such ships and aircraft shall be taxable only in

the Contracting State in which the place of effective management of the

enterprise is situated.5. All other elements of

capital of a resident of a Contracting State shall be taxable only in that

Contracting State.Article

25ELIMINATION

OF DOUBLE TAXATIONDouble

taxation shall be avoided in the following manner:1. In the case of India:a. Where a resident of

India derives income or owns capital which, in accordance with the provisions

of this Convention, may be taxed in France, India shall allow as a deduction

from the tax on the income of that resident an amount equal to the income tax

paid in France, whether directly or by deduction; and as a deduction from the

tax on the capital of that resident an amount equal to the capital tax paid in

France. Such deduction in either case shall not, however, exceed that part of

the income tax or capital tax (as computed before the deduction is given) which

is attributable, as the case may be, to the income or the capital which may be

taxed in France. Further, where such resident is a company by which surtax is

payable in India, the deduction in respect of income tax paid in France shall

be allowed in the first instance from income tax payable by the company in

India and as to the balance, if any, from surtax payable by it in India.b. Where a resident of

India derives income which, in accordance with the provisions of this

Convention shall be taxable only in France, India may include this income in

the tax base but shall allow as a deduction from the income tax that part of

the income tax which is attributable to the income derived from France.2. In the case of

France:a. Profits and other

positive income arising in India and which are taxable in that Contracting

State in accordance with the provisions of this Convention, are taken into

account for the computation of the French tax where such income is received by

a resident of France. The Indian tax shall not be deductible from such income.

The beneficiary shall be entitled to a tax credit against French tax

attributable to such income. Such tax credit shall be equal:i. in the case of income

referred to in paragraph 2 of Article 9, Articles 11, 12, 13, paragraph 5 of

Article 14, paragraph 3 of Article 16, Article 17, paragraphs 1 and 2 of

Article 18, and paragraph 3 of article 23, to the amount of tax paid in India

in accordance with the provisions of those articles. However, it shall not

exceed the amount of French tax attributable to such income;ii. in the case of other

income, to the amount of French tax attributable to such income, which is thus

exempted. This provision shall apply also to the remuneration referred to in

Article 19 and in paragraph 4 of Article 20.a.a.b.a.b. As regards the

application of sub-paragraph (a) to income referred to in articles 12 and 13,

where the amount of tax paid in India in accordance with the provisions of

these articles exceeds the amount of French tax attributable to such income,

the resident of France receiving such income may present his case to the French

competent authority. If it appears that such a situation results in taxation

which is not comparable to taxation on net income, that competent authority may

allow the non credited amount of tax paid in India as a deduction from the

French tax levied on other income from foreign sources derived by that

resident. The provisions of this sub-paragraph shall not apply where tax is

deemed to be paid in India according to the provisions of sub-paragraphs (c)

and (d).c. For the purposes of

the tax credit referred to in sub-paragraph (a) (i) the term "tax paid in

India" shall be deemed to include any amount which would have been payable

as Indian tax under the laws of India, and within the limits provided for by

this Convention, for any year but for an exemption from, or reduction of, tax

granted for that year under:i. Sections 10(4),

10(4B), 10(15)(iv) covering interest section 10(6)(viia) covering salaries and

section 80L covering interest and dividends, of the Income-tax Act, 1961 (43 of

1961), so far as they were in force on, and have not been modified since, the

date of the signature of this Convention, or have been modified only in minor

respects so as n