France

Double Taxation
Avoidance Agreement

Income-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 capital

Notification
No. G.S.R.681(E),dtd.07.09.1994

1.     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.

ANNEXURE

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

The
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
1

PERSONAL
SCOPE

This
Convention shall apply to persons who are residents of one or both of the
Contracting States.

Article
2

TAXES
COVERED

1.     The taxes to which
this Convention shall apply are:

a.     In India:

                             
i.       
the
income-tax including any surcharge thereon;

                            
ii.       
the
surtax; and

                           
iii.       
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; and

                   
iii.       
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
3

GENERAL
DEFINITIONS

In
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 waters

c.     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
4

RESIDENT

For
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
5

PERMANENT
ESTABLISHMENT

1.     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; or

b.    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
6

INCOME
FROM IMMOVABLE PROPERTY

1.     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
7

BUSINESS
PROFITS

1.     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
8

AIR
TRANSPORT

1.     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
9

SHIPPING

1.     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., and

b.    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
10

ASSOCIATED
ENTERPRISES

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 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
11

DIVIDENDS

1.     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
is

                             
i.         

an
individual; or

                            
ii.         
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
12

INTEREST

1.     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; or

                                        
ii.   
the “Reserve
Bank of India” in the case of India and the ‘Banque de France” in the
case of France; or

                                       

iii.    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
13

ROYALTIES
AND FEES FOR TECHNICAL SERVICES AND PAYMENTS FOR THE USE OF EQUIPMENT

1.     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
14

CAPITAL
GAINS

1.     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
15

INDEPENDENT
PERSONAL SERVICES

1.     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;
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 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
16

DEPENDENT
PERSONAL SERVICES

1.     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”; and

b.    the remuneration is
paid by, or on behalf of, an employer who is not a resident of the other
Contracting State; and

c.     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
17

DIRECTORS’
FEES

Directors’
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
18

INCOME
EARNED BY ENTERTAINERS AND ATHLETES

1.     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
19

REMUNERATION
AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE

1.      

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
20

NON-GOVERNMENT
PENSIONS AND ANNUITIES

1.     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
21

PAYMENTS
RECEIVED BY STUDENTS AND APPRENTICES

A
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
22

PAYMENTS
RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

1.     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
23

OTHER
INCOME

1.     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
24

CAPITAL

1.     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
25

ELIMINATION
OF DOUBLE TAXATION

Double
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

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