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Greece 17.
Greece - Agreement for avoidance of double taxation with Greece Whereas
the annexed Agreement between the Government of India and the Government of
Greece for the avoidance of double taxation of income has been ratified and the
instruments of ratification exchanged, as required by Article XX of the said
Agreement ; Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said Agreement shall be given effect to in the Union of
India. Notification :
No. GSR 394, dated 17-3-1967. TEXT OF ANNEXED AGREEMENT DATED 11-2-1965 Whereas
the Government of India and the Government of Greece desire to conclude an
Agreement for the avoidance of double taxation of income ; Now,
therefore, it is hereby agreed as follows : ARTICLE
I - 1. The taxes which are the subject of the present Agreement
are: (a) in India: the income-tax, the super tax, the
surcharge, imposed under the Income-tax Act, 1961 (43 of 1961) (hereinafter
referred to as Indian tax); (b) in Greece :
the tax on physical persons and the income-tax on legal
entities, and any special tax levied in Greece with reference to freight earned
by shipping enterprises by the carriage of passengers, livestock or goods,
imposed under the Royal Decrees No. 3323/1955 and 3843/1958 and the Law No.
1880/1951
(hereinafter referred to as Greek tax). 2. The
present Agreement shall also apply to any other taxes of substantially similar
character imposed in India or Greece subsequent to the date of signature of the
present Agreement. ARTICLE
II - 1. In the present Agreement, unless the context otherwise
requires,
(a) the
term Greece means the territory of the Kingdom of Greece ;
(b) the
terms one of the territories and the other territory mean Greece or India
as the context requires ;
(c) the
term person includes natural persons, companies and all other entities which
are treated as taxable units under the tax laws in force in the respective
territories ;
(d) the
term company means any entity which is treated as a body corporate or as a
company for tax purposes ;
(e) the
term tax means the Greek tax or Indian tax, as the context requires ;
(f) the terms
resident of Greece and resident of India mean, respectively, a person who
is resident in Greece for the purposes of Greek tax and not resident in India
for the purposes of Indian tax, and a person who is resident in India for the
purposes of Indian tax and not resident in Greece for the purposes of Greek
tax :
a company shall be regarded as resident in Greece if it is
incorporated in Greece or its business is wholly managed and controlled in
Greece; a company shall be regarded as resident in India if it is incorporated
in India or its business is wholly managed and controlled in India ;
(g) the
terms Greek enterprise and Indian enterprise mean, respectively, an
industrial or commercial enterprise or undertaking carried on by a resident of
Greece and an industrial or commercial enterprise or undertaking carried on by
a resident of India; and the terms enterprise of one of the territories and
enterprise of the other territory mean a Greek enterprise or an Indian
enterprise as the context requires ;
(h) the term
permanent establishment means a fixed place of business in which the business
of the enterprise is wholly or partly carried on :
(aa) the
term fixed place of business shall include a place of management, a branch,
an office, a factory, a workshop, a warehouse, a mine, quarry or other place of
extraction of natural resources ;
(bb) an
enterprise of one of the territories shall be deemed to have a fixed place of
business in the other territory if it carries on in that other territory a
construction, installation or assembly project or the like ;
(cc) the
use of mere storage facilities or the maintenance of a place of business
exclusively for the purchase of goods or merchandise and not for any processing
of such goods or merchandise in the territory of purchase, shall not constitute
a permanent establishment ;
(dd) a
person acting in one of the territories for or on behalf of an enterprise of
the other territory shall be deemed to be a permanent establishment of that
enterprise in the first-mentioned territory, only if
(1) he has and
habitually exercises in the first-mentioned territory a general authority to
negotiate and enter into contracts for or on behalf of the enterprise, unless
the activities of the person are limited exclusively to the purchase of goods
or merchandise for the enterprise, or
(2) he
habitually maintains in the first-mentioned territory a stock of goods or
merchandise belonging to the enterprise from which the person regularly
delivers goods or merchandise for or on behalf of the enterprise, or
(3) he
habitually secures orders in the first-mentioned territory wholly or almost
wholly for the enterprise itself or for the enterprise and other enterprises
which are controlled by it or have a controlling interest in it ; (ee) a broker of a genuinely independent status
who merely acts as an intermediary between an enterprise of one of the
territories and a prospective customer in the other territory shall not be
deemed to be a permanent establishment of the enterprise in the last-mentioned
territory ; (ff) the fact that a company, which is a resident
of one of the territories has a subsidiary company which either is a resident
of the other territory or carries on a trade or business in that other
territory (whether through a permanent establishment or otherwise) shall not,
of itself, constitute that subsidiary company a permanent establishment of its
parent company ; (i) the term pension means a periodic payment
made in consideration of services rendered or by way of compensation for
injuries received; (j) 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 moneys worth ; (k) the term competent authority means in the
case of India, the Central Government in the Ministry of Finance, Department of
Revenue, or its authorised representative and in the case of Greece, the
Ministry of Finance or its authorised representative. 2. In the
application of the provisions of this Agreement in one of the territories any
term not otherwise defined in this Agreement shall, unless the context
otherwise requires, have the meaning which it has under the laws in force in
that territory relating to the taxes which are the subject of this Agreement. ARTICLE
III - 1. Subject to the provisions of paragraph (3) below, tax shall
not be levied in one of the territories on the industrial or commercial profits
of an enterprise of the other territory unless profits are derived in the
first-mentioned territory through a permanent establishment of the said
enterprise situated in the first-mentioned territory. If profits are so derived, tax may be levied in the
first-mentioned territory on the profits attributable to the said permanent
establishment. 2. There
shall be attributed to the permanent establishment of an enterprise of one of
the territories situated in the other territory the industrial or commercial
profits which it might be expected to derive in that other territory if it were
an independent enterprise engaged in the same or similar activities under the
same or similar conditions and dealing at arms length 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 ascertainment
thereof presents exceptional difficulties, the profits attributable to the
establishment may be estimated on a reasonable basis. 3. For
the purposes of this Agreement the term industrial or commercial profits
shall not include income in the form of rents, royalties, interest, dividends,
management charges, remuneration for labour or personal services or income from
the operation of ships or aircraft. ARTICLE
IV - Where (a) an enterprise of one of the territories
participates directly or indirectly in the management, control or capital of an
enterprise of the other territory, or (b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of one of the
territories and an enterprise of the other territory, 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 but for those
conditions would have accrued to one of the enterprises but by reasons of those
conditions have not so accrued may be included in the profits of that
enterprise and taxed accordingly. ARTICLE
V - 1. Income derived from the operation of aircraft by an
enterprise of one of the territories shall not be taxed in the other territory,
unless the aircraft is operated wholly or mainly between places within that
other territory. 2.
Paragraph (1) shall likewise apply in respect of participations in pools of any
kind by enterprises engaged in air transport. ARTICLE
VI - 1. When a resident of Greece, operating ships, derives profits
from India through such operations carried on in India, such profits may be
taxed in Greece as well as in India; but the tax so charged in India shall be
reduced by an amount equal to 50 per cent thereof, and the reduced amount of
Indian tax payable on the profits shall be allowed as a credit against Greek
tax charged in respect of such income.
The credit aforesaid shall not exceed the Greek tax charged in respect
of such income. 2. (a)
When a resident of India, operating ships, derives profits from Greece,
through such operations carried on in Greece, such profits may be taxed in
Greece as well as in India; but the tax so charged in Greece shall be reduced
by an amount equal to 50 per cent thereof and the reduced amount of Greek tax
payable shall be allowed as a credit against Indian tax charged in respect of
such income. The credit aforesaid shall
not exceed the Indian tax charged in respect of such income. (b)
Sub-clause (a) of clause (2) shall not, however, apply as long as the
laws in Greece do not impose any tax on income derived from the operation of
ships belonging to foreign enterprises operating in the Greek territory. In such cases, the profits referred to in
sub-clause (a) of clause (2) may be taxed only in India. 3.
Paragraphs (1) and (2) shall not apply to profits arising as a result of
coastal traffic. 4. The
provisions of clause (1) shall not in the case of India affect the application
of sub-sections (1) to (6) of section 172 of the Income-tax Act, 1961, for the assessment of profits from
occasional shipping or tramp steamers; but the provisions of that clause will
be applied, when an adjustment is to be made under sub-section (7) of the
aforesaid section of the Income-tax Act, 1961, in such cases. ARTICLE
VII - Royalties derived by a resident of one of the territories from sources
in the other territory may be taxed only in that other territory. In this
Article, the term royalty means any royalty or other like amount received as
consideration for the right to use copyrights, artistic or scientific works,
cinematographic films, patents, models, designs, plans, secret processes or
formulae, trade marks and other like property or rights, but does not include
any royalty or other like amount in respect of the operation of mines, quarries
or other natural resources. ARTICLE
VIII - Dividends paid by a company which is a resident of one of the
territories to a resident of the other territory may be taxed only in the
first-mentioned territory. ARTICLE
IX - Interest on bonds, securities, notes, debentures or any other form of
indebtedness derived by a resident of one of the territories from sources in
the other territory may be taxed only in that other territory. ARTICLE
X - Income from immovable property may be taxed only in the territory in
which the property is situated. For
this purpose any rent or royalty or other income derived from the operation of
a mine, quarry or any other place of extraction of natural resources shall be
regarded as income from immovable property. ARTICLE
XI - Capital gains derived from the sale, exchange or transfer of a capital
asset, whether movable or immovable, may be taxed only in the territory in
which the capital asset is situated at the time of such sale, exchange or
transfer. ARTICLE
XII - 1. Remuneration other than pensions and annuities, paid in
Greece for services rendered therein out of public funds of India shall not be
taxed in Greece unless the payment is made to a citizen of Greece. 2.
Remuneration other than pensions and annuities, paid in India for services
rendered therein out of public funds of Greece shall not be taxed in India
unless the payment is made to a citizen of India. 3. The
provisions of paragraphs (1) and (2) of this Article shall not apply to
payments in respect of services in connection with any trade or business
carried on by either of the Contracting Parties or political sub-divisions
thereof for purposes of profit. 4. The
provisions of paragraphs (1) and (2) of this Article shall also apply to
remuneration other than pensions and annuities paid by the Reserve Bank of
India, the Public Railways Authorities and the Postal Administration of India
and by the Bank of Greece, Greek State Railways and the Greek Postal and
Telegraphic Administration. ARTICLE
XIII - Any pension or annuity derived by a resident of one of the territories
from sources in the other territory may be taxed only in that other territory. ARTICLE
XIV - 1. Profits or remuneration for professional services or for
services as an employee (including services as a director) performed in one of
the territories by an individual who is a resident of the other territory may
be taxed only in the territory in which such services are performed. 2. An
individual who is a resident of India shall not be taxed in Greece on profits
or remuneration referred to in paragraph (1) if (a) he is temporarily present in Greece for a
period or periods not exceeding in the aggregate 183 days during the calendar
year immediately preceding the relevant fiscal year, (b) the services are performed for or on behalf of
a resident of India, (c) the profits or remuneration are subject to
Indian tax, and (d) the profits or remuneration are not deducted
in computing the profits of an enterprise chargeable to Greek tax. 3. An
individual who is a resident of Greece shall not be taxed in India on the
profits or remuneration referred to in paragraph (1) if (a) he is temporarily present in India for a
period or periods not exceeding in the aggregate 183 days during the relevant
previous year, (b) the services are rendered for or on behalf of
a resident of Greece, (c) the profits or remuneration are subject to
Greek tax, and (d) the profits or remuneration are not deducted
in computing the profits of an enterprise chargeable to Indian tax. 4. Where
an individual permanently or predominantly performs services on ships or aircraft
in international traffic operated by an enterprise of one of the territories,
profits or remuneration from such services may be taxed only by the country of
which the individual is resident. ARTICLE
XV - A professor or teacher from one of the territories, who receives
remuneration for teaching, during a period of temporary residence not exceeding
two years, at a university, college, school or other educational institution in
the other territory, shall not be taxed in that other territory in respect of that
remuneration. ARTICLE
XVI - An individual from one of the territories who is temporarily present
in the other territory solely (a) as a student at a university, college or
school in such other territory, (b) as a business apprentice, or (c) as the recipient of a grant, allowance or
award for the primary purpose of study or research from a religious,
charitable, scientific or educational organisation, shall
not be taxed in the other territory in respect of remittances from abroad for
the purposes of his maintenance, education or training, in respect of a
scholarship, and in respect of any amount representing remuneration for
services rendered in that other territory, provided that such services are in
connection with his studies or training or are necessary for the purpose of his
maintenance. ARTICLE
XVII - 1. The laws in force in either of the territories will continue
to govern the assessment and taxation of income in the respective territories
except where express provision to the contrary is made in this Agreement. 2.
Subject to the provisions of Article VI income from sources within Greece which
under the laws of Greece and in accordance with this Agreement is subject to
tax in Greece either directly or by deduction shall not be subject to Indian
tax. 3.
Subject to the provisions of Article VI income from sources within India which
under the laws of India and in accordance with this Agreement is subject to tax
in India either directly or by deduction shall not be subject to Greek tax. 4. The
graduated rate of Greek tax to be imposed on residents of Greece and the
graduated rate of Indian tax to be imposed on residents of India may be
calculated as though income which under this Agreement is not subject to Greek
or Indian tax, as the case may be, were included in the amount of the total
income. ARTICLE
XVIII - The competent authorities shall exchange such information (being
information which is at their disposal under their respective taxation laws in
the normal course of administration) as is necessary for carrying out the
provisions of the present Agreement.
Any information so exchanged shall be treated as secret and shall not be
disclosed to any persons other than those concerned with the assessment and
collection of the taxes which are the subject of the present Agreement. No information as aforesaid shall be
exchanged by the competent authority of one of the territories which would
disclose any trade, business, industrial or professional secret or any trade
process to the authority of the other territory. ARTICLE
XIX - Where a resident of one of the territories shows proof that the action
of the taxation authorities of the other territory has resulted or will result
in double taxation contrary to the provisions of the present Agreement, he
shall be entitled to present his case to the competent authority of the
territory of which he is resident.
Should his claim be deemed worthy of consideration, the competent
authority to which the claim is made shall endeavour to come to an Agreement with
the competent authority of the other territory with a view to avoiding double
taxation. ARTICLE
XX - 1. The present Agreement shall be ratified and the instruments
of ratification shall be exchanged at New Delhi as soon as possible. 2. Upon
exchange of the instruments of ratification, the present Agreement shall have
effect (a) in India, for any year of assessment,
beginning on or after the 1st April, 1964, (b) in Greece, for any fiscal year, beginning on
or after the 1st January, 1964. ARTICLE
XXI - This Agreement shall continue in effect indefinitely but either of the
Contracting Parties may on or before the 30th day of June in any calendar year
after 1965 give to the other Contracting Party notice of termination, and in
such event this Agreement shall cease to be effective (a) in India, for any year of assessment
beginning on or after the 1st April in the calendar year next following such
written notice of termination. (b) in Greece, for any fiscal year beginning
on or after the 1st January next following such written notice of termination. In
witness whereof, the undersigned duly authorised thereto have signed this
Agreement and have affixed thereto their seals. Done at
New Delhi on the 11th day of February, 1965, in duplicate in the English language. Judicial analysis n Where assessee-company, carrying on
shipping business, entered into an agreement with HLL, a Greek company, and
according to agreement, entire affairs of assessee-company were to be managed
by HLL as their agents, assessee-company had to be treated as resident in
Greece in terms of article II(I)(i) of Agreement for Avoidance of Double
Taxation between India and Greece and was entitled to deduction of 50 per cent
of tax charged in India in respect of its shipping businessUniversal Cargo
Carriers Inc. v. CIT [1993] 70 Taxman 515/[1994] 205 ITR 215 (Cal.). n Where remedy of claiming refund under
sub-section (7) of section 172 was barred on account of expiry of time limit,
claim for relief of tax provided under clause (1) of article VI of Agreement
between Government of India and Government of Greece for avoidance of double
taxation of income was not entertainableAzolla Shipping Co. Ltd. v.
ITO [1986] 15 ITD 438 (Bom. - Trib.).
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