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REGISTERED No. D. (D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 3—Sub-section (i)

PUBLISHED BY AUTHORITY

No. 342] NEW DELHI, FRIDAY, OCTOBER 16, 1981/ASVINA 24, 1903

Separate paging is given to this Part in order that it may be filed as a separate

compilation

(1621)

835 GI/81—1

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T HE G A Z E T TE OF I N D IA • E X T R A O R D I N A RY

[ P A RT I I —S EC 3 ( i )]

835 GI/81—2

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION

New Delhi, the 16th October, 1981

INCOME-TAX

G.S.R. SS9(K).—Whereas the annexed Agieempnt between the Government of the Republic of India and the Government of the United Republic of Tanzania for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has been ratified and the instru- ments of ratification exchanged, as required by Article 30 of the said Agreement :

Now, therefore, in exercise of the powers confer; ed by section 90 of the Income-tax Act, 1961 (43 of 1961) and section 24A of the Companies (Profit) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs .that all the provisions of the said Agreement shall be given effect to in the Union of India.

IF. No. 5OU8|73-FrD]

K, R. KHOSLA, ft. Secy.

ANNEXURE

AOREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED REPUBLIC OF TANZANJA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PRE- VENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME.

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA

AND

THE GOVERNMENT OF THE UNITED REPUBLIC OF TANZANIA

FOR

THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION

OF FISCAL EVASION WITH RESPECT TO TAXES ON

INCOME

The Government of the Republic of India and the Gov- ernment of the United Republic of Tanzania,

Desiring to conclude an Agreement Tor the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows :

CHAPTER I

SCOPE OF THE AGREEMENT

Article I

PERSONAL SCOPE

This Agreement shall apply to persons who are residents

of one or both the Contracting States.

Article 2

TAXES COVERED

1. The taxes to which this Agreement shall apply are-:

(H) In the ca;>e of India :

(1) the income-tax including any surcharge theieon imposed under the Income-Tax Act, 1961 (43 of 1961);

(2) the surtax imposed under the Companies (Pro- fits) Surtax Act, 1964 (7 of 1964): (hereinafter referred to as "Indian Tax").

(b) In the case of Tanzania : the income tax and any other tax deemed to be en income tax under the Income Tax Act, 1973 (hereinafter referred to as "Tanzania Tax").

2. The Agreement shall also apply fo any Identical or subs- tantially similar taxes which are imposed by either Contract- ing State after! the date of signature cf the present Agree- ment in addition to or in place of, the taxes referred to in paragraph 1 of this Article,

3. At the end of each year, the competent authorities of the Contracting States shall notify to each other any significant changes which have been made in their respective taxation laws which are the subject of this Agreement and furnish copies of relevant enactment* and regulations.

CHAPTER II

DEFINITIONS

Article 3

GENERAL DEFINITIONS

1. In this Agreement, unless the context otherwise requires :

(a) The tei)n> 'India' means the territory of India and includes the territorial sea and aiispace above it us well as any other maritime zone referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (Act No. 80 of 1976), iu which India has certain lights and tq the extent these rights can be exercised therein as if such maritime zone Is a part of the territory of India ;

(b) The term "Tanzania'' means the United Republic of Tanzania, including any area outside the territorial waters of Tanzania which, in accordance with inter- national law, has been or may be designated, under the laws of Tanzania concerning the Continental Shelf, as an area over which Tanzania may exer- cise sovereign rights with rc&pect to the exploration for and exploitation of natural resources;

(c) the teitois "a Contracting State" and "the olher Con- tracting State" mean India or Tanzania, as the con- text requires ;

(d) the term "tax" means Indian tax or Tanzanian tax, as the context requires, but shall, not include any nmount which is payable in respect of any default or: omission in relation¹ to the taxes to which this Agreement applies or which represents a penalty imposed relating to those taxes ;

(c) the terra "person" includes individuals -companies and all other entities which are treated as taxable units under the taxation laws in force is the res- pective Contracting States;

(f) the term "company" means any body corporate or any entity which is treated as a company under the taxation laws in force in the respective Contracting Slates;

law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of similar nature.

2. Where by leason of the provisions of paragraph 1, en individual is a resident of both Contracting States, then his i evidential status for the purposes of this Agreement shall be dcteirrvned in accordance with the following rules :—

• in) lie shall be deemed to be a resident of the Contract- ing State in which he has a permanent home avail- able to him. If he has a permanent home available to him in both Contracting Stales, he shall be deem- ed to be a resident of the Contracting State with which his personal and economic relations are closer (hereinafter referred to as his "centre of vital in- terests") ;

(b) If the Contracting State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him In cither Contracting State, lie shall be deemed to be a resident of the Contracting Stale in which he has an habitual abode ;

(c) If he has an habitual abode in bolh 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 ;

(cD If he is :i national of bolh Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mu- tual agreement.

3, Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both the Contracting States, then it shall be Jeemed to be a resident of the Contracting Slate in which its place of effective man- ngement is situated.

Article 5

PFRMANENT ESTABLISHMENT

1. For the purpose of this Agreement, the term "permanent establishment means n fixed pkice ot business in which Ihe business of the enlerpiise is wholly or partly carried on.

(dj the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or for collecting information, for the enterprise;

(c) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of in- formation or for scientific research being activities solely of a. preparatory or auxiliary chaiacter in the trade or business of the entei prise.

4. A person acting in a Contracting Stale for or on behalf of an entei prise of the other Contracting State—other than an ngent of an independent status to whom the provisions of. paragraph 5 apply—shall be deemed to be a permanent estab- lishment of that enterprise in the first-mentioned St"tc if:—

(i) He has and habitually exercises in that State, an authority to conclude contracts for or on behalf of the enterprise, unless his activities arc limited to the purchase of goods or menhindhe for the enter- prise ; or

In) he habitually maintains in the first-mentioned Con- tracting State a stock of goods or merchandise be- longing to that enterprise from which he legularly fulfills oidcis on behalf of the enterprise.

5. An enterprise of a'Contracting State shall not be deem

ed to have a permanent establishment in the other Contract- ing State merely because it curries on business in that other State through a. broker, general commission agent or any other agent of an independent status, where such persons me ucting in the ordinary course of theiii business. However, when the activities of such un agent are devoted wholly or almost wholly on behalf of that enterprise, he would not be considered an agent of an independent status within the mean- ing of this paragraph,

6. The fuct th.it a company, which is a lesidcnt of a Con- tracting Mate contiols or is controlled by a Company which is a resident of the other Contracting State, or which carries on business in that other Conti acting State (whether through a peimanent establishment or otherwise), shall not, of itself, constitute for either company n permanent establishment oC the other.

7 An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting Malt it it carries on a business which consists of providing ihc services of public entertainers (such as theatre, motion picture, radio or television artistes and musicians) "oi athletes in that other Contracting State unless the enterprise is directly or indirectly supported, wholly or substantially, from the public funds of the Government of the first-mentioned Con- tracting State in connection with the provision of such ser- vices.

CHAPTER III

TAXATION OF INCOME

Article 6

INCOME FROM IMMOVABLE PROPERTY

1. Income from immovable property may be taxed in tb-⁸

Contracting State in which such property is situated.

2. The teim "immovable property" shall be defined in ac- cordance with the law and usage of the, Contracting State in which the property is situated. The term shall in any case include property accessory to immovable property, live- stock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovr.ble property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, ollwells, quarries and other places of extraction of natural resources. Ships and airciaft shall not be regarded as immovable property. 4_ The provisions of paragraphs 1 ind 3 shall also apply to the income from immuvable prupeity of an entei prise and to income fiom immovable propeity used for the peifoimance of professional sci vices.

Aititle 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall I>e taxable only in thiit Contracting Stale unless the enter- prise cjiries on business in the other Contiacting State through a peimanent establishment situated therein. If the enterprise cairics on business as aforesaid, the piofils of the enterprise may be taxed in the other Contracting State but only so muJi of them as is attributable to th.it peimanent establish- ment.

2. If an enterprise of a Contiacting State, which has a permanent establishment in the other Contracting State, sells goods oi merchandise of the same or similar kind as those sold by the peimanent eslablishmo.it or lenders ••ervices of the s.une oi similai kind as those rendered by the perma- nent establishment, the profits of such activities may be attri- buted to the permanent establishment unless the cnterpri.se proves that such sales or services arc iot attributable to the ..aivity oT the permanent establishment.

3. Where an enteipihe of a Contiacting State carries on bus ness in the other Contracting State through a pcimauent establishment situated therein, there ihall in each Contracting State be attributed to th.it peimunent establishment the profits vUnJi it might be expected to make if it were n distinct and separate entei prise engaged in the same or similnri acti- vities undo the snrne or similar conditions and dealing wholly independently with the enterprise of which it is n peimanent establishment. In any case, where Lhf toircc. amount of piofits attributable to a peimnnent establishment is incapable of deteiniination oi the ascertainment theieof presents ex- ceptional difficulties, the piofits, attrihulnble to the perma- nent establishment may be estimated on .i leasunable basis.

4 In so for ns it has been customary in a Contracting State lo determine the profits to be attributed to a permanent estab- lishment on the basis of an apportionment of the total profits of the entei pi ise to its various parts, nothing in paragraph 3 shall preclude 'hat Contracting State from determining the piofits to bo taxed bv such nn apportionment as may be customary ; the method of apportionment adopted shall, how- ever, be such that the result shall be in accordance with the principles laid down in this Article.

5. In the determination of the profits of a permanent estab- lishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incuned, whethei in the State in which the perma- nent establishment is situated or elsewhere, but this does not include any expenses which, under the law of that State, would not be allowed to be deducted by an entei prise of that State

6. No piofits shall be attributed to a peimanent establish- ment by reason of the mere purchase by that peimanent establishment of goods or merchandise for the enterprise.

7. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by yeai unless there is good and sufficient reason to the contrary.

Article 8

AIR TRANSPORT

1. Profits derived by nn enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situate*],

2. The provisions of paragraph 1 of this Article shall also apply to a share of profits fiom the operation of aircraft in international truffle derived by an enterprise of a Contracting State through participation in a pooled service, in a joint air transport operation or in an international operating agency.

3. For the purposes of paragraph I, interest on funds directly connected with the operation of aircraft in interna- tional traffic shall be regarded as income from the operation of such aircraft, and the provisions of Article 12 shall not apply in relation 1o such interest.

Article 9

SHIPPING

1. Income of an enterprise of one of tile Contracting States derived from the other Contracting State from the operation of' ships in international traffic may be taxed in that other Contracting State, but the tax chargeable in that other Contracting Stale on such income shall be reduced by an amount equal to 50 per cent of such tax,

2. For the purposes of paragraph 1 of this Article, income derived from the other Contracting State from the operation of ships shall menn income from the carriage of passenger*, mail, livestock, or fioods shipped in that other Contracting State.

3. Paragraph )* shall not apply to profits ausiim as a leault

of coastal traffic.

Aiticle 10

ASSOCIATED ENTERPRISES

Where

(a) an enterprise of a Contracting State participates di- rectly or indirectly in the management, control or capital of an enterprise of tho other Contracting State, or

(b) the siime persons participate directly or indirectly in the management, control or capital of an enter- prise of a Contracting State und 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 inde- pendent enterprises, then any profits which would have accrued to one of the enterprises, then any profits which would have accrued to one of the enterprises, but, by reason of those conditions, have not sit accrued, may be included in the pro- fits of that enterprise and tax accordingly.

Article H

DIVIDENDS

1. Dividends rinidi by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

1. However, such dividends may also be taxed in the Contracting Slate of which the company paying the dividends is a resident, and according to the law of that State, but the tax so charged shall not exceed :

la) 10 per ceiif of ihe gross Hmounl of the dividends if the recipient is a company which owns at least 10 per cent of the shares of the company paying the dividends dm HIE the period of six months immedi- ately pit-ceding the dote nf payment of the dividends;

(b) 15 per cent of the gross amount of the dividends

in nil other cases.

3. The term "dividends" as used in this Article means in- come from shares or other rights, not being debt-claims, participating in profits, as well as income from other cor- porate lights assimilated to income from shares or any other item which is deemed to be a dividend or distribution of a company' by the taxation law of the Contracting State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the recipient 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 State professional services from a fixed base situated therein and the holding in respec of which the divi- dends arc paid is effectively connected with such permanent establishment of fixed base, In such a case the provisions of Aiticle 7 or Article 16, as the cme may be, shall apply,

5. Where a company which is a resident of a Contracting Stale derives profits or income from the other Contracting State, that other State may not impose any tax on the divi- dends paid by the Company to persons who a.re not resident of that other State, or subject the company's undistributed' profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State,

Article 12

INTEREST

1. Interest arising in a Contracting State and paid to a icsidcnt of the other Contracting State may be taAed in that other State.

2. However, such interest niay also be taxed in the Con- tracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 12-1|2 peiJ cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 1, interest arising in a Contracting State and paid to the Government of the other Contracting State Bank or local authority thereof, the Central Bank of that other Contracting State, or any agency wholjy owned by that Govcrnmen or local -authority shall be exempt from tax of the first-mentioned Contracting State.

The competent authorities of the Contracting States may determine by mutual agreement uny other governmental in- stitution to which this paragraph shall apply.

\4. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortage and whether or not carrying a right to participate in profits, and other debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the Contracting State in which the income arises.

5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contrac- ting 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 State independent personal services from a fixed base situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. Tn such a case the provisions of Article 7 or Article 16, m the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when the prayer is that Contracting State itself, a political subdivision, a local authority or iesident of that State. Where, however, the person paying the interest, whether he is a resi- dent of H Contracting State or not. has in a Contraction State a permanent establishment ia-.connection with which the ' indebtedness on which the interest is paid was incurred, and such inteiest is boine by that permanent establishment, then

such interest shall be deemed to atise in the Contracting

„ State in which lie permanent establishment is situated,

7. Wheie, owing to u special relationship between the payer and the recipient or between both of them and some other persoD, the amount of the interest paid, having regard to the dcbt-clain\ for which it is paid, exceeds Ihc amount which would have been agieed upon by the payer and the lecipient in the absence of such relationship, the provision* of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement,

Article 13

ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. Howevei, such royalties may also be taxed in the Con- tracting State in which they arisen, and according to the law of that Stale, but the tax so charged shall not exceed 20 per cent of the gioss amount of the royalties.

3. The term '"royalties" as used in this Aiticle means pay- ments of any kind icceived as a consideration for the use of or the right to use, any copyright of literary, artistic or scienti- fic work (including cinematograph films, and films or tapes for ladio or television broadcasting), any patent, trade mark, design oi model, plan, secret formula or process, or for the use of, or the right to use, Industrial, commercial or scientific equipment, or for information concerning industrial, com- mercial or scientific experience.

4. The piovisions of paragraphs 1 and 2 shall not opply if the recipient of the royalties, being a resident of a Con- tracting State, carries on business in the other Contracting State in whxh the royalties- arise through a permanent estab- lishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establish- ment or fixed base. Tn such a case, the provisions of Article 7 or Article IS, as the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a poli- tical subdivision, a local authority or a resident of that State Where, however, the person paying the royalties, whe- ther he is a lesident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the loyalties was incurred, and such royalties aie borne by such permanent establishment, then such royalties shall be deemed to arisen in the Con- tracting State in which the permanent establishment is situated,

6. Where, owing to a special relationship between the payer and the recipient or between both of them and "omt other person, the amount of royalties paid, having regard to the use, right or information for which they are paid, ex- ceeds the amount which would have been agreed iipon by the payer and the recipient In the absence of such relationship, the piovisions of this Article shall apply only to the last men- tioned amount, Tn that case, the excess pert of the payment* shall remain taxable according to the law of each Contracting State, due regard being had to the other provision of this Agreement.

Article 14

CAPITAL GAINS

Contracting State or of movable property pertaining to u fixed base available to a resident of a Contiacting State in •he. other Contracting State for the purpose of performing professional services, including such gains from the alienation of such permanent establishment (alone or together) with the whole enterprise) or of such a fixed base, may be taxed in that other Slate.

3, Notwithstanding the piovisions of paragraph 2, gains by an enterprise of a Contracting State from the alienation of ships and aircraft which it operates in international traffic and movable property pertaining to the operation of such ships and aircraft shall bo taxable only in that State.

4, Gains derived by a resident of a Conti acting State from the alienation of any property other than those mentioned in paiagraph 1, 2 and 3 shall be taxable only in that State.

5, Tjic teim "alienation"' means the sale, exchange, transfer or rellnquishment of the property or the extinguishment of .iny rights therein or the compulsory acquisition thereof under eny law in force in the respective Contracting States.

Article 15

MANAGEMENT FEES

1. Management or professional fees arising in a Contract- ing State and paid to a resident of the other Contracting Slate may be taxed in that other State.

2. However, such management or professional fees may he taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed twenty per cent of the gross amount of the management or professional fees.

3. The terrn "management, or piofessional fees" as used in this Article means payments of any kind to any person, other than to an employee of the person making the pay- ments, in consideration for any services of n. managerial, technical or consultancy nature.

4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the management or professional fees, being a resident of a Contracting State, entries on business in the other Contracting Slate in which the management or professional fees arise, thiough a permanent establishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the riflht or¹ pioperty in respect of which the management or profes- sional fees are paid, is effectively connected with such per- manent establishment or fixed btfse. In such a case, the provisions of article 7 or article 16, as the caso may be, shall apply.

5. Management or professional fees shall be deemed to arise in a Contracting State when thfc payer is- that Con- tracting State itself, a political subdivision, a local authority or a'resident of that State, Where, however, the person pay- ing the management or professional fees, whether he is a resident of that State or not, has in a Contracting State a permanent establishment in connection with which the liablity to pay the management, or professional fees was incurred and such management or professional fees arc borne by such permanent establishment, then such management or professional fees shall be deemed to arise in the Contract- ing State in which the permanent establishment is situated.

Article 16

INDEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Article 15, income deriv- ed by a resident of a Contracting State in respect of pro- fessional services or other independent activities of a similar character shall he taxable only in that State unless :—

(a) he has a fixed base regularly available to him in the other Contracting States for the purpose of performing his activities, in which case so much of the income may be taxed in that other State as is attributable* to that fixed base; or

(b) he is present in the other Contracting State for the purpose of performing his activities for a period ov periods exceeding m the aggregate 1R3 davs in the relevant year of income and in which case so much of the Income may be taxed In that other State as is attributable to the activities per- formed in that other State.

2. The term "professional services" includes independent scientific, literary, artistic, educational or teaching acti- vities, as well us the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 17

DFPENDENT PFRSONAL SERVICES

1. Subject to the provisions of Articles 18, 19, 20, 21, 22 and 23, salaries, wnges and other similar remuneration derived by u. resident of n Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contractinn State. If the employment is so exercised such remuneration as Is derived there-irom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remune- ration derived by a resident of a Contracting State in res- pect of nn employment exercised in the othejr Contractin" State shall be taxable only in the first mentioned State if :

fa) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant year of income, and

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

(c) the remuneration is not borne bv a permanent establishment or fixed base which the employer has

. in the other State,

3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercise aboard a. ship or aircraft in international traffic, may be taxed in the Contracting State in which the place of effective manage- ment of the enterprise is situated.

Article 18

DIRECTOR'S FFPS

Directors' fees and similiar payments derived by a resi- dent of a Contracting State in his capacity as v. member of the Board of Directors of a company which is a resident of the other Contracting State may be taxed in that other ContractinR State.

Article 19

ARTISTES AND ATHLETES

11 Notwithstanding the provisions °f Articles 16 and 17, income derived by public entertainers (such ^s theatre, motion picture, radio' or. television artistes and musicians! or athletes, from their personal activities as such mny be taxed in the Contracting State in which these activities are exercised :

Provided that such mcome shall not be taxed in the said Contracting State if the visit of the public entertainers or athletes to that State is directly or indirectly supported, wholly or substantially, from the public funds of the Govern- ment of the other Contracting State.

2, For the purposes of this Article, the term 'Government' includes a State Government, a political sub-division, or a local or statutory authority of either Contractinc State.

Article 20

GOVERNMENT FUNCTIONS

1. Remuneration Xnot being a pension) paid by the Government of a Contracting State to any individual who is ti citizen of that State in respect of serviceo rendered in the discharge of governmental functions in the other Contracting State shall be taxable onlv in the first-mentioned Contract- ing State.

2. Any pension paid by the Government of one of the Contracting States to any individual may be taxed in that C o n t r a c ts State.

3. The rtrovisions of paragraphs 1 and 2 shall not apply to remuneration and pensions in respect of services rendered in connection with any business carried on by Ihe Govern- ment of cither of the Contracting States for the purposes ct profit.

4. For the purposes of this Article, the term "Govern- ment" shall include any State Government or local or statutory authority of either Contracting State and in parti- cular the Reserve Bank of India and the Bank of Tanzania.

Article 21

NON-GOVERNMENT PENSIONS AND ANNUITIES

1. Any pension (other than a, pension referred to in Article 20) or annuity derived by a resident of a Contract- ing State from sources within the other Contracting Stato may be taxed only in the first-mentioned Contracting State.

2. The term "pension" means a periodic payment made in consideration of services rendered in the past or by way of compensation for injuries received in the course of perfor- mance of services.

3. The term "annuity" means a stated sum payable perio- dically 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.

Article 22

STUDENTS AND APPRENTICES

1, A student or business apprentice who is or was im- mediately before visiting a Contracting State n resident of the other Contracting State and who is present in the first-mentioned Contracting State solely for the purpose of his education or training, shall be exempt from tax In the first- mentioned Contracting State on :

(a) payments made to him by persons residing outside that first-mentionfd Contracting State for the pur- pose of his maintenance, education or training; and

(b) remuneration from employment in that first-men- tioned Contracting State, in an amount not in excess of Rs. 10,000 or its equivalent In Tanzania currency during any "previous year" or the "ye'"" of income", ag the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance

2. The benefits of this Article shall extend onlv for such period of lime as may be reasonably or customarily reqn'r d to complete the education or training undertaken, but in

no event shall any individual have the benefits of this Article for more than three consecutive years from the date of his first arrival in the first-mentioned Contracting State.

Article 23

PROFESSORS AND TEACHERS

1. A professor or teacher who visits a Contracting State for the purpose of teaching or engaging in research, or both, at a university, or other approved educational institution in that Contracting State and who is, or was immediately before such visits, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned Contracting State on any remuneration for such teacheing or research for a pe.;iod not exceeding 24 months from the date of his arrival in that Contracting State.

2. This Article snail not apply to income from research if Mich research is undertaken primarily for the private benefit of a specific person or persons.

3. For fbe purposes of this'Article and Article 22. and

individual shall be deemed to be a resident of a Contracting. State if he is resident :

(!) in the case of India, in,the "previous years", and

(ii) in the case of Tanzania, in the "vear of income" in which he visits the other Contracting State or in the immediately preceding "previous year"⁵ or "year of income", as the case may be.

4. For the purposes of paragraph 1, "approved enduca- ticwial institution" means an institution which has been ap- proved in this regard by the competent authority of the concerned Contracting- State.

Article 24

INCOME NOT EXPRESSLY MENTIONED

Items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of- this Agreement in respect of which he is subject to tax ki that State shall be taxable only in that State.

CHAPTER IV

METHOD FOR ELIMINATION OF DOUBLE TAXATION

Article 25

AVOIDANCE FOR DOUBLE TAXATION

1. The laws in force in either of the Contracting States will continue to govern the taxation of income in the res- pective Contracting States except where provisons to the contrary are made in this Agreement.

2. (a) The amount of Tanzanian tax payable, under the laws of Tanzania and in accordance with the pro- visions of this Agreement, whether directly or by deduction, by a resident of India, in respect of income from sources within Tanzania which has been subjected to tax both in India and Tanzania, shall be allowed as a credit against the Indian tax payable in respect of such income provided that such credit shall not exceed Indian tax (as com- j>uted before allowing any such credit), which is appropriate to the income derived from sources within Tanzania; so, however, that where such resi- dent is a company by which surtax is payable in India,_ the credit aforesaid shall be allowed in the first instance against income tax payable bv the Company in India and as to the balance, if any, against surtax payable by it in India;

(b) For the purposes of the credit referred to in sub- paragraph (a) above, the term "Tanzania tax pay- able" shall be deemed to include any amount which

835 GJ/81— 3

would have been payable as Tanzania tax for any year but for—

(i) any exemption from tax on interest granted under paragraph 1 of the First Schedule. Part II of the Income Tax Act, 1973; or

(.ii) any investment deduction granted under para- graphs 24, 25 and 26 of the Second Schedule to the Income Tax Act, 1973; or

(iii) the lower corporation rate of income tax provid- ed by paragraph 4(b) of the Third Schedule to the Income Tax Act, 1973; or

(iv) any other provisions which may subsequently be enacted granting an exemption or reduction of tax which the competent authorities of the Con- tracting States agree to be for the purpose of economic development.

3. (a) The amount of Indian tax payable, under the laws of India and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of Tanzania in respect of income from sources within India which has been subjected to tax both in India and Tanzania shall be allowed as a' credit against Tanzania tax payable in respect of such income provided that such credit shall not exceed the Tanzanian tax (as computed before allowiing any such credit), which is appropriate to the income derived from sources within India;

(b) For the purposes of the credit referred to in sub- paragraph (a) above, the term "Indian tax payable" shall be deemed to include any amount by which Indian tax has been reduced by the special incentive measures set forth in the following sections of the Income-tax Act, 1961" :

(i) Section 10(4)—relating to exemption from tax on interest payable to a non-resident on any security notified by the Government of India;

(ii) Section 10 (4A)—relating to exemption from tax on interest payable to a non-resident on moneys in a Non-resident (External) Account;

(iii) Section 10(15)(iv)—relating to exemption from tax of (a) non-resident in respect of moneys lent by him to the Government or local authority In India; (b) an approved foreign financial institution _ in respect of interest on moneys lent by it to an industrial undertaking in India under a loan agree- ment; and (c) a non-resident in respect of interest on moneys lent or credit facilities allowed by him to an industrial undertaking in India for the pur- chase outside India of raw materials or capital plant and machinery or for industrial development in India;

(iv) Section 32 A—relating to investment allowance in

respect of ships, air-crafts, machinery or plant;

(v) Section 33A—relating to development allowance

for planting or replanting of tea bushes;

(vi) Section 35CC—relating to the rural development

allowance;

(vii) Section 54E—relating to capital gains;

(viii) Section 80HH—relating to deduction in respect of profits and gains from newlv established industrial undertakings or hotel business in backward areas;

(ix) Section 80HHA—relating to deduction in respect of profits and gains from newly established small scale industrial undertakings in certain areas;

(x) Section 80J—relating to deduction in respect of profits and gains from eligible industrial undertak- ings or ships or hotels;

(xi) Section 80K—relating to deduction in respect of dividends attributable to profits and gains from eligible industrial undertakings or ships or hotels;

(xii) Section SOL—relating to deduction in respect of interest on certain securities, dividends, etc., and

(xiii) Any other provision^ which may subsequently be enacted granting aii exemption or reduction of tax which the competent authorities of the contracting states agree to be for the purposes of economic development

4. Income which, in. accordance with the provisions of this Agreement is not to' be subjected to tax in a Contracting State, may be taken into account for calculating the mtc of tax to be imposed in that Contracting State.

CHAPTER V

SPECIAL PROVISIONS

Article 26

NON-DTSCRTM1NATION

1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burden some than the taxation and connected require- ments to which nationals of that other State in the same

circumstances are or may be subjected.

2. The luxation on a permanent establishment which an enterprise of a Contracting State has in the other Contract- ing State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in the same circum- stances.

3. Nothing contained in this Article shall bo construed a" obliging a Contracting State to grant to persons not resident in that State any personal allowances, reliefs and reductions for taxation purposes which are by law available only to persons who are resident.

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirect- ly, by one of more resident of the other ContracliriK State, shall not be subjected in the first-mentioned Contracting State to any taxation (>r any requirement connected there with which Is other or more burden some than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the iame circumstances.

5. In this Article, tlio term "taxation" means taxes which

are the subject of this Agreement.

Article 27

MUTUAL AGREEMENT PROCEDURE

1. Where a resident of a Contracting State considers that tho actions of ono or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may notwithstanding the remedies provided by the national laws of those States, present hii case to the competent authority of the, Contraction State of which he Js a resident. This case must be presented within three years of the date of receipt of notice of the action which Rives rise to taxation not in accordance with the Agreement.

2. The competent authority shall endeavour, if the ob- jection appears to it to be justified and if it fa not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of tlie other Contracting State, with a view to the avoidance of taxation not in accordance with the Agreement Any agreement reached shall be implemented notwithstanding any time limits in the* national laws of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement miy difficul- ties or doubts arising as to the interpretation or application of tho Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States mav comiminicflfo with each other directly for the purpose of reaching an agreement in the sense Qf the preceding paia- , graphs.. When it seems advisable in order to each abet- ment to have an oral exchange of opinions, sued exchange may take place through a Commission consisting of represen- tatives of tho competent authorities of the Conti dieting Stales.

Article 28

HXCHANGE OF INFORMATION

1. 'llie- competent authorities of the Contracting States

shall exchange such information or document JS in iiexxiSMV for carrying out the provisions of this Agreement or for the prevention of evasion of taxes which tire tho subject of this Agreement. Any information or document so ex- changed shall be treated as secret but may be disclosed to persons (including a court or other authorities 4 concerned with the assessment collection, enforcement, investigation or prosecution in respect of the taxes which arc the subject of this Agreement, or to cersons with respect to vtrfiom the information or document relates.

2. The exchange of information or document* shall be either on :x routine bHsis or on request with reference to particular case or both. Tho competent authorities of the Contracting States shall aflrec from time to timu 'in. the list of the information or documents Which shall !v 'tirnisheil on ft routine basis,

3. In no case shall the provisions Of r>arRtfrar>h 1 be construed "so as to impose on a Contracting .'ittte the obligation ;

(a) to carry out administrative measures, it vari.ince •with the laws or administrative practice of that or of the other Contracting State;

(b) to supply information or documents whi^h jre not obtainable under the laws or in the now^il course of the administration of that or of the other Con- tracting State;

(c) to supply information or documents wfiicH would disclose any trade, business, industrial, commercial or professional secret or trade process or friformn- tion the disclosure of which would be cstitcir v to public policy.

Article 29

DIPLOMATIC AND CONSULAR ACTIVITIES

Nothing in this Agreement shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements.

CHAPTER VI

FINAL PROVISIONS

Article 30

ENTRY INTO FORCE

1. Tho present Agreement shall be ratified bv Hie Con-

tracting States according to their own internal legtoJniion.

Z The instruments of ratification shall be c*ch"nced at

Dai-es-Sidam as soon as possible.

3. Upon exchange of the instruments of ratification, the

present Agreement shall have effect—

(a) in India, in respect of income arising in jjiy year of account commencing on or after the 1st djy of January following the calendar year m which the instruments are exchanged;

(b) in Tanzania, in respect of income arhine far any year of income commencing on or after the 1st d.ay of January following the calendar year in which tho Instruments of ratification are exchanged.

Article 31

TERMINATION

This Agreement shall continue in effect indefinitely hut either irf the Contracting States may on or before the 30th ot June iu the sixth or any subsequent calendar year follow- ing the calendar year iu whicb the exchange of instruments of latilkation takes place, give to the other Contractions State notice of termination and in such event this Agreement shall cease to have effect—

(ft) in India, in respect of income assessable for any year of assessment commencing on or after the lirst day of April in the second calendar year next following the calendar yeur in which the notice of termination ii given;

In witness whereof the undersigned, being duly aijthoristd

thereto, hiwe signed the present Agreement.

Done in duplicate at Dar-es-Salaani this Fifth dny of vSeptember ono thousand nine hundred and seventy nine in English language.

(A. S. Gonsalves)

For the Government of India

(Ndugu E.I.M. Mtr.i)

For the Government of Tanz.min.

(Agreement signed on 5-9-1979 as amended by Govern- ment of IndiaTs letter No. DAR|COMj2H4|3[69 dated 15-2-1980 and the Government of Tanzania's letter No. TYC|4OI19|56 dated 3-7-1980).

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AND PUBLISHED BY THE CONTROLLER OF PUBLICATION, DELHI-110054, -'981