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Circular regarding Refund of Service Tax - New Rule - effective from 01st July, 2012

As per below notification of Service Tax department, it has been revised for getting Refund of Service Tax w.e.f. 01.07.2012. There is too discrepancy in the notification dated 20th June, 2012 regarding Refund of Service Tax hence Service Tax Department has issued this Circular which clarify all about how to get Service Tax Refund. Read the below circular.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE & CUSTOMS
(TAX RESEARCH UNIT)
*****
V.K. Garg
Joint Secretary (TRU-II)
Tel: 23093027; Fax: 23093037
Email: garg.vk@nic.in
D.O.F.No.334/1/2012-TRU
New Delhi dated the 29th June, 2012.
Dear Madam/Sir,

You will be already aware that the Negative List, together with many other accompanying changes, comes into operation from July 1, 2012.

2. The necessary notifications from 25/2012-ST to 40/2012-ST and Notification No. 28/2012-CX (NT) were issued on June 20, 2012 and have comprehensive changes relating to exemptions, Place of Provision Rules, 2012, changes to Service Tax Rules, 1994, Cenvat Credit Rules, 2004 and details of all the notifications that are being rescinded.

3. Notification No 52/2011-ST dated 30.12.2011 relating to refunds on specified services has also been revised in accordance with the new regime and the new notification No.41/2012-ST dated 29.06.2012 has been issued under the revised section 93A. Services of commission agents to exporters on the existing lines have also been validated by the issue of Notification No.42/2012-ST dated 29.06.2012.

4. There has been some doubt regarding the applicability of provisions of the Finance Act, 2004 relating to education cess and the Finance Act, 2007 relating to secondary and higher education cess as the concerned acts make reference to section 66 of the Finance Act, 1994, which shall cease to have effect from July 1, 2012. In this connection, as also in general, you may kindly refer to the sub-section (1) of section 8 of the General Clauses Act, 1897 which reads as under:
“Where this Act, or any Central Act or Regulation made after reference to the commencement of this Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provisions so re-enacted.”

Thus any reference to section 66 of the Finance Act, 1994 shall be construed as reference to the newly re-enacted provision i.e. section 66B of the same Act. Despite the stated position of law, the matter has been settled by the issue of Removal of Difficulties Order No. 2/2012 dated 29.06.2012.

5. It may be noted that Notification No. 11/2005-ST dated 19.04.2005 has not been rescinded to enable sanction of pending rebates. It shall, however, automatically cease to have effect for exports on or after July 1, 2012 as the Export of Services Rules, 2005 will stand superseded from the said date.

6. You may kindly go through all the changes and let me know at the earliest if anything is required in any manner for the smooth implementation of the new provisions.

7. The successful implementation of this reform requires an involved approach at all levels, in particular in the initial months. It is necessary that these changes are well understood by the tax payers as well as our staff. To this end CBEC has released an elaborate Educational Guide (with further improvisation over the draft Guidance Papers that were released at the time of budget) and adequate copies of the same should be available to you already or shortly. You may also like to download the same from CBEC website (from the dropdown menu under the title service tax).

8. It is clarified that any Board circular that is contrary to the revised law will stand automatically superseded. In case you have any doubt about any specific circular the same may be referred to the Board.

9. CBEC has already held five seminars during this month at Delhi, Chennai, Kolkata, Ahmedabad and Hyderabad for both the trade and some of the officers in and around these places. Seminar at Mumbai is scheduled on July 13, 2012.

10. It will be desirable if similar events are held locally, supplemented also by training of our officers who have to implement the new provisions. If you need, some of the TRU officers could also assist subject a little bit to the exigencies of work here. Those who desire may source a copy of the power point presentation from TRU (by sending a request at garg.vk@nic.in).

11. Despite a very elaborate consultative process starting from August, 2011, when the first concept paper was released, it is likely that the actual implementation of negative list will throw some issues that appear a little complex. You may like to discuss them appropriately within your own set up and in appropriate cases refer them to the Board for suitable examination. Any precipitated action will be ill-advised at the early stages of implementation unless the revenue is at immediate stakes.

12. A list of services that are likely to come into the tax net in your charge may be drawn and communicated to me. This would help us to share the same with other formations as also provide information from other formations to you so that a coordinated approach is followed until the system gets streamlined.

13. In general any case resulting in taxation of an activity that is not liable to tax under the present regime should at least receive the attention of the Commissioner in charge before it is taken up for any further action.

14. Of equal importance is to devote attention to activities that are presently liable to tax and may cease to be taxed in future. Some of these have been clearly exempted. There could be others where, either due to a particular interpretation or due to applicability of Place of Provision Rules, 2012 or in some other manner, an interpretation may be taken that the same are no more liable to tax. Such cases may be immediately identified and in case of doubt referred to the Board.

15. The allotment of accounting heads is being communicated by a separate communication.

16. A spirit of Helpfulness, Understanding and Guidance (HUG for short) should guide us in balancing our task keeping in perspective the enormity of changes that are being implemented shortly.
With regards,
Yours sincerely,

(V.K. Garg)
To
All Chief Commissioners/Directors General
All Commissioners of Central Excise
All Commissioners of Customs and Central Excise
All Commissioners of Service Tax

Do you check you PAN Ledger, Form 26AS Statement, Tax (TDS) Credits before submitting Income Tax Return? Know.

Friends, do you check you PAN Ledger, Form 26AS Statement, Tax (TDS) Credits before submitting Income Tax Return?, If, Yes, there is no any problem, but if your answer is No, then there are too difficult to face more problems. Therefore Tax payee or Assessee must know about PAN Ledger.

From which financial year will the Annual Statement under Sec. 203AA (Form No. 26AS) be issued?
The annual statement (Form No. 26AS) will be issued for all tax deducted and tax collected at source from FY 2005-06 onwards after the expiry of the financial year.

How will the PAN-wise ledger account be created by NSDL in respect of payment of TDS made by deductors in banks?
The PAN-wise ledger account will be created after matching the information in the TDS/TCS statements filed by the deductor/collector and the details of tax deposited in banks coming through On Line Tax Account System (OLTAS).

What essential information should be given in the quarterly statements to enable accurate generation of PAN-wise ledger account?
The accuracy of PAN-wise ledger account will depend on:
  • Correct quoting of TAN by the deductor.
  • Correct quoting of PAN of deductor.
  • Correct and complete quoting of PAN of deductee.
  • Correct quoting of CIN (Challan Identification Number) wherever payment is made by challan.
Will a deductee be able to view his ledger account on NSDL-TIN website?
Yes. The scheme for such views is expected to be notified by ITD soon.

Draft guidelines regarding implementation of General Anti Avoidance Rules (GAAR) by Income Tax

Draft guidelines regarding implementation of General Anti Avoidance Rules (GAAR) in terms of section 101 of the Income Tax Act, 1961.

The Chairman, CBDT, Vide OM F.NO. 500/111/2009-FTD-1 Dated 27 February, 2012 constituted a Committee under the Chairmanship of the Director General of the Income Tax (International Taxation) to give recommendations for formulating the guidelines for proper implementation of GAAR Provisions under the Direct Tax Code Bill, 2010 and to suggest safeguards to these provisions to curb the abuse thereof. The Committee comprised of the following officers :

Guidelines u/s 101 of Income Tax Act, 1961
Section 101 of the Finance Act, 2012, provides that “the provisions of this Chapter shall be applied in accordance with such guidelines and subject to such conditions and the manner as may be prescribed”. The Committee makes the following recommendations to be incorporated in the guidelines.

Know More about CBDT Direct Tax Code Draft Guidelines of GAAR Click Here.

What are the mistakes causes Rejection of Refund Credit to Taxpayer Account?

Mistakes in address etc do not affect processing but cause mis-delivery or non-delivery of communication or in case of Bank Account error cause rejection of refund credit to taxpayer account. The following points may be noted:
  • The name in the return should be entered as it appears in the PAN card, to the extent possible.
  • Address should be correctly filled with correct city, state and PINCODE for faster and accurate delivery of communication from the Department.
  • For faster credit of Income Tax refunds, correct bank account number and MICR code in the return should be mentioned. In case of any mistake in MICR or Bank Account number, the refund will not be credited. and a cancelled cheque showing correct particulars would be required to be submitted to CPC for correction in bank account number or MICR code.
  • In case of Refunds below Rs 100, no refund is issued and if Demand is below Rs 100, it need not be paid.

How to rectify the mistake and to get the correct refund?

Mistakes in the ITR due to any of the reasons may be corrected by submitting a rectification form. Some basic information is provided below:
  1. The procedure for rectification and correction of mistakes will be available shortly. In case of any queries please call at 080-43456700.
  2. In case of any difference in date of birth or gender in Department records or in case of any need to correct the address, the data may be corrected by submitting a revised PAN application form (quoting the existing PAN number) with correct details and providing relevant proof at any TIN facilitation center.
  3. In case of any mistake in MICR or Bank Account number a cancelled cheque showing correct particulars would be required to be submitted to CPC for correction in bank account number or MICR code.
  4. In case the charging of additional tax and interest is only because of non- matching of tax payment or TDS, upon correction of the details by taxpayer or employer / bank, the additional tax and interest will be automatically reduced or eliminated.

How to get Tax Benefit from Capital Gain & How to Calculate it?

To get benefit of Income Tax Exemption of co-ownership House property i.e. Husband and wife sharing 50% equally u/s. 24(b) or u/s. 80C, the following conditions are follows for claiming an exemption in Income Tax Return.

Ownership is a condition precedent for claiming an exemption u/s 24(b) or u/s 80C of the Income Tax Act-1961. Without ownership, benefit of deduction cannot be availed by the assessee. In the case elaborated by you, non availability of income in the hands of the wife or non availment of deduction by wife doesn’t entitle husband to claim the deduction.

Two Separate treatments are not possible, one for recognizing the income & the other for claiming the deduction. On the one side, assessee (employee-husband) want to prove that he is the owner of the house property for claiming the deduction u/s 24(b) / 80C and on the other side, want to isolate himself while recognizing the income. It appears unacceptable & illegitimate.

It appears that the employee has leased the jointly owned house property to the company and the company has allotted the same as rent free accommodation to the employee. There is no if bar in the Income tax in husband claiming deduction u/s 10(13A) on rent payment to wife.

If the salaried Taxpayee earned some amount on their income as part of Short or Long Term capital gain. Thus the following steps to solve the problem of calculation of Tax on Capital Gain i.e. Count Net taxable short or Long Term capital gain first and then must reported it to employer to include it in Form No. 16. Even if it is not reported or included in Form No. 16, you can consider the same & pay the tax on it while filing your income tax return as well as Short or Long Terms Capital Gain is required to be shown in “Schedule-TI”, “Schedule-CG” in the ITR-2. It is taxable at a special rate of 15% u/s 111A of the Income Tax Act -1961 even though your other income remains in the tax slab of 10%.

e-Filing of Income Tax Return is Mandatory for Individual & HUF, but Why?

Friends, Most of people do not have clear idea about their income tax status. This is to mean that they do no know what amount they should pay for tax against what they earn in a year. They can calculate the extent of tax they are paying, and they will learn that they are paying much more towards tax than what they should have paid. They do not, usually, maintain accounts of daily expenditure. Income tax is received by the state from its citizens in every year on what they earn. Income tax rebate tips are, therefore, important. Everyone must file his income tax return on annual income within a stipulated date of the calendar year.
Tax system has been classified in two categories: progressive and digressive. Tax is fixed on entire annual income of a person, and this is known as progressive process. The digressive process is applied for the corporate, and tax is fixed on the net income in their case. A person must get all kinds of financial operation done by him in a year. He must also get his total annual income or net income, as the case may be. It is, then, possible for him to file his income tax return.

Most of the persons do not have the habit of keeping the data necessary for filling their tax return. They can seek assistance from income tax consultants. Income tax consultants play great role for filing income tax return for the corporate sectors where there are huge operations in financial transaction.

It is important to identify the areas in which one can avail rebates in income tax:

The people who are engaged in business can highlight travel expenditure. Travel for conferences or seminars, airfare, vehicles rental, toll fees, parking fees, hotel charges, tips etc are deductible travel costs.

A person who maintains two businesses should adjust spending of the first into the second and that of second into the first. By doing so, he will get benefit.

Everybody should preserve medical bills. Some of the medical expenditure (dental insurance, health insurance etc) may be transformed into personal health expenditure, and this will help towards the growth of business.

One must not keep all jobs associated with filling of income tax returns to be done just before the final day of tax return submission. Instead of acting this way, one should prepare day-to-day transactions so that one will not have much trouble and anxiety while submitting the tax return within the scheduled date.

Husband and wife live together, usually. They should submit income tax return separately. This will reduce their amount of tax considerably.

How to claim Exemption from Income Tax by Form 15G and how to avoid its Penalty?

Form No. 15G is a declaration form which can be filed by non senior citizens if the final tax on his estimated total income computed as per the provisions of the Income Tax Act should be NIL, and the aggregate of the interest etc. received during the financial year should not exceed the basic exemption limit.

If both these conditions are satisfied, Form 15G may be furnished and in such case, the entire interest income can be paid without deduction of tax at source.

False statement causing Penalty.
Before signing the verification, the declarant should satisfy himself that the information furnished in the declaration is true, correct & complete in all respect. Any person making a false statement in the declaration shall be liable to prosecution u/s 277 of the Income Tax Act-1961 and in case where tax sought to be evaded exceeds Rs. 1 Lacs (Rs. 2.50 Lacs w.e.f. 01.07.2012), with a rigorous imprisonment which shall not be less than 6 months but which may be extend to 7 years & fine as well as in any other case, with rigorous imprisonment which shall not be less than 3 months but which may extend to 3 years (2 years w.e.f. 01.07.2012) & fine.

It appears that you have submitted Form No. 15G under the wrong impression that tax on your estimated income for the relevant year is Nil. You may pay the balance amount of your tax liability now at the time of filing the return of income. As far as prosecution is concerned, it may be noted that the Commissioner of Income Tax is empowered to grant immunity from prosecution u/s 278AB of the Income Tax Act-1961.

Exemption Claim from Income Tax.
The exempt income is required to be reported in the Sahaj in Part D (D19).

How to adjust losses while Filing of Income Tax Return?

The Income Tax Act allows the Taxpayers under certain Conditions to set off loss against Income hereby reducing the net tax liability. If such loss can not be fully set off, the remaining balance can even be carried forward for set off in the future years. It is necessary for every taxpayers to properly understand and take advantage of the facilities in this regard.

Inter Source Adjustment:

There are five heads of income under which any taxpayer can earn income.
1. Salary
2. House Property
3. Income From Business or Profession
4. Capital Gains and
5. Income from Other sources.

However, a person could suffer losses from other heads of income. Now the first and foremost rule is that loss under on head of income has to be first adjusted against any income from the same head this call Inter Source Adjustment.

Inter Head Adjustment:
Now say after setting off the loss as above, there still remains some balance. This balance loss can then be set off against income from other heads called Inter Head Adjustment. Now, such a loss may be adjusted against salary income or say income from Business if any. There are two exceptions to the rule of Inter Head-Adjustment
  • Losses under Capital Gains can not be set off against income from any other head.
  • Loss from business or profession can not be set off against salary income.
Carry Forward of Losses:
Any Loss that can not be set off either against the same head or under other heads because of inadequacy of income, may be carried forward to be set off against income of the subsequent year. Such a carry forward exercise may be done for 8 Years. After 8 years, if the loss has not yet been fully set off, it has to be written off and cannot be used for tax saving.

The following table encapsulates the above discussion:

Type of loss to be carried forward to subsequest year(s)

Income against which carried forward loss can be set off in nest year(s)

For who many years loss can be carried forward

1. House Property Loss

2. Business Loss

3. Capital Loss

a) Short-Term Capital Loss

b) Long Term Capital Loss

Income under the head “ Income from House property

Any Business Profift

Any Taxable Income under the head “Capital Gains”

Long Term Capital gains only

8 Yewars

8 Years

8 Years

8 Years


Adjustment of Loss under the Head Capital Gains:
The loss under the head of Capital Gains is that they have a boundary i.e. they have to be adjusted against other capital gain income only and other income are not available for the setting off. The second condition in this regard is that long-Term capital loss can only be adjusted against long-term capital gain.

Conclusion:
Lastly, note that for being eligible to carry forward and set-off any loss, it is important to file the Tax Return by the specified due date. If the loss return is submitted after the due dates, the Board may condone the delay only if it is satisfied that it was due to genuine hardship on the part of the taxpayer (Circular No. 8/2011 dated 16.05.2001).

E-filing of I-T Return is now mandatory for Individuals and HUF where books of accounts have to be audited u/s 44AB.

As per Amended Rule 12, Income Tax Rules 1962 E-filing of I-T Return is now mandatory for Individuals and HUF where books of accounts have to be audited u/s 44AB. For companies E-filing of I-T Return- ITR-6 with Digital Signature is mandatory.

To see Amended Rule 12 Click Here

Provision to submit Salary and Other Bills of June-12 due to accidental Condition.

As per Maharashtra Government Notification No. Sankirna 1012/Pra.Kra.64/Tresury Administrative Department Dated 24.06.12 by Finance Department, the provision to submit Salary and Other Bills of June-12 due to accidental causes instructions Click Here.

31st July is Due Date of Income Tax Return for Salaried Employee Assessee.

As you know very well the month of end of July is the due Date of Income Tax Return for Salaried Employee Assessee for Assessment year 2012-13. In Which form is applicable for Salaried Employee for submission of Income Tax Return for the Financial Year 2012-13. For any other assessees Like Salaried Income, Person having Income from House property, Interest income, Business Income where accounts are not required to be audited.

Free Softwares to file your Income Tax Return Online/Offline. Income Tax Department has been published Softwares for Income Tax Return Preparation for Assessment Year 2012-13. These are Excel Based Software (version 1.0). This utility is useful for Employee Assessee, Business Assessee for Annual Income Tax Return purpose.

Free ITR Software Sahaj & Sugam:

Sl. No.
Form Name
Return Preparation Software
Remarks
System Requirements
1
ITR-1 (SAHAJ)
New Release
MS Excel
2
ITR-2
New Release
MS Excel
3
ITR-3
New Release
MS Excel
4
ITR-4
New Release
MS Excel
5
ITR-4S (SUGAM)
New Release
MS Excel

How to Work in this Software?
To work in excel based utility all above Softwares are mandatory to enable macros. After enable macros this software is working properly in Microsoft Office 2003, 2007 and 2010.

How to Enable Macros in MS Excel for Return Preparation Utility?
It is necessary to ENABLE the execution of macros in Return-Preparation-Utility in order to enter, validate and generate an .XML file for upload. Follow these steps to ENABLE execution of macros depending on the version of [Microsoft Office Excel] being used to open the Return-Preparation-Utility :

[Microsoft Office Excel 2003]
Navigate through the following excel menu option to reduce the level of security in executing macros :
Tools --> Macros --> Security --> Low
OR
Tools --> Macros --> Security --> Medium
Save the excel-utility and re-open it.

[Microsoft Office Excel 2007]
Navigate through the following excel menu options to reduce the level of security in executing macros :
Excel Options --> Trust Centre --> Trust Centre Settings --> Macro Settings --> Enable all macros
AND
Excel Options --> Trust Centre --> Trust Centre Settings --> ActiveX Settings --> Enable all controls without restriction and without prompting
Save the excel-utility and re-open it.

[Microsoft Office Excel 2010]
When you open the EXCEL-UTILITY, the yellow Message Bar appears with a shield icon and the Enable Content button.
Click on the Enable Content to enable the macros.

Download Free Software ITR-1 (SAHAJ) (Click Here)

No liability of TDS if Contract is not made between Contractor or Subcontractor under section 194C.

As per the order passed by the CIT(A)-24, Mumbai for the quantum of assessment for the assessment year 2006-07. The below order cleared that when any deductor deduct TDS against payment of Contract but if there is no commencement of Contract between Contractor or Subcontractor then there is not liability of Deduction of TDS under Section 1994C.

TAT MUMBAI
Ratnakar Sawant, Dinesh N. Shah & Co. v. ITO
IT Appeal No. 2941 (Mum.) of 2011
[Assessment year 2006-07]
May 11, 2012

ORDER

Amit Shukla, Judicial Member – This appeal has been filed by the assessee against order dated 2-2-2011, passed by the CIT(A)-24, Mumbai for the quantum of assessment for the assessment year 2006-2007.

2. The solitary issue involved in various grounds of appeal relates to addition of Rs. 18,70,375/-, on account of payment made for hiring of vehicles in violation of Section 40(a)(ia). The factual matrix of this ground are that the assessee is an individual and proprietor of two concerns, namely, ‘M/s Ratan Transport’ and ‘M/s Ratan Forklift Hiring Services’, which are engaged in the business of forklift hiring. The hire charges so received from the various parties from hiring of forklift vehicles were either through the forklift vehicles owned by him or taken on hire from outside parties for which he had to make payment to such other parties.

3. The Assessing Officer during the course of the assessment proceedings noted that the assessee had declared-turn over of Rs. 82.73 lacs in M/s Ratan Forklift and Rs. 15.82 lacs in M/s Ratan Transport from hiring business. As against this, the assessee has claimed hire charges paid in both the proprietary concerns aggregating Rs. 81,17,595/-. He proceeded to scrutinize the payment which were made in excess of Rs. 50,000/- to various persons, which amounted to Rs. 18,70,375/-, the details of which has been given at para 11 of the assessment order. The Assessing Officer observed that the assessee had not deducted TDS as per the provision of 194C(2) on these payments and therefore, same is not allowable as expenditure. The assessee contended that he had offered his income u/s 44AE and therefore, such a dis-allowance cannot be made and secondly, provision of Section 40a(ia) will not be applicable to assessee in this year as he is individual not liable to deduct TDS u/s 194C. The Assessing Officer rejected the explanation and held that the assessee was engaged in the business activities of forklift and hiring and had made transactions with various persons and therefore, non-deduction of TDS clearly violates the provision of Section 40(a)(ia) even in this year. Accordingly, sum of Rs. 18,70,375/- was added to the income of the assessee.

4. In the first appeal , the assessee submitted that forklift vehicles were hired from different owners not for any specific job or contract but for carrying out his own obligation as a contractor with the principals. There was no element of contract between the assessee and the parties from whom he had hired the forklift, either oral or written and therefore the provision of Section 194C(2) are not applicable. It was further submitted that individuals are not liable to deduct TDS under Section 194C(2) in respect of payment to sub-contractors under sub-section (2) of Section 194C, which has only come in the statute w.e.f. 1- 6-2007. Further reliance was placed on the following decisions :-

(i) Punjab & Haryana High Court in the case of CIT (TDS) v. United Rice Land Ltd. [2008] 174 Taxman 286.

(ii) Mythri Transport Corporation v. Asstt. CIT [2010] 124 ITD 40 (Visakha.)

(iii) Order of CIT(A) 24 in the case of Janardhan V. Sawant, A.Y. 2007-2008 (Appeal No. CIT(A) 24/ACIT, 13 (2)/337/09-10 dtd.11.06.2010).

5. Learned CIT(A) dismissed the assessee’s contention simply by affirming the finding of the Assessing Officer.

6. Learned AR appearing on behalf of the assessee submitted that firstly, it was not a case for hiring of forklift vehicles from the outsider under a contract and therefore, it does not come within the purview of sub-contract under Section 194C (2), as there was no oral and written agreement and secondly, hiring of forklift vehicles is a machinery which falls within the scope of Section 194(1) and not 194C.Even the Explanation to Section 194(1) provides for TDS liability on hiring of machinery which has come w.e.f. 13-7-2006, hence, does not fall in the impugned assessment year. She also filed copy of decision of ITAT Mumbai Bench in ACIT v. Janardhan V. Sawant, in ITA No.6505/Mum/2010, vide order dated 28-3-2012, wherein on similar facts in the case of assessee’s brother, the Tribunal has dismissed the case of the department.

7. On the other hand, learned Senior DR submitted that there was a clear violation of Section 194C as the assessee has not deducted TDS and the finding given by the Assessing Officer and affirmed by the CIT(A), is liable to be upheld.

8. We have carefully considered the rival submissions and also the findings given in the impugned orders. The assessee is an individual, who has undertaken a contract to provide forklift on hire to his principals, on which he has received hire charges. Besides his own forklift vehicles, he has also hired forklift vehicles from the outside parties for which he has paid hire charges to them and has been claimed as expenditure. In such a case, the assessee is solely responsible for executing the contract with the persons to whom he has given forklift vehicles on hire and it is only for fulfillment of this contract that he has also engaged the forklift vehicles from the outside parties. In case of hiring from outside parties the responsibility and the risk involved for performing the contract work lies with the assessee only and no such risk and responsibility seems to have been transferred to outside parties via-à-vis his principals. The provisions of Section 194C applies to any payment made to a contractor for carrying out any work in pursuance of a contract between the contractor and the specified persons. The contract also includes sub-contract. For application of provisions of Section 194C in this case it has to been seen, whether the assessee has entered into any kind of sub-contract with the outside parties from whom he has hired the forklift vehicles on random basis to fulfil his own commitment towards his principals. There is no material on record to remotely suggest that there was any kind of oral or a written contract or sub-contract with the outside parties from whom he has taken the forklift vehicles. Until and unless risk and responsibility of the contract undertaken by the assessee is shifted to the sub-contractors, it cannot be held that these persons are the sub-contractors of the assessee. The judgments as have been relied upon by the assessee before the CIT(A) clearly clinches the issue in favour of the assessee. The relevant proposition laid down in these cases are given here under :-

United Rice Land Ltd. (supra)

“The assessee-company was engaged in the business of manufacture and export of rice. Whenever there was need for transportation of goods from business premises to the part the assessee used to engage trucks through transporters. The consideration was charged by the transporters from the truck owners or operators and the hire charges were paid by the assessee directly to the truck owners or drivers or through the transporters. There was no contract with any of the local transporters or truck owners. The Assessing Officer treated the assessee as in default for short deduction of tax under Section 201 of the Income-Tax Act, 1961 and levied interest under section 201(IA) of the Act. The Commissioner (Appeals) partly allowed the appeal filed by the assessee. The appeal filed by the revenue was dismissed by the Tribunal. On further appeal:

Held: dismissing the appeal, that the Assessing Officer had held the assessee liable to deduction of tax only on the assumption that the assessee had agreement with the parties through whom trucks were arranged for transportation of goods. The Commissioner (Appeals) had recorded a finding that there was neither an oral nor written agreement between the assessee and the transporters for carriage of goods nor had it been proved that any sum of money regarding freight charges was paid to them in pursuance of a contract for a specific period, quantity or price. This finding of fact was recorded after considering the certificate furnished by the transporters. The tribunal also recorded that this finding of fact had not been controverted by the Department.”

Mythri Transport Corporation (supra)

“In the instant case, there is no material to suggest that the other lorry owners involved themselves in carrying out any part of the work undertaken by the assessee by spending their time, energy and by taking the risks associated with the main contract work. In the absence of the above said characteristics attached to a sub-contract in the instant case, the payment made to the lorry owners stands at par with the payments made towards salaries, rent etc…… Hence, in our considered opinion, it cannot be said that payments made for hired vehicles would fall in the category of payment towards a sub-contract with lorry owners. In that case the assessed is not liable to deduct tax at source, as per provisions of section 194C(2), on payments made to the lorry owners for lorry hire. Consequently, the provisions of section 40(a)(ia) shall not apply to such payments.”

9. This issue has also come up for consideration by the coordinate Bench of the ITAT in the case of Janardhan V. Sawant (supra), which was rendered in the case of the assessee’s brother wherein on similar facts, the appeal of the department has been dismissed.

10. So far as the second contention that hiring of forklift vehicles comes within the purview of hiring of machinery and, therefore, it will fall within purview of Section 194(1), is not adjudicated upon and is left upon to be decided in some other matter. The issues regarding applicability of Section 194C in the cases where income is computed u/s 44AE and also applicability of amendment as contended before the authorities below is also not adjudicated upon as we have already decided the issue on merits.

11. Thus, in view of our finding given above, and also respectfully following the decision of the ITAT in the case Janardhan V. Sawant (supra), we hold that the assessee was not liable to deduct TDS under Section 194C(2) in relation to payment made to the outside parties and accordingly there is no violation of Section 40(ia). Hence, the addition of Rs. 18,70,375/- is deleted.

12. In the result, the appeal filed by the assessee is allowed.

How to Calculate TDS (Salaried Employee) for A. Y. 2013-14.

As you know very well the Finance Minister cleared the Income Tax Exemption Limit in the Budget and thus I develop for you updated TDS & Income Tax Calculator for Assessment Year 2013-14 i.e. Financial Year 2012-13 along with Salary Statement Month-wise. Now a days 65% Dearness Allowance rate is applicable and upcoming Dearness Rate may be comes by 5% from July-2012, thus I already cleared in our TDS/Income Tax Calculator. This calculator benefited you to calculator your Income Tax and Deduct the TDS Monthly from your Salary as per Income Tax Rules.

See Below Pic. of TDS Tax Calculator

Download (Click Here)
Income Tax Slab For A.Y. 2012-13 (Click Here)
See here All Condition TDS/Income Tax Calculator (Click Here)Link

How to file your Income Tax Return for Asstt. Year 2012-13 - Important guidelines.

Income-tax return is a legal document and it should be filed by the assessee with due care and caution. There should be no corrections or overwriting and it should be properly signed and verified by the person authorized to do so under the provisions of the Income-tax Act. The following important points may be taken care of while filling up the return forms:

Assessment year to which New Forms are applicable:
The new ITRs notified are applicable for the assessment years 2008-09 onwards only, for return of income relating to earlier assessment years return is to be furnished in the appropriate form as applicable in that assessment year. Each assessee has to identify the correct ITR Form applicable in its case before filing the return of Income.

No enclosures to the return:
Rule 12(2) of the I.T Rules provides that the return of income and return of fringe benefits required to be furnished in Form No. ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, or ITR-8 shall not be accompanied by a statement showing the computation of tax payable on the basis of return, or proof of tax, if any, claimed deducted or collected at source or the advance tax or tax on self assessment, if any, claimed to have been paid or any document or copy of any account or form or report of audit required to be attached with the return of income or return of fringe benefits under any provisions of the Act.

For timely delivery of refunds, ensure correct address and account number on your Return of Income:
From 1.10.07 onwards, all income tax refunds in Bangalore, Chennai, Delhi, Kolkata and Mumbai will be delivered by the Refund Banker directly at the communication address mentioned on the Return of Income. Taxpayers are requested to fill in the correct address (available during working hours for delivery) to ensure speedy delivery of refunds. In the case of taxpayers who opt for refunds through ECS, it will be credited directly to the bank account for which correct MICR code/ Bank Account Number has to be furnished on the Return.

Manner of filing the new Forms :
These Forms can be submitted in the following manner:
  1. a paper form;
  2. e-filing
  3. a bar-coded paper return.
Returns can be e-filed through the internet. E-filing of return is mandatory for companies and firms requiring statutory audit u/s 44AB. E-filing can be done with or without digital signaturea):
  • If the returns are filed using digital signature, then no further action is required from the tax payers.
  • If the returns are filed without using digital signature, then the tax payers have to file ITR-V with the department within 15 days of e-filing.
  • The tax payers can e-file the returns through an e-intermediary who would e-file and assist him in filing of ITR-V within 15 days.
Where the form is furnished by using bar coded paper return then the tax payers need to print two copies of Form ITR-V. Both copies should be verified and submitted. The receiving official shall return one copy after affixing the stamp and seal.

Filling out acknowledgement:
Where the return is furnished in paper format, acknowledgement slip attached with the return should be duly filled in. The new forms are not required to be filed in duplicate.

Intimation of processing under section 143(1):
The acknowledgement of the return is deemed to be the intimation of processing under section 143(1). No separate intimation will be sent to the taxpayer unless there is a demand or refund.

Furnishing details of high value transactions:
In the return the details of high value transactions need to be compulsorily stated, which are ordinarily reported through the annual information return (AIR) and these details are cross checked and matched with the data in the AIR.

Filing your return through Tax Return Preparers (TRPs):
If you are an individual or an HUF assessee and you are not required to get your accounts audited (called ‘eligible person’) under the provisions of the Income Tax Act, then you can use the services of a Tax Return Preparer (TRP). However, if the ‘eligible person’ is not a resident in India during the previous year relevant to such assessment year, he can not avail of the services of a TRP.

If you are filing your returns through a TRP then you should ensure that:
  1. You are eligible to file return of Income under this Scheme;
  2. You give your consent to any Tax Return Preparer to prepare your return of income for any assessment year;
  3. You verify that the facts mentioned in the return are true and correct before you sign the return;
  4. You certify the amount which has been paid by you under this Scheme to the Tax Return Preparer for preparing and furnishing of the return of income; and
  5. You take a receipt of the payment made to the Tax Return Preparer and produce the same before the Resource Centre or Assessing Officer, if required,
Incentive to Tax Return Preparers:
The Tax Return Preparer shall charge a fee of two hundred and fifty rupees for any assessment year from the eligible person for preparing and furnishing his return of income for that assessment year:

Provided that he will charge no fees for preparing and furnishing the return for any eligible assessment year if the amount disbursable to him as per the scheme notified by the government for that eligible assessment year exceeds two hundred and fifty rupees. If the amount disbursable is less than two hundred and fifty rupees, we can charge the difference between rupees two hundred fifty and the amount disbursable.

Verification:
The verification must be signed by the authorized person before furnishing the return and the name and designation of the person signing the return should also be written. Any person making false statement is liable to be prosecuted under section 277 of the Act.

Can we file of Income Tax Return without Form. 16 (Salaried Employee).

There is big problem when TDS Deductor deduct Tax as TDS from Salaried Employee, but not issued a TDS Certificate (Form 16) to the Deductee or issued a Form 16 by TDS Deductor to Deductee but Deductee (Salaried Employee) not received the same then beneficiary of TDS Certiicate (Form 16), how to file Income Tax Return without TDS Certificate or Form No. 16. In this case an Assessee can file the Income Tax Return on the Basis of TDS Credit relfected in Form No. 26AS rather than waiting for the TDS Certificate from the concerned Deductor.

Now, the Income Tax Department is also replying mainly on the amount reflected in 26AS for granting TDS Credit to the assessee. However, it is advisable to get the copy of the TDS Certificate for record purpose as the option of filing the reviced TDS Return is always available with the Deductor.

Circular Regarding Income-tax authorities - Instructions to subordinate authorities - Authorization of AOs in certain cases to rectify arrear demand.

Section 119 of the Income-tax Act, 1961 - Income-tax authorities - Instructions to subordinate authorities - Authorization of AOs in certain cases to rectify/reconcile disputed arrear demand

Circular No. 4 of 2012, dated 20-6-2012

The Board has been apprised that in certain cases the assessees have disputed the figures of arrear demands shown as outstanding against them in the records of the Assessing Officer. The Assessing Officers have expressed their inability to correct/reconcile such disputed arrear demand on the ground that the period of limitation of four years as provided under sub-section (7) of section 154 of the Act has expired.

Further, in some cases, the Assessing Officers have uploaded such disputed arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Center (CPC), Bengaluru which has resulted in adjustment of refund arising out of processing of Returns against such arrear demand which has been disputed by such assessees on the grounds that either such demand has already been paid or has been reduced/ eliminated in the appeals, etc. The arrear demands, in these cases also were not corrected / reconciled for the reason that the period of limitation of four years has elapsed.

2. The Board, in consideration of genuine hardship faced by the abovementioned class of cases, in exercise of powers vested under section 119(2)(b) of the Act, hereby authorize the Assessing Officers to make appropriate corrections in the figures of such disputed arrear demands after due verification/reconciliation and after examining the same on merits, whether by way of rectification or otherwise, irrespective of the fact that the period of limitation of four years as provided under section 154(7) of the Act has elapsed.

3. In view of the above the following has been decided:—

(a) In the category of cases where based on the figure of arrear demand uploaded by the Assessing Officer but disputed by the assessee, the Centralized Processing Center (CPC), Bengaluru has already adjusted any refund arising out of processing of return, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits. After due verification of any such claim on merits, the Assessing Officer shall issue refund of the excess amount, if any, so adjusted by CPC due to inaccurate figures of arrear demand uploaded by the Assessing Officer. The Assessing Officer, in appropriate cases, will also upload amended figure of arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Center (CPC), Bengaluru wherever there is balance outstanding arrear demand still remaining after aforesaid correction/ reconciliation.

(b) In other cases, where the assessee disputes and requests for correction of the figures of arrear demand, whether uploaded on CPC or not uploaded and still lying in the records of the Assessing Officer, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits and after due verification of such claim, will make suitable correction in the figure of arrear demand in his records and upload the correct figure of arrear demand on CPC portal.

4. It is specifically clarified that these instructions would apply only to the cases where the figures of arrear demand is to be reconciled/ corrected - whether such arrear demand has been uploaded by the Assessing Officer on to Financial Accounting System (FAS) of CPC or it is still in the records of the Assessing Officer.

This may be brought to the notice of all the officers of your CCA region.

Notification regarding Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of fiscal evasion with foreign countries

Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of fiscal evasion with foreign countries - Norway

notification no. 24/2012 [F.NO. 505/3A/81-FTD-I], DATED 19-6-2012

Whereas an Agreement between the Republic of India and the Kingdom of Norway for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital was signed at New Delhi on the 2nd day of February, 2011;

And whereas, the date of entry into force of the said Protocol is the 20th day of December, 2011, being the date of later of the notifications of satisfaction of all legal requirements and procedures as required by the respective laws for entry into force of the Agreement, in accordance with Paragraph 2 of Article 31 of the said Agreement;

And whereas, sub-paragraph (a) of Paragraph 3 of Article 31 of the said Agreement provides that the provisions of the said Agreement shall have effect in India in respect of income derived or capital owned in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement entered into force;

Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement, as set out in the Annexure hereto, shall be given effect to in the Union of India. In respect of income and on Capital arising in any fiscal year beginning on or after the 1st day of April, 2012.

AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE KINGDOM OF NORWAY 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 Kingdom of Norway, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and with a view to promoting economic cooperation between the two countries, have agreed as follows:

Article 1 : PERSONS COVERED - This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2 : TAXES COVERED - 1. This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, and taxes on the total amounts of wages or salaries paid by enterprises.

3. The existing taxes to which the Agreement shall apply are in particular:

(a) in India:

(i) the income tax, including any surcharge thereon; and
(ii) the tax on capital (the wealth tax), including any surcharge thereon (hereinafter referred to as "Indian tax");

(b) in the case of Norway:
(i) the tax on general income;
(ii) the tax on personal income;
(iii) the special tax on petroleum income;
(iv) the resource rent tax on income from production of hydroelectric power;
(v) the withholding tax on dividends;
(vi) the withholding tax on pensions;.
(vii) the tax on remuneration to non-resident artistes, etc.;
(viii) the tax on capital (the wealth tax)

(hereinafter referred to as "Norwegian tax").

4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.

Article 3 : GENERAL DEFINITIONS - 1. For the purposes of this Agreement, unless the context otherwise requires:

(a) the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in "Which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;
(b) the term "Norway" means the Kingdom of Norway, and includes the land territory, internal waters, the territorial sea and the area beyond the territorial sea where the Kingdom of Norway, according to Norwegian legislation and in accordance with international law, may exercise her rights with respect to the seabed and subsoil and their natural resources; the term does not comprise Svalbard, Jan Mayen and the Norwegian dependencies outside Europe;
(c) the terms "a Contracting State" and "the other Contracting State" mean India or Norway, as the context requires;
(d) the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States;
(e) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(f) the term " enterprise" applies to the carrying on of any business;
(g) 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;
(h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(i) the term "competent authority" means:
(i) in India: the Finance Minister, Government of India, or its authorised representative;
(ii) in Norway: the Minister of Finance or the Minister's authorised representative;
(j) the term "national", in relation to a Contracting State, means:
(i) any individual possessing the nationality of that Contracting State;
(ii) any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State;

(k) the term "tax" means Indian or Norwegian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes;
(1) the term "fiscal year" means:
(i) in the case of India: the financial year beginning on the 1st day of April;
(ii) in the case of Norway: the calendar year.

2. As regards the application of the Agreement at any time by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4 : RESIDENT - 1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof, provided, however, that:

(a) this term, does not include any person who is liable to tax in that State in respect only of income from sources in that State; and
(b) in the case of income derived or paid by a partnership, estate, or trust, this term applies only to the extent that the income derived by such partnership, estate, or trust is subject to tax in that state as the income of a resident, either in its hands or in the hands of its partners or beneficiaries.

2. 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 only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.

3. Where by reason of the 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 only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.

Article 5 : PERMANENT ESTABLISHMENT - 1. For the purposes of this Agreement, 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 sales outlet;
(g) a warehouse in relation to a person providing storage facilities for others;
(h) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and
(i) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. The term "permanent establishment" also encompasses:

(a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than three months together with other such sites, projects or activities, if any;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating to more than six months within any 12-months' period.

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 carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(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 a preparatory or auxiliary character.

However, the provisions of sub-paragraphs a) to e) shall not be applicable where the enterprise maintains any other fixed place of business in the other Contracting State for any purposes other than the purposes specified in the said sub-paragraphs.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 7 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

(a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or
(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or
(c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control as, that enterprise.

6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.

7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that 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 or on behalf of that enterprise and other enterprises controlling, controlled by, or subject to the same common control as, that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph unless the enterprise can demonstrate that the transactions between the said enterprise and the agent are under arm's length conditions.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other 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 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 (including livestock and equipment used in agriculture and forestry), 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 and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall 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 a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. 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 State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State. 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, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of banking enterprises, 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, know-how or other rights, or by way of commission or other charges 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. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

5. 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.

6. 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 year unless there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8 : SHIPPING AND AIR TRANSPORT - 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2. Profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise in international traffic shall be taxable only in that Contracting State, except insofar as those containers or trailers and related equipments are used for transport solely between places within the other Contracting State.

3. For the purposes of this Article interest, on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest.

4. The provisions of paragraph 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

5. The provisions of paragraphs 1 and 2 shall apply to profits derived by the joint Norwegian, Danish and Swedish air transport consortium Scandinavian Airlines System (SAS), but only insofar as profits derived by SAS Norge AS, the Norwegian partner of the Scandinavian Airlines System (SAS), are in proportion to its share in that organization.

Article 9 : ASSOCIATED ENTERPRISE - 1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are 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.

2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

Article 10 : DIVIDENDS - 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other 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 State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 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.

3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident and income treated as dividends under the taxation laws 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 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 State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Article 11 : INTEREST - 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other 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 beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, any such interest referred to in paragraph 1 shall be taxable only in the Contracting State of which the recipient is a resident, if such resident is the beneficial owner of the interest and if such interest is paid to the Government of a Contracting State, or a political sub-division or a local authority thereof:

(a) In the case of Norway, the term Government encompasses:

(i) the Central Bank of Norway;
(ii) the Government Pension Fund;
(iii) the Norwegian Guarantee Institute for Export Credits;
(iv) Norfund,

to the extent they are wholly owned and controlled by the Government of Norway.

(b) In the case of India, the term Government encompasses:

(i) the Reserve Bank of India;
(ii) the Export-Import Bank of India and the National Housing Bank to the extent they are wholly owned and controlled by the Government of India or the Reserve Bank of India.

(c) to any other institution as may be agreed upon from time to time between the competent authorities of the Contracting States through exchange of letters.

4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation law of the Contracting State in which the income arises. 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 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. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 12 : ROYALTIES AND FEES FOR TECHNICAL SERVICES - 1. Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical services.

3. (a) 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 television or radio broadcasting, any patent, trade mark, design or 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, commercial or scientific experience.

(b) The term "fees for technical services" as used in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Agreement, as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such perrmanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority, or a resident of that State. Where, however, the person paying the royalties or fees for technical services whether he is a resident of a Contracting State or not, has in a Contracting Stale a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information 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 payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 13 : 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 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 with the whole enterprise) or of such fixed base, may be taxed in that other 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 in a company which is a resident of a Contracting State may be taxed in that State.

5. Gains from the alienation of any property, other than that referred to in the preceding paragraphs, shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14 : INDEPENDENT PERSONAL SERVICES - 1. Income derived by an individual 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 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 State; or
(b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any period of 12 months; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

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

Article 15 : DEPENDENT PERSONAL SERVICES - 1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other 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 State if:

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State and whose activity does not consist of hiring out of labour, and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

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 State. Where a resident of a Contracting States derives remuneration in respect of an employment exercised aboard an aircraft operated in international traffic by the Scandinavian Airlines System (SAS) consortium, such remuneration shall be taxable only in that Contracting State.

Article 16 : DIRECTORS' FEES - Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or of a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17 : ARTISTES AND SPORTSPERSONS - 1. Notwithstanding the provisions of Articles 14 and 15, 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 a sportsperson, from personal activities as such exercised in the other Contracting State, may be taxed that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the activities are substantially supported by public funds of one or both of the Contracting States or of political sub-divisions or local authorities thereof. In such a case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.

Article 18 : NON-GOVERNMENT PENSIONS, ANNUITIES AND ALIMONY - 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 to an individual periodically at stated times during his 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. Alimony received by a resident of a Contracting State and paid by a resident of the other Contracting State shall be exempt from tax in the first-mentioned State to the extent such payments are not deductible for tax purposes in the other Contracting State.

Article 19 - GOVERNMENT SERVICE - 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State.

(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. (a) 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 State or sub-division or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if:

(i) the individual is a resident of, and a national of, that other State; or
(ii) such pension is exempt from tax in the first-mentioned State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof.

Article 20 : STUDENTS - 1. A student 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 besides grants, loans and scholarships be exempt from tax in that other State on payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training, and shall in addition be entitled during such education or training to the same exemptions, reliefs, or reductions in respect of taxes available to residents of the State he is visiting.

2. The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than six consecutive years from the date of his first arrival in that other State.

Article 21 : OFFSHORE ACTIVITIES - 1. The provisions of this Article shall apply notwithstanding any other provision of this Agreement.

2. A person who is a resident of a Contracting State and carries on activities offshore in the other Contracting State in connection with the exploration or exploitation of the seabed or subsoil or their natural resources situated in that other State shall, subject to paragraphs 3 and 4 of this Article, be deemed in relation to those activities to be carrying on business in that other State through a permanent establishment or fixed base situated therein.

3. The provisions of paragraph 2 shall not apply where the activities are carried on for a period not exceeding 30 days in the aggregate in any twelve months period commencing or ending in the fiscal year concerned. However, for the purposes of this paragraph :

(a) where an enterprise of a Contracting State carrying on offshore activities in the other Contracting State is associated with another enterprise carrying on substantially similar offshore activities there, the former enterprise shall be deemed to be carrying on all such activities of the latter enterprise, with the exception of activities which are carried on at the same time as its own activities; and

(b) two enterprises shall be deemed to be associated if one is controlled directly or indirectly by the other, or both are controlled directly or indirectly by a third person or persons;

4. Profits derived by an enterprise of a Contracting State from the transportation of supplies or personnel to or from a location, or between locations, where activities in connection with the exploration or exploitation of the seabed or subsoil or their natural resources are being carried on in the other Contracting State, or from the operation of tugboats and other vessels auxiliary to such activities, shall be taxable only in the Contracting State of which the enterprise is a resident.

Notwithstanding the provisions of this paragraph, profits derived from such operation may also be taxed in the Contracting State in which the operation is carried on; but the tax so charged shall not exceed 50 per cent of the tax otherwise imposed by the domestic law of that State. For the purposes of this paragraph, the amount of such profits subject to tax in India shall not exceed 7.5 per cent of the sums receivable.

5. (a) Subject to sub-paragraph (b) of this paragraph, salaries, wages and similar remuneration derived by a resident of a Contracting State in respect of an employment connected with the exploration or exploitation of the seabed or subsoil" or their natural resources situated in the other Contracting State, to the extent that the duties are performed offshore in that other State, may be taxed in that other State. However, such remuneration shall be taxable only in the first-mentioned State if the employment is carried on offshore for an employer who is not a resident of the other State and provided that the employment is carried on for a period or periods not exceeding in the aggregate 30 days in any twelve-month period commencing or ending in the fiscal year concerned.

(b) Salaries, wages and similar remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard a ship or aircraft engaged in the transportation of supplies or personnel to or from a location, or between locations, where activities connected with the exploration or exploitation of the seabed or subsoil or their natural resources are being carried on in the other Contracting State, or in respect of an employment exercised aboard tugboats or other vessels operated auxiliary to such activities, may be taxed, in the Contracting State of which the enterprise carrying on such activities is a resident.

Article 22 : OTHER INCOME - 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.

Article 23 : CAPITAL - 1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

2. 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 State.

3. Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State, and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in that State.

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

Article 24 : METHODS FOR ELIMINATION OF DOUBLE TAXATION - 1. The laws in force in either of the Contracting States shall continue to govern the taxation of income and capital in the respective Contracting States except where express provisions to the contrary are made in this Agreement.

2. Double taxation shall be eliminated as follows:

(A) In India:

(a) Where a resident of India derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in Norway, India shall allow:

(i) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Norway on that income;
(ii) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in Norway on that capital;

Such deduction shall not, however, exceed that portion 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 Norway.

(b) Where in accordance with any provision of the Agreement income derived or capital owned by a resident of India is exempt from tax in India, India may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

(B) In Norway:

(a) Where a resident of Norway derives income or owns elements of capital which, in accordance with the provisions of this Agreement, may be taxed in India, Norway shall allow:

(i) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in India on that income;
(ii) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in India on elements of capital;

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 same elements of capital which may be taxed in India.

(b) Where in accordance with any provision of the Agreement, income derived or capital owned by a resident of Norway is exempt from tax in Norway, Norway may nevertheless include such income or capital in the tax base, but shall allow as a deduction from the Norwegian tax on income or capital that part of the income tax or capital tax, as the case may be, which is attributable to the income derived from India or the capital owned in India.

Article 25 : NON-DISCRIMINATION - 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting 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. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first mentioned State at a rate of tax which is not more than 10 percentage points higher than that imposed on the profits of a similar company of the first mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7 of this Agreement.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

Article 26 : MUTUAL AGREEMENT PROCEDURE - 1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes Under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the 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 may communicate with each other directly, for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

Article 27 : EXCHANGE OF INFORMATION - 1. The competent authorities of the Contracting States shall exchange such information (including documents or certified copies of the documents) as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1 or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorizes such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information (including documents or certified copies of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3, but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

Article 28 : ASSISTANCE IN THE COLLECTION OF TAXES - 1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties, fine and costs of collection or conservancy related to such amount.

3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State.

7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be :

(a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or
(b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection,

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to carry out measures which would be contrary to public policy (ordre public);
(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

Article 29 : LIMITATION OF BENEFITS - Benefits of this Agreement shall not be available to a resident of a Contracting State, or with respect to any transaction undertaken by such a resident, if the main purpose or one of the main purposes of the creation or existence of such a resident or of the transaction undertaken by him, was to obtain the benefits under this Agreement that would not otherwise be available.

Article 30 : MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS - 1. Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

2. Insofar as, due to fiscal privileges granted to members of diplomatic missions and consular posts under the general rules of international law or under the provisions of special international agreements, income is not subject to tax in the receiving State, the right to tax shall be reserved to the sending State.

Article 31 : ENTRY INTO FORCE - 1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Agreement.

2. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article.

3. The provisions of this Agreement shall have effect:

(a) in India: in respect of income derived or capital owned in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force; and
(b) in Norway: in respect of taxes on income or capital relating to the calendar year (including accounting periods beginning in any such year) next following that in which the Agreement enters into force and subsequent years.

4. The Convention between the Kingdom of Norway and the Republic of India for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital, signed on 31st December, 1986, shall terminate and cease to have effect in respect of taxes on income and on capital to which the present Agreement applies in accordance with the provisions of paragraph 1 of this Article.

Article 32 : TERMINATION - This Agreement shall remain in force indefinitely until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:

(a) in India, in respect of income derived or capital owned in any fiscal year on or after the first day of April next following the calendar year in which the notice is given;
(b) in Norway: in respect of taxes on income or on capital relating to the calendar year (including accounting periods beginning in such year) next following that in which the notice is given;

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Agreement.

DONE in duplicate at New Delhi on this Second day of February 2011, each in the Hindi, Norwegian and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.