Author: inavatiq

Case Details: Virgin Atlantic Airways Ltd. vs. Deputy Commissioner of Income-tax, International Taxation [2025] 180 taxmann.com 794 (Delhi-Trib.)

Judiciary and Counsel Details

• Vikas Awasthy, Judicial Member & Avdhesh Kumar Mishra, Accountant Member
• Nagesh Kumar Behl, Adv. & Amit Khurana, Chartered Accountant for the Appellant.
• M.S. Nethrapal, CIT(DR) for the Respondent.

Facts of the Case

Assessee, a UK tax resident airline, had a branch office in India. It was engaged in the business of transporting passengers, mail, livestock, and goods by air in International Traffic. The assessee received delivery order charges.

The Assessing Officer (AO) held that delivery order charges were taxable in India, as they constituted income derived from an activity after the transportation of goods in international traffic. The aggrieved assessee filed the instant appeal before the Tribunal.

ITAT Held

The Delhi Tribunal held that the income of the assessee from the operation of aircraft in international traffic was not subject to tax in India in light of the provisions of Article 8 of the India-UK DTAA. Clause (3) of Article 8 defines the term “Operation of Aircraft”. The expression “operation of aircraft” not only includes the transportation by air of persons, livestock, goods, or mail, but also includes the sale of tickets for such transportation, the incidental lease of aircraft on a charter basis, and any other activity directly connected with such transportation.

The activity of the delivery of goods carried out by the assessee is inextricably linked to the main activity of transportation by air of goods or mail, etc., as the assessee was complying with delivery orders directly connected with the transportation of goods/mail, etc., in international traffic.

Thus, in the facts of the case and in light of the provisions of Article 8(3) of the India-UK DTAA, the delivery order charges received by the assessee would not be taxable in India.

List of Cases Reviewed

• Turkish Airline Inc. v. ACIT [IT Appeal no. 3776(Delhi) of 2023, dated 26-3-2025] (para 8) followed

List of Cases Referred to

• Turkish Airline Inc. v. ACIT [IT Appeal no. 3776(Delhi) of 2023, dated 26-3-2025] (para 3).

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Case Details: Greater Visakhapatnam Smart City Corporation Ltd., In re [2025] 180 taxmann.com 454 (AAR-ANDHRA PRADESH)

Judiciary and Counsel Details

• K. Ravi Sankar & B. Lakshmi Narayana, Member
• M. Ravi Teja, CA for the Applicant.

Facts of the Case

The applicant, a special purpose vehicle of the State Government and a municipal corporation, implemented a sewerage and recycled water project under a tripartite arrangement with the Greater Visakhapatnam Municipal Corporation (GVMC) and Hindustan Petroleum Corporation Limited (HPCL), wherein recycled water was supplied to HPCL and its quantity was measured through flow meters installed at the end-user premises. The applicant sought an advance ruling from the Authority for Advance Ruling (AAR) on whether the maintenance charges of such flow meters formed part of a composite supply with the supply of recycled water and, if not, the applicable rate of tax. The applicant submitted that the maintenance of the flow meters installed at HPCL’s premises, used solely to record recycled water, required classification independent of the principal supply of water. The matter was accordingly placed before the AAR.

AAR Held

The AAR held that the maintenance of flow meters constituted a standalone supply of service and did not form part of any composite supply linked to the supply of recycled water. The AAR observed that the activity fell under Heading 9987 as an independent maintenance service and was taxable at 18 percent in terms of “Notification No. 11/2017-Central Tax (Rate), dated 28-06-2017” as amended. The AAR further held that the maintenance activity was to be assessed as a standalone supply in accordance with the classification entry applicable to maintenance services. The ruling was issued in favour of the revenue.

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The Digital Personal Data Protection Act 2023 (DPDP Act) and the Right to Information Act 2005 (RTI Act) represent two core pillars of democratic governance—privacy and transparency. While the RTI Act promotes openness by enabling citizens to access government-held information, the DPDP Act strengthens individual privacy in the digital age. Their intersection has renewed debates on how to balance personal data protection with the public’s right to know, especially after the DPDP Act amended Section 8(1)(j) of the RTI Act.

Table of Contents

1. Introduction
2. Constitutional and Historical Foundations of the Two Rights
3. The Statutory Conflict – Dismantling Section 8(1)(j)
4. Judicial Guidance and Why Section 8(2) Cannot Replace the Old Safeguard
5. How the DPDP Act’s Architecture Increases State Power and Reduces Oversight
6. Which Law Should Prevail? A Constitutional Inquiry
7. Pathways to Harmonisation – Recommendations
8. Conclusion – Protecting Both Pillars of Democracy

1. Introduction

In modern democratic governance, two foundational principles stand in perpetual tension – the citizen’s right to access information about the State, and the individual’s right to privacy. India institutionalised the former through the Right to Information Act, 2005 (RTI Act), which transformed civic engagement by guaranteeing unprecedented access to governmental records. Twelve years later, the Supreme Court’s landmark decision in K.S. Puttaswamy v. Union of India [2017] 88 taxmann.com 176. recognised the right to privacy as a fundamental right intrinsic to dignity, autonomy, and personal liberty. This constitutional affirmation triggered India’s legislative journey toward a comprehensive privacy regime, culminating in the Digital Personal Data Protection Act, 2023 (DPDP Act).

However, while the DPDP Act was envisioned as a rights-protective legal framework, it also reached back to reshape the structure of transparency, amending Section 8(1)(j) of the RTI Act through Section 44(3) of the new law. This amendment, seemingly technical, has fundamentally altered the process of balancing privacy and public interest. The result is a statutory collision – two equally important rights derived from the Constitution now appear to undermine each other, not through their inherent content, but through the manner in which the legislature recalibrated the mechanisms of disclosure.

This write-up provides a definitive analysis of this conflict. It explores the historical and constitutional roots of both rights, dissects the statutory amendments, examines judicial precedents, and evaluates the broader implications for governance, accountability, and democratic oversight. The chapter concludes by proposing a principled route to harmonisation, a solution that protects privacy without eroding the transparency essential to a functioning democracy.

2. Constitutional and Historical Foundations of the Two Rights

2.1 The Rise of Transparency – RTI and Article 19(1)(a)

India’s right to information grew out of sustained grassroots pressure rather than top-down reform. In the 1990s, the Mazdoor Kisan Shakti Sangathan (MKSS) movement rallied rural communities to seek access to expenditure records, wage registers and project documents. This push for transparency helped shape the broader momentum that eventually informed early legislative efforts, including the Freedom of Information initiatives of the late 1990s and the emergence of state-level RTI laws in states such as Tamil Nadu, Goa and Madhya Pradesh.

Judicial interpretation strengthened this movement. Courts consistently recognised that the right to information is embedded in the freedom of speech and expression under Article 19(1)(a). Citizens cannot meaningfully participate in democracy unless they know how the government functions, how it spends public money, and how decisions are made. The RTI Act, enacted in 2005, operationalised this constitutional guarantee. It created the presumption that disclosure is the rule and exemptions the exception. Section 8 of the Act provided narrowly tailored exemptions, including protection of personal information, but always conditioned such exemptions on the broader public interest.

By design, the RTI Act was a transparency-first statute. It is assumed that sunlight is the best disinfectant and that public scrutiny is the default mechanism of accountability.

2.2 Constitutionalisation of Privacy – Puttaswamy and Article 21

The right to privacy developed more slowly and subtly. Earlier decisions recognised zones of personal liberty but stopped short of declaring privacy an independent fundamental right. That changed in 2017 with the nine-judge bench judgment in Justice K.S. Puttaswamy v. Union of India [2018] 97 taxmann.com 585 (SC). The Court unanimously affirmed the right to privacy as intrinsic to Article 21’s guarantee of life and personal liberty. The judgment emphasised autonomy, dignity, informational self-determination, and the necessity for data protection.

Crucially, Puttaswamy introduced the proportionality doctrine. The State may restrict privacy only if:

• The restriction is backed by law,
• It pursues a legitimate aim, and
• It is proportionate to the objective, meaning the least intrusive measure must be adopted.

The decision laid down an explicit constitutional mandate for comprehensive data protection legislation. This led to the Justice B.N. Srikrishna Committee report in 2018 and ultimately to the enactment of the DPDP Act, 2023.

2.3 The Structural Clash Between Articles 19(1)(a) and 21

Both RTI and privacy are constitutionally derived. Neither occupies a superior position. The right to know facilitates democratic participation, while the right to privacy safeguards dignity and autonomy. The challenge lies in harmonising these rights without diluting either of them. That challenge is precisely where the DPDP Act’s amendment to the RTI Act becomes crucial and controversial.

3. The Statutory Conflict – Dismantling Section 8(1)(j)

3.1 What the Original RTI Framework Provided?

Section 3 of the RTI Act granted citizens an enforceable right to access governmental information. Section 8(1)(j), dealing with personal information, was designed as a qualified exemption. It allowed PIOs to deny access to personal information only when:

1. The information had no relationship to a public activity or interest, or
2. Disclosure would cause an unwarranted invasion of privacy,

unless the PIO determined that the larger public interest justified disclosure.

This structure mandated a three-part balancing test. Importantly, the burden was not on the citizen. The PIO bore the legal duty to weigh privacy against public interest. This built-in safeguard became central to transparency, ensuring that personal information of public officials, salaries, assets, service records, remained accessible when relevant to accountability.

3.2 What the DPDP Amendment Did to RTI Act?

Section 44(3) of the DPDP Act replaced the detailed, nuanced text of Section 8(1)(j) with a minimalist phrase:

“information which relates to personal information.”

The amendment eliminated:

• The requirement to assess connection to public activity,
• The requirement to evaluate unwarranted invasion, and
• The mandatory public interest override.

This was not a mere stylistic revision; it was a structural transformation. The amended clause converts a carefully balanced exemption into a blanket restriction. The constitutional obligation to weigh competing rights at the point of decision-making has vanished.

3.3 Why the New Framework Pushes PIOs Toward Denial?

The DPDP Act imposes penalties up to ₹250 crore on data fiduciaries, including public authorities, for violating its provisions. Faced with severe consequences and given a broadly worded exemption (“personal information”), PIOs are now structurally incentivised to deny almost any request that touches upon personal data. Given that nearly every government record contains at least some personal details, denial becomes the safe default.

Information historically used to expose corruption or maladministration, MLA expenditure records, beneficiary lists, attendance registers, and asset disclosures can now be withheld simply by invoking “personal information.”

This is not an incremental change; it represents a fundamental recalibration of transparency.

4. Judicial Guidance and Why Section 8(2) Cannot Replace the Old Safeguard

4.1 How Courts Previously Balanced Privacy and Public Interest?

Before the amendment, courts frequently engaged with Section 8(1)(j)’s public interest proviso.

In Girish Ramchandra Deshpande v. CIC (2012) 25 taxmann.com 525 (SC), the Supreme Court held that service records and asset details of public servants are ordinarily private but may be disclosed if the requester establishes a compelling public interest. The decision reaffirmed the statutory duty of the PIO to perform the balancing exercise.

In Subhash Chandra Agarwal (2019), involving disclosure of judges’ assets and judicial appointment correspondence, the Court again relied on the balancing framework of Section 8(1)(j). It emphasised that transparency and privacy must both be preserved through meticulous, case-specific proportionality analysis.

These cases rested on the presumption, encoded in law, that the balancing exercise was mandatory.

4.2 Government’s Argument that Section 8(2) Covers the Gap

The government argues that the amendment does not undermine transparency because Section 8(2) allows disclosure despite any exemption when public interest outweighs harm. The Union Minister and Attorney General maintain that Section 8(2) subsumes the old proviso and continues to protect the public’s right to know.

4.3 Why Section 8(2) Fails as a Practical Safeguard?

This argument overlooks structural realities.

• Section 8(1)(j)’s proviso required PIOs to weigh interests during the initial evaluation. After the amendment, PIOs can deny requests immediately without undertaking any balancing exercise.
• Section 8(2) operates only at later appellate stages, placing the burden on citizens instead of the authority.
• Severe DPDP penalties intensify risk aversion, making a Public Information Officer (PIO) highly unlikely to rely on the Section 8(2) override.
• The removal of the proviso signals a legislative preference for privacy over transparency in personal data cases.

Thus, Section 8(2) cannot compensate for the structural vacuum created by the removal of the balancing mandate.

5. How the DPDP Act’s Architecture Increases State Power and Reduces Oversight

5.1. Broad Definition of Personal Data and Its Impact on RTI

The DPDP Act defines personal data expansively to include any data linked to an identifiable individual, names, contact details, addresses, identifiers, and even digitised non-digital records. With such a wide ambit, almost every government file can arguably be shielded under “personal information.”

5.2. Deemed Consent for State Functions

Section 7(c) allows the State and its instrumentalities to process personal data without consent for any function under law. This grants broad data-processing power to the State while citizens are simultaneously deprived of the ability to scrutinise how such data is used.

5.3. Blanket State Exemptions Under Section 17(2)

The Act empowers the Central Government to exempt selected state instrumentalities entirely from its provisions for reasons such as sovereignty and security. Such exemptions can place intelligence agencies, enforcement bodies, and other powerful institutions outside the purview of the privacy safeguards, while the RTI mechanism to oversee them becomes weaker.

5.4. How These Features Create an Accountability Imbalance?

The cumulative effect is troubling:

• State power to collect, retain, and process data expands,
• While citizen power to question and scrutinise shrinks.

This imbalance undermines the proportionality requirement set out in Puttaswamy, which demands that any restriction on fundamental rights be narrowly tailored and accompanied by procedural safeguards.

6. Which Law Should Prevail? A Constitutional Inquiry

6.1 Why Statutory Interpretation Alone Cannot Resolve the Clash?

Both Acts are special statutes within their domain. The DPDP Act is special regarding personal data protection; the RTI Act is special regarding access to information. Therefore, the principle does not conclusively resolve the conflict. Instead, both must coexist in a manner that allows each to function within its constitutional territory.

6.2 Why Neither Privacy nor RTI Can Automatically Override the Other?

Privacy derives from Article 21; access to information flows from Article 19(1)(a). Neither right constitutionally trumps the other. The doctrine of Harmonious Construction requires the judiciary to interpret the statutes in a manner that preserves both rights.

6.3 A Constitutional Method for Harmonising Both Rights

The DPDP Act should prevail in defining privacy rights and permissible processing. But the RTI Act must prevail in deciding when public interest justifies disclosure. This demands a procedural mechanism, which the amendment removed. Therefore, true harmonisation requires restoring the balancing test within the RTI framework.

7. Pathways to Harmonisation – Recommendations

7.1 Restoring the Public Interest Override in RTI

Reintroducing an explicit public interest override in Section 8(1)(j) is the most important corrective step. The new proviso should be aligned with the Puttaswamy proportionality test, ensuring:

• Legality,
• Legitimate aim,
• Necessity, and
• Least intrusive means.

Without this safeguard, transparency will erode steadily.

7.2 Clarifying “Personal Information” to Protect Accountability

The DPDP Rules or government guidance should clarify that:

• Information related to public servants’ official functions, salaries, and assets relates to public activity and cannot be withheld merely because it identifies an individual.
• Redaction must be the default technique for protecting private details rather than denying entire records.

7.3 Institutional Coordination Between DPBI and CIC

Joint guidelines are essential to:

• Clarify how PIOs must apply Section 8(2),
• Safeguard officials acting in good faith, and
• Prevent overbroad denials caused by fear of DPDP penalties.

7.4 Judicial Review as the Final Arbiter

Ultimately, the courts may need to review whether the amendment to Section 8(1)(j) disproportionately infringes Article 19(1)(a). Judicial interpretation may restore the balancing test as a constitutional requirement.

8. Conclusion – Protecting Both Pillars of Democracy

The DPDP Act is a landmark in the evolution of data protection in India, fulfilling the constitutional mandate of Puttaswamy. Yet, its interface with the RTI Act has created a structural tension that threatens transparency. By removing the explicit balancing test from Section 8(1)(j), the Act has inadvertently tipped the scales in favour of opacity. This shift compromises accountability, undermines public oversight, and risks transforming the RTI Act from a right-to-know statute into a right-to-deny framework.

A democracy cannot function when privacy becomes a shield for governmental opacity. Nor can it thrive if transparency disregards legitimate privacy concerns. The constitutional promise demands a careful, structured harmonisation.

Restoring a robust public interest override is essential, not as a concession to one right over another, but as a mechanism for preserving both. Transparency and privacy are pillars that must stand together. Neglecting one destabilises the entire democratic architecture.

This analysis argues for recalibration, not confrontation. India must reaffirm its commitment to both rights by restoring the structural safeguards that ensure governance remains accountable, citizens remain empowered, and privacy remains protected.

The post [Analysis] Reconciling DPDP Act and RTI Act – Privacy vs Transparency in India appeared first on Taxmann Blog.

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Editorial Team – [2025] 180 taxmann.com 813 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. OECD Releases “2025 Update to Model Tax Convention”

The Organisation for Economic Co-operation and Development (OECD) has released the ‘2025 Update to the OECD Model Tax Convention’. This update was approved by the Committee on Fiscal Affairs on 13 October 2025 and by the OECD Council on 18 November 2025.

The following are the key changes to the OECD Model Tax Convention included in the 2025 Update:

(a) Dispute Resolution (Article 25)

OECD amends Article 25 and its Commentary to clarify the relationship between the Model Convention and the General Agreement on Trade in Services (GATS). A new paragraph 6 is added, which clarifies that, for purposes of GATS Article XXII(3), a measure will fall within a tax treaty’s scope only if Article 24 applies to it.

Any dispute between treaty partners over whether a measure falls within the scope of the treaty must be resolved under the Mutual Agreement Procedure (MAP) under Article 25(3) or by such other procedure mutually agreed. This amendment prevents overlapping or contradictory dispute-settlement routes between the tax treaty and WTO’s GATS, thereby reinforcing the primacy of MAP for tax-related jurisdictional disputes.

(b) An individual’s home could constitute a “place of business”

Recognising rising remote-work models, Commentary to Article 5 (Permanent Establishment) is amended to clarify the circumstances in which an individual’s home could constitute a “place of business” of the enterprise for which the individual works. The OECD notes that these clarifications are an evolution of established principles but have been refined to provide modern certainty.

(c) Optional alternative PE rule for extractible natural resources

The Commentary to Article 5 now includes an optional alternative provision addressing activities relating to exploration and exploitation of natural resources. This provision introduces a lower PE threshold that is crossed once a non-resident enterprise operates in a source State for a bilaterally agreed period.

(d) Transfer pricing and interest limitation
The Commentary on Article 9 has been revised to address queries arising from Working Party 6’s review of transfer pricing rules for financial transactions (as detailed in Chapter X of the Transfer Pricing Guidelines). These updates clarify the operation of Article 9, particularly in relation to domestic interest-deductibility rules, including those recommended under the BEPS Action 4 final report. Corresponding amendments have also been made to the Commentaries on Articles 7 and 24.

(e) Update to Article 25 Commentary on Amount B

The Commentary on Article 25 has been modified to incorporate references to the tax-certainty framework and double-taxation relief outlined in the Amount B report. These revisions aim to ensure that all dispute-resolution mechanisms remain optional for jurisdictions that choose not to adopt Amount B.

(f) Exchange of Information (Article 26)

Two major changes are introduced in Article 26 Commentary:

• Information received under exchange-of-information provisions may be used for tax matters relating to persons other than those for whom the information was originally obtained.

Agreed interpretative guidance has been incorporated on taxpayer access to exchanged information and the disclosure of reflective, non-taxpayer-specific information generated from or based on exchanged data.

Source – OECD 2025 Update to Model Tax Convention

2. UAE FTA and China’s STA Sign MoU to Enhance Bilateral Tax Cooperation

The Federal Tax Authority (FTA) has signed a Memorandum of Understanding (MoU) with the State Taxation Administration of the People’s Republic of China (STA) on 20 November 2025 to strengthen cooperation and enhance the exchange of expertise in the field of taxation.

The MoU was formally signed at the FTA headquarters in Dubai by H.E. Khalid Ali Al Bustani, Director-General of the FTA, and H.E. Jinglin Hu, Commissioner of the STA.

The agreement forms part of the ongoing efforts of both authorities to reinforce bilateral relations and promote collaboration on tax administration. It provides for the exchange of technical expertise and best practices, as well as enhanced coordination through joint visits, meetings, knowledge-sharing activities, and the exchange of information on emerging tax policies and procedures.

FTA representatives noted that the MoU aligns with the Authority’s broader strategy of expanding international partnerships and establishing robust cooperation frameworks at regional and global levels. The agreement is expected to help build effective mechanisms for collaboration, supporting the FTA’s objectives of fostering a tax environment rooted in compliance, transparency, and sound governance.

The Authority commended the strong cooperation with the STA and emphasised the positive outcomes anticipated from the MoU. The agreement will pave the way for deeper engagement with China on tax matters and support the ongoing development of the UAE’s tax system by adopting international best practices and advanced digital technologies.

The FTA further highlighted that the MoU enhances cooperation in key implementation areas, including digital transformation of tax administration and capacity-building through training initiatives. It also facilitates the organisation of exchange visits between the two tax authorities to broaden administrative and technical collaboration.

Additionally, the agreement supports the FTA’s continuous improvement efforts to elevate the quality of services offered to taxpayers, leveraging technological solutions to enhance efficiency and ease of compliance. The strengthened exchange of expertise is expected to boost overall competitiveness and reinforce the UAE’s global standing, particularly in digital transformation and modern tax administration.

Source – Federal Tax Authority

Click Here To Read The Full Article

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