Delivery Order Charges Covered Under Aircraft Operation – Not Taxable in India

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.