Case Details: Deputy Commissioner Income-tax(International Taxation) v. Delta Air Lines - [2025] 178 taxmann.com 589 (Mumbai - Trib.)
Judiciary and Counsel Details
- MS. Suchitra Raghunath Kamble, Judicial Member
- Girish Agrawal, Accountant Member
Facts of the Case
The assessee was a foreign airline and a tax resident of the USA. It was engaged in the business of operating aircraft in international traffic. The assessee had obtained approval from the DGCA to undertake scheduled air services in India on routes specified under the India-US Air Transport Agreement (ATA).
During the relevant assessment year, the assessee earned income from operating aircraft in international traffic through its own aircraft, as well as through a combination of its own aircraft and third-party aircraft. The assessee filed its return of income, reporting income from business operations as nil and interest income.
Assessment for the year under consideration was completed after denying a claim for exemption under Article 8 of the India-USA Double Tax Avoidance Agreement (DTAA) with respect to income from transportation involving third-party carriers, pursuant to the code-sharing arrangement. The matter reached the Mumbai Tribunal.
Tribunal Held
The Tribunal held that in the assessee’s own case for AY 2018-19, the decision was held in favour of the assessee, whereby it was held that income from transportation of passengers and cargo in international traffic, using third-party airlines either entirely or for a part of the journey under the code-sharing arrangement, is not taxable in India, as per Article 8 of the India-USA DTAA. In holding so, the Coordinate Bench, inter alia, held that the transportation of passengers and cargo through a third-party carrier falls within the ambit of the word ‘charterer’. The transportation under code-sharing is on a principal-to-principal basis and falls within the ambit of ‘operation of aircraft’ in international traffic.
The decision of the Coordinate Bench in the assessee’s own case for the Assessment Year 2018-19 is squarely applicable to the year under consideration, as there has been no material change in the factual matrix or the applicable law. The revenue brought nothing on record to demonstrate any variation to this effect.
Accordingly, there was no reason to interfere with the findings arrived at by the CIT(A), whereby the entire receipts, including those in relation to transportation undertaken entirely using third-party carriers, were held to be covered under Article 8 for exemption.
Accordingly, the exemption claimed by the assessee under Article 8 of the India-US DTAA in respect of code share revenue was to be allowed.
List of Cases Reviewed
- Delta Air Lines, Inc. v. ACIT (International Taxation) [2024] 169 taxmann.com 8 (Mumbai – Trib.)[Para 6] Followed
List of Cases Referred To
- Delta Air Lines, Inc. v. ACIT (International Taxation) [2024] 169 taxmann.com 8 (Mumbai – Trib.) (para 4)
- Delta Air Lines, Inc. v. Asstt. DIT (International Taxation), Range -1(2)
- Mumbai [2015] 57 taxmann.com 1/69 SOT 45 (Mumbai) (para 5).
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