British Airways Plc. Vs Assistant Director of Income Tax (ITAT Delhi)
ITAT rules British Airways’ ground handling income is taxable in India; pooling service receipts not protected under the India–UK DTAA
The ITAT Delhi dismissed the assessee’s appeals for AYs 2009-10 and 2010-11 and upheld the taxability in India of income earned from providing ground handling and engineering services to other airlines. The assessee, a UK airline, claimed exemption under Article 8 of the India-UK DTAA, contending that such services were ancillary to aircraft operations and constituted participation in International Airlines Technical Pool (IATP) arrangements. The Tribunal noted that the issue had been consistently decided against the assessee since AY 1996-97 and that the earlier Tribunal decision had held that receipts from such services were not covered by Article 8. It also observed that the Delhi High Court, while deciding cases involving Lufthansa German Airlines and KLM Royal Dutch Airlines, had distinguished the assessee’s case on the basis of differences between the India-UK DTAA and the India-Germany/Netherlands DTAAs. The Tribunal held that the OECD Commentary was not binding and that no material had been produced to show that the earlier Tribunal decision had been challenged or rectified. It found no merit in the assessee’s claim and dismissed both appeals.
