Case Law Details
DCIT Vs. M/s. KLM Royal Dutch Airlines (ITAT Delhi)
The technical handling services rendered by the assessee to the other airlines in India held to be part of the business of the assessee from the operation of aircraft in international traffic.
In DCIT vs. KLM Royal Dutch Airlines [ITA No: 3819 /Del/2015, (A.Y. 2009-10) & ITA No: 3820/Del/2015 (A.Y. 2010-11), decided on 28.05.2018], Revenue raised ground that the CIT(A) has erred in holding that the ground handling and the technical handling services rendered by the assessee to the other airlines in India are part of the business of the assessee from the operation of aircraft in international traffic as per article 8 of the DTAA between India and Netherlands.
The assessee company was into the airlines business and operates in all major countries including India. The assessee company was also into the business of operations of aircraft in international traffic and derived income from providing air services for the carriage of the passengers, freight and mail in international traffic. Apart from business of air transport operation, the assessee was also rendering technical handling services to other airlines in India, the payments of which were settled through IATA clearance. The Assessee claimed the receipt for rendering services like technical handling as exempt under Article 8 of Double Taxation Avoidance Agreement (in short DTAA) between India and Netherlands. Disagreeing with the assessee, AO proceeded to hold that the technical handling charges were required to be taxed in accordance with the provisions of Income Tax Act, 1961 (for short ‘the act’) and not under Article 8 of the DTAA between India and Netherlands and consequently made addition thereof to the total income of the assessee and assessed the same at Rs. 22,32,71,454/- & 240756483/- for AYs 2009-10 & 2010-11, respectively.
The assessee company filed the appeals before the CIT(A), who deleted the additions by allowing the appeals.
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