Case Law Details
Malaysian Airline System Berhad Vs DCIT (ITAT Delhi)
The case of Malaysian Airline System Berhad Vs DCIT (ITAT Delhi) revolves around the taxability of services provided by the Malaysian airline to Indian airlines in Malaysia. The dispute arises from the treatment of income derived from ground handling and other services provided by the head office of the assessee company to Jet Airways and JetLite.
Detailed Analysis: The appellant, Malaysian Airline System Berhad, contested the final assessment order passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(1) of the Income Tax Act. Grounds of appeal included arguments against the taxation of proceeds from services provided in Malaysia to Indian airlines, asserting that they do not constitute taxable income in India.
The dispute resolution panel (DRP) upheld the AO’s decision to tax the receipts on account of services provided in Malaysia. The panel deemed the receipts as “Fees for Technical Services” taxable in India, citing contracts between the parties, including the nature of services and relevant provisions of the Double Taxation Avoidance Agreement (DTAA) between India and Malaysia.
Despite the appellant’s objections and contentions regarding the jurisdiction of Indian tax authorities over income derived from services provided outside India, both the DRP and the AO maintained their stance. The AO, guided by the DRP’s directions, passed a final assessment order bringing the receipts under the tax purview.
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