As per treaty with USA Profits attributable to transaction of cargo, mail, etc. by aircrafts owned, chartered or leased by assessee cannot be taxed in India

CASE LAWS DETAILS

DECIDED BY: ITAT, MUMBAI BENCH `L’, MUMBAI

IN THE CASE OF: ADIT (International Taxation) Vs. Federal Express Corporation, USA, Appeal No: ITA Nos. 4452, 4453 & 9482/2004, DECIDED ON: January 29, 2009

RELEVANT PARAGRAPH

27. Rival submissions of the parties have been considered carefully in the light of the material placed before us and the case laws referred to. The first question for our consideration is whether the benefit of Article 8 of the Indo U.S. Treaty can be denied to the assessee merely on the ground that the nature of activity carried on by the assessee, in the opinion of the A.O., amounts to courier activity. It may be mentioned that the learned Departmental Representative could not seriously challenge the factual finding given by the GT(A) to the effect that the assessee is engaged in the business of transporting cargo in the international traffic by its own aircraft. We have also gone through the finding of the fact recorded by the CIT(A). It is not in dispute that the assessee has a fleet of 650 aircraft engaged in the transportation of cargo in the international traffic globally. It is also recognised by the Director General of Civil Aviation in India since the approval was granted to operate air cargo service to and from India. The assessee also obtained approval from the Reserve Bank of India to establish branches at Mumbai, New Delhi, Kolkata and Chennai for undertaking the airline cargo operations. Further air carrier certificate has been issued to the assessee by the Federal Aviation Administration, government of U.S. certifying that the assessee has met all the requirements of the Federal Aviation Act, 1958. It is also noted that the assessee is registered member of International Air Transport Association (IATA). Further it is submitted by the assessee that five flights a week were operated to and from India in the international traffic for transportation of cargo even in the first year of business in India. All these factual aspects could not be controverted by the learned Departmental Representative. Therefore, considering the same, we are of the considered view that the CIT(A) was justified in holding that the assessee was engaged in the business of transportation of cargo by air in the international traffic.

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