Delta Air Lines Vs DCIT (International Taxation) (ITAT Mumbai)
The case involves four appeals filed by the assessee before the Income Tax Appellate Tribunal (ITAT) Mumbai against separate orders of the NFAC/CIT(A) dated 4 June 2024 for Assessment Years (AY) 2007-08, 2011-12, 2012-13, and 2013-14. As the issues involved were common across all years except for variations in figures, the Tribunal heard the appeals together and issued a common order, treating AY 2007-08 as the lead case.
The primary issues raised by the assessee included the validity of reassessment proceedings under Section 147 of the Income Tax Act, denial of exemption under Article 8 of the India-USA Double Taxation Avoidance Agreement (DTAA), disregard of the alternative method for computation of income, enhancement of global profitability rate, levy of interest under Section 234B, and initiation of penalty proceedings under Section 271(1)(c). The assessee contended that all material facts had been disclosed earlier and reopening of assessments was invalid as it constituted a change of opinion beyond four years. However, the assessee did not press the grounds related to reassessment during the hearing.
On the substantive issue, the assessee, a tax resident of the USA engaged in airline operations, argued that income derived from international transportation of passengers and cargo, including through third-party aircrafts under code-sharing arrangements, was exempt from taxation in India under Article 8 of the India-USA DTAA. It was submitted that identical issues had already been adjudicated in favour of the assessee for AYs 2014-15 to 2016-17 and 2018-19, where the ITAT had held that such income was exempt from Indian tax. The assessee relied on these earlier decisions, stating that there was no variation in facts or law for the current assessment years.
