INCOME TAX ACT, 1961

Section 90

Double taxation relief - DTAA between India and France - Taxability of profit from technical handling services - Assessee being pool member of IATP

AO required assessee, based at France, to furnish details in respect of Technical Handling undertaken by it for other carriers along with details of income from cargo passage and interest, etc. Assessee submitted that since assessee was redndering Technical Handling services only to IATP Pool Members, it was a pooling activity and not liable to be taxed in India. AO rejected this and treating Technical Income as 'fees for technical services' covered under section 115A read with section 44D, taxed the same at 20% of gross receipts. As per AO, assessee provided its services both to airlines who were members of IATA/IATP as well as members who were not members of IATP.Held: Assessee company was a member of IATP and DTAA between India and France clearly set out that those who are members of pool are exempt from tax in India. Thus, AO was not right in rejecting claim of assessee that profit from technical handling services was covered by Article 8 and in treating the Technical Income as 'fee for technical services' covered under section 115A read with section 44D and taxing the same at 20% of the gross receipts. Also, IATP manual clearly set out that there was no bar on member airline to provide service to non-IATP Pool member and in fact, even non IATP Pool members if took such service from a pool would be considered as a pool service to them. Thus, assessee being a pool member and providing service in that capacity to guest members came under the purview of article 8(2) of DTAA between India and France. Hence, there could be no taxability.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2004-05 & 2005-06

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