https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=63565 https://www.taxtmi.com/caselaws?id=63565 Taxability of Income from Technical Facilities under International Airlines Technical Pool (IATP) - Double Taxation Agreement Between India And Germany - Whether the profits of the appellant was due to participation in a pool - HELD THAT:- Admittedly, if it was so then the profits will not be liable to tax in India. The aims and objectives of participation in IATP have been mentioned earlier. We find that the appellant has rendered services/facilities to three airlines and has availed the services of one airline. On extending services to the other airlines, the appellant has received a sum of Rs. 49.64 lakhs and on availing the services, it has paid the sum of Rs. 45.50 lakhs. Thus, there was reciprocity between the members of the pool. But in the case of British Airways, we find that it has rendered services to more than 16 airlines and has not availed services from any other airlines in India. It was only one way traffic. Thus, there was no reciprocity between the British Airlines and the other airlines and, therefore, the ITAT has held that in the case of British Airways, there was no reciprocity and, therefore, it could not be said to be participation in a pool. We also find that in the case of British Airways [ 2001 (9) TMI 242 - ITAT DELHI-A] , the ITAT has held that the services rendered by that airline was in the nature of commercial activities and, therefore, was in the nature of business activities. For coming to this conclusion, the ITAT had noted that the British Airlines had employed excess staff for such purposes. Volume of receipts which is in crores for providing services also suggested that the providing of services by British Airways was a commercial activity. But in the case of the appellant, it has not been proved by the revenue that the extra staff was employed for providing services to other airlines. We have also noted that the services rendered and availed were as per IATP manual and, therefore, the profit was not taxable inIndiain view of Article 8(4) of DTAA. We have also noted that as per Article 8(4) of DTAA between India and Germany, the profit from the participation in a pool will not be taxable in India. But Article 8(2) of DTAA between India and UK talks of participation in pool of any kind by enterprises engaged in air transport . The use of the word pools envisages that there could be several pools or understanding i.e. more than one. Here the word pool does not indicate a pool which is internationally recognized. The use of the word pools any kind clearly indicates that it was in the nature of commercially understood meaning. But in the international aviation industry, there is only one pool i.e. IATP. Certainly, in the case of British Airways, it was not a case of participation in a pool. In the appellant s case, it is participation in IATP only. This was the reason that the IT AT has to find out the meaning of the word pool in the case of British Airways. Moreover, in the case of British Airways, it was pools of any kind but in the case of the appellant, it was not a pool of any kind but only IATP. Thus, the facts in the case of British Airways were altogether different then the facts of the appellant s case and the view taken by the ITAT in the case of British Airways is not applicable in the case of appellant as the facts are entirely different. We have also noted that British Airways has rendered services to Atlas Air Corporation which is not a member of IATP. The services rendered to that airline could not be bound by IATP manual. Looking to the above distinguishing features, we hold that the appellant s profit due to participation in a pool was covered under Article 8(4) of the DTAA between India and Germany and such profit cannot be brought to tax inIndia. We, therefore, allow the ground of appeal and delete the addition sustained by the CIT(A). In the result, the appeal filed by the assessee is allowed. Case-Laws Income Tax Thu, 12 Feb 2004 00:00:00 +0530