2008 (10) TMI 30

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.... that arose for consideration before the Tribunal was whether the recovery/ adjustment of rent from CSC Private Limited by the assessee (KLM) was an income chargeable to tax in India. This question arose in the backdrop of Articles 6 and 8 of the Double Taxation Avoidance Agreement between India and the Netherlands. There is no dispute that the assessee is a company incorporated in the Netherlands and its main activity is operation of aircrafts in international traffic both for transport of passengers as well as of cargo handling. There is also no dispute that the profits from the international traffic would be taxable in the Netherlands, being the place of effective management of the assessee. 3. In respect of the cargo business, the as....

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....is adjustment was treated by the department as income of the assessee chargeable to tax in India under Article 6 of the said Double Taxation Avoidance Agreement. 6. The Commissioner of Income Tax (Appeals) also confirmed the view taken by the Assessing Officer. 7. However, the Income Tax Appellate Tribunal, after examining the entire matter, came to the conclusion that the arrangement between the assessee and the CSC was that the rent payable to Airport Authority of India, though payable by the assessee in the first instance, was recovered from the charges payable by the assessee to CSC. From this, the Tribunal concluded that the recovery of the said charges towards licence fee/ rent did not arise from any activity outside the activit....