2026 (2) TMI 1092

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....ely), whereby a certificate at the rate of .1% has been issued under Section 197 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961'). 2. As per the facts pleaded, petitioner-British Airways PLC is a company and a tax resident of the United Kingdom as per Tax Residency Certificate issued by UK authorities. The disputed services fall under Airline services, which are essentially "Operation of Airline & Cargo Service" which is exempted under Article 8 of the India-UK Double Taxation Avoidance Agreement (hereinafter referred to as 'the India-UK Treaty') read with Section 90 of the Act of 1961. 3. Learned counsel for the petitioner at the outset submitted that so far the 'operation of airline and cargo services' is c....

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....erates at a very thin margin. 7. Mr. Anurag Ojha, learned Senior Standing Counsel for the Income Tax Department, on the other hand, contended that the tax collected under the certificate issued under Section 197 of the Act of 1961 is only an advance tax and the same is subject to final assessment and submitted that apart from the operation of Airline and Cargo services, the petitioner provides variety of other services such as Ground Handling and Engineering services which are definitely taxable in India and therefore, the certificate issued by the competent authority cannot be faulted with. 8. So far as the contention of Mr. Vishal Kalra, learned counsel for the petitioner that for the last sixteen years, NIL rate certificates have b....

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....he competent authority himself admits that the services apart from the Ground Handling and engineering services are not exigible to tax under Act of 1961. 12. It is true that the rate of .1% appears to be very low or negligible but given the volume of transactions which the petitioner undertakes in India (about Rs.4000 Crores per year) even this .1% turns out to be substantial for an Airline company. It is not in dispute that so far as the Ground Handling and Engineering services or any other service, which are taxable in India are concerned, the petitioner-company is obliged to pay the tax and has been paying the same. 13. It is to be noted that petitioner's assessment has been made and so far as airline services qua which the certif....