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2020 (6) TMI 1 - AT - Income TaxAccrual of income in India - revenue receipts as from operation of aircraft in international traffic - India and France (DTAA) - Revenue contended that the assessee provides its services both to airlines who are members of IATA/IATP as well as members who are not members of IATP and does not receive any reciprocal services in India and considering the scale of activities both inside India as well as outside thus an independent commercial and business activity which is in no way ancillary or connected to the business in the operation of aircraft as defined by Article 8(4) of the DTAA between India & France - HELD THAT:- Assessee company is a member of IATP and the DTAA between India & France clearly set out that those who are members of pool are exempt from tax in India. AO was not right in rejecting the claim of the assessee that profit from technical handling services is covered by Article 8 and in treating the Technical Income as “fee for technical services” covered u/s 115A read with Section 44D and taxed the same at 20% of the gross receipts. CIT(A) rightly held that the assessee’s income from ground handling and technical handling services is covered by Article 8 of the Indo-French DTAA. But the CIT(A) further held that income earned from rendering service to Iberworld a non IATP member would be taxed under Article 7, that is what challenged before us by the assessee. IATP manual clearly set out that there is no bar on member airline to provide service to non IATP Pool member and in fact, even non IATP Pool members if takes such service from a pool would be considered as a pool service to them. Thus, the assessee being a pool member and providing service in that capacity to the guest members comes under the purview of Article 8(2) of the DTAA between India and France. Therefore, the CIT(A) was not right in sustaining the taxability under Article 7 of the DTAA. Thus, appeal of the assessee is allowed. Validity of reopening of assessment u/s 147 - HELD THAT:- After going through the reasons it can be seen that the Assessing Officer has prima facie reason to believe that there is escapement of income as no return was filed by the assessee which is admitted fact. Thus, initiating proceedings u/s 148 of the Act are just and proper.
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