Assessee, an airline having establishment in Bhutan, claimed that income from sale of tickets to air passengers, insurance and fuel charges, etc. in India was taxable in Bhutan only. Assessing Officer held that as assessee was having permanent establishment in India, income was taxable in India. Commissioner (Appeals) had accepted contention of assessee that since its place of effective management (POEM) had been in Bhutan, as per article 8 of Indo Bhutan Double Taxation Avoidance Agreement its income from air transport was taxable in Bhutan only. Tribunal affirmed the order of CIT(A). (AY. 2017-18, 2018-19)
DCIT (IT) v. Tashi Air (P.) Ltd. (2023) 198 ITD 420 (Kol) (Trib.)
S. 9(1)(i) : Income deemed to accrue or arise in India-Business connection-Income from sale of tickets-Profit derived from operation of ships or aircraft in international traffic was liable to be taxed in contracting state in which place of effective management of enterprise was situated, which was Bhutan-DTAA-India-Bhutan [S. 90, Art. 8]