British Airways PLC Vs ITO & Ors. (Delhi high Court)

British Airways PLC, a UK-based airline, sought a lower withholding tax certificate from the Income Tax Officer for the financial year 2019-20. They argued their income from international air traffic to and from India is not taxable under the India-UK Double Taxation Avoidance Agreement. The airline faced difficulties filing their application due to limitations in the TRACES online system, which restricted manual applications and the number of parties that could be entered at once.

IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 03.12.2020

W.P.(C) 13496/2019
BRITISH AIRWAYS PLC … Petitioner
Through: Mr.Vishal Kalra, Advocate.

Versus

INCOME TAX OFFICER & ORS. … Respondents
Through: Mr. Ruchir Bhatia, Senior Standing
Counsel with Ms. Mansie Jain and
Ms. Madhura MN, Advocates.

CORAM:
HON’BLE MR.JUSTICE MANMOHAN
HON’BLE MR.JUSTICE SANJEEV NARULA

SANJEEV NARULA, J. (oral)

1. The Petitioner is a foreign company, incorporated under the laws of the United Kingdom and resident of U.K. under the India-U.K. DTAA. By way of the present writ petition, it seeks a direction for issuance of a lower withholding certificate under Section 197(1) of theIncome Tax Act, 1961 [hereinafter referred to as the ‘Act’], effectivefrom 1st April, 2019 for Financial Year [hereinafter referred to as ‘FY’] 2019-20.

2. Mr. Vishal Kalra, learned counsel for the Petitioner submits that the Petitioner is engaged in the business of operating aircraft ininternational traffic and its revenue/income in relation to itsinternational air traffic to and from India is derived from ticket sales and cargo traffic. As its income/profits are not chargeable to tax under Article 8 of India-UK DTAA r/w Section 90(2) of the Act, the Petitioner requested for nil rate of withholding tax. Mr. Kalra furthersubmits that starting from the calendar year in question, the TDSReconciliation, Analysis and Correction Enabling System [hereinafterreferred to as the ‘TRACES’] was unable to accept manual applications till March, 2019. On 25th February, 2019, Petitioner had tried to file a manual application, but it was not accepted by theIncome Tax Department. Therefore, Petitioner could file its firstapplication only on 18th March, 2019. Even on the said date, the TRACES system permitted concurrent insertion of only three parties in the defined fields provided therein, and allowed attachment of documents as annexures. The system allowed only one application to be filed at a time. Due to the aforesaid constraints, vide applicationdated 18th March, 2019, Petitioner inserted the names of 3 parties in the space provided in the online form, and documents – containing names of approximately 300 other parties for which it needed the certificate – were uploaded as annexure thereto.

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