Double Taxation Avoidance Agreement India And France
b. As regards the application of point (a) to the income referred to in Articles 12 and 13, the beneficiary established in France who obtains that income may submit his case to the competent French authority if the amount of tax paid in India in accordance with the provisions of those Articles exceeds the amount of French tax resulting therefrom. If it is found that such a situation results in taxation which is not comparable to that of net income, that competent authority may authorise the unassumed amount of tax paid in India in the form of a deduction of French tax levied on other income from foreign sources received by that resident. The provisions of this Subsection shall not apply where the fee is considered to have been paid in India in accordance with points (c) and (d). In the present case, it is apparent from the file that the Indian branch is only a branch of the foreign company/assessee which deals with the operation of aircraft in international traffic. There are no specific services provided between headquarters and the branch, as the appraiser said, which appear to be correct, and no separate fact from the revenue we have been recorded in the minutes. All revenue collected by the branch is transferred to the central government once local expenditure has been made and the branch is received by the general public and not by the provision of services at headquarters. Therefore, assessee does not have a permanent establishment in India. Therefore, the Assessing Officer`s finding that the valuation company has a permanent establishment in India and that, therefore, the income received in India is taxable, is not a correct finding according to the facts recorded. It is also apparent from the examination of the comments of both parties and the International Airlines Technical Pool (IATP) agreement, as well as the standard assistance agreement, in accordance with the DBA between India and France, that the evaluating entity is a member of iatp and that the services provided by the appraiser to the carriers concerned were also members of IATP. This aspect is not disputed by the Assessing Officer in the tax order, although the DR states on the contrary that some airlines that provided the services provided were not members of iatp.
However, this is not the case in this evaluation year. In accordance with Annex “A” of the IATP Manual, it is clear that the member airline does not intend to provide services to members of the non-IATP pool and, in fact, even non-IATP pool members would be considered a pool service when they benefit from such a service from a pool. Therefore, the presentation of the HR Ld is objectively erroneous. With regard to the DBA between India and France, it is clear that Article 8(2) expressly mentions that the DBA applies to profits made by an enterprise of a State Party on international traffic on participation in a pool, joint venture or international operating agency and which is taxable only in those Contracting States. In the present case, the State party is France and, although the taxable person has to pay taxes in India under its national law, while it receives income from Indian territory, Air France is exempt from tax charges in India under Article 8(2) of the DBA Agreement, since its services/activities and their profits come from participation in the pool. The Hon`ble High Court in the KLM Royal Dutch Airlines & Lufthansa German Airlines (a.a.) case made clear how British Airways` facts were distinct. In this case, the relationship established with British Airways is also not applicable, given that the valuation company is a member of iapac and the DBAA between India and France clearly states that those who are members of the pool are exempt in India. . . .