What did the Tribunal hold?

The Tribunal held that the CIT(A) was correct in allowing the exemption under Article 8 of the India-USA Tax Treaty. The Tribunal found no factual differences from earlier cases where the same issue was decided in favor of the assessee.

The Revenue appealed against the CIT(A)'s decision to grant exemption under Article 8 of the India-USA Tax Treaty to Delta Air Lines Inc. The exemption was for income earned from carrying passengers and cargo using third-party carriers under code-sharing arrangements.

What were the issues?

Whether income from international carriage of passengers and cargo using third-party carriers under code-sharing arrangements is taxable in India or exempt under Article 8 of the India-USA Tax Treaty.

DCIT vs Delta Air Lines Inc | ITAT Mumbai 2026

Income Tax Appellate Tribunal, MUMBAI

Before: HON’BLE MS. BEENA PILLAI & HON’BLE SHRI ARUN KHODPIA

आयकरअपीलीयअिधकरण, मुंबईपीठ�, मुंबई INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: I BEFORE HON’BLE MS. BEENA PILLAI, JUDICIAL MEMBER AND HON’BLE SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA 2884/MUM/2026 िनधा�रणवष�/AssessmentYear:2023-24) DCIT(IT)-2(1)(2) DELTA AIR LINES INC 604, Koutaliya Bhavan, BKC, Mumbai Podar House, Sitaram D Marg, – 400051, Maharashtra. Vs. Marine Drive, Mumbai – 400021, Maharashtra. अपीलाथ�Appellant ��थ� Respondent

Permanent Account Number of Assessee: AAACD4092N

अपीलाथ��ारा/Appellant represented by: Shri Sriram Seshadri (Virtually Present) ��थ��ारा/Respondentrepresented by: Shri Rajendra Jaypal – Sr. DR

सुनवाईकीतारीख/Date of conclusion of hearing: 07-05-2026 घोषणाकीतारीख/Date of pronouncement: 04-08-2026 आदेश / ORDER

PERARUN KHODPIA, ACCOUNTANT MEMBER: The captioned appeal is preferred by the Revenue challenging the order passed by Ld. CIT(A)/NFAC dated 15.12.2025 for the Assessment Year 2023-24, which in turn arises for the order under Section 143(3) r.w.s. 144C dated 28.05.2025 passed by the Assistant Commissioner of Income-tax (International Taxation) Circle-2(1)(2), Mumbai.

The grounds of appeal raised by the Revenue are as under:

“1. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing the benefit of exemption under Article 8 of the India- USA Tax Treaty on revenue earned by the Assessee from carriage of cargo and passengers in international traffic, attributable to usage of third party carriers and consequently, holding that the said revenue is not taxable under the provisions of Article 7 of the India-USA Tax Treaty. 1

Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding that the transportation of cargo and passengers through usage of third-party carriers amounts to 'charter' under Article 8(2) of India- USA Tax Treaty without considering the relevant facts and circumstances of the Assessee's case. 3. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding that the income earned by the Assessee from the usage of third-party aircrafts for transportation of cargo and passengers will be exempt under Article 8(2)(a) of the India-USA Tax Treaty. 4. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding that the income earned by the Assessee from the usage of third-party aircrafts for transportation of cargo and passengers amounts to participating in a pool or joint business under Article 8(4) of the India-USA Tax Treaty. 5. The appellant craves leave of the ITAT to add, amend or alter the ground herein, if requires.” 3. Facts of the caseas culled out from the order of Ld. CIT(A) are, the Appellant “Delta Air Lines” is a non-resident and incorporated under the laws of USA and is a tax resident of USA. The appellant is engaged in the business of operation of aircrafts in international traffic and operates in India through a branch office. The Appellant filed its return of income on 29 November 2023 declaring nil income from business operations and interest income of Rs. 1,57,520/-. The said return was processed u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment and accordingly notice u/s 143(2) of the Act was served to the assessee. The Assessing Officer passed assessment order passed u/s 143(3) r.w.s. 144C(3) of the Act dated 28 May 2025 determining total income at Rs. 39,73,33,865/- after denying the Appellant’s claim of exemption under Article 8 of the India-USA DTAA, in respect of the Appellant’s income from transportations involving third-party carriers pursuant to code-sharing arrangements of Rs.509,20,09,442/-.

The assessee assailed the assessment order passed u/s 143(3) r.w.s. 144C(3) of the Act dated 28 May 2025before the Ld. CIT(A), who had decided the issue with following findings: -

6.4 Thus, the sole dispute in relation to the exemption under Article 8 of the IndiaUSA DTAA, is in relation to the code-share revenue. In this regard, the Hon’ble Mumbai ITAT, on the above dispute in case of the Appellant for AY 2018-19, involving the same set of facts as AY 2023-24, has held in favour of the Appellant, that the Appellant’s income from transportation of passengers and cargo, in international traffic, using third-party airlines either entirely or for a part of the journey under the code sharing arrangement, is not taxable in India as per Article 8 of the India-USA DTAA. This decision of the Hon’ble Mumbai ITAT was followed by this office in case of the Appellant for AY 2014-15, 2015-16, and 2016-17 vide orders dated 28 March 2025. Further, the decisions of this office were upheld by the Hon’ble Mumbai ITAT vide its order dated 19 September 2025 for AY 2014-15, 2015-16, and 2016-17. Subsequently, the Hon’ble Mumbai ITAT vide its order dated 28 October 2025 for AY 2007-08, 2011- 12, 2012-13, and 2013-14, followed its aforesaid earlier decisions for AY 2018-19 and AYs 2014-15 to 2016-17. In holding so, the Hon’ble ITAT, for AY 2018-19,inter alia held that the transportation of passengers and cargo through third-party carrier is covered within the ambit of the word ‘charterer’, the transportation under code-sharing is on a principal to principal basis and falls within the ambit of ‘operation of aircrafts’ in international traffic. Relevant extract of the decision of the Hon’ble Mumbai ITAT for AY 2018-19 is as under: “i. the transportation of passengers either fully or party in third party aircrafts in a specific journey by way of a code sharing arrangement, would fall within the ambit of the word "charterer" and, accordingly would be within the scope of "operation of aircrafts " as defined in Article-8(2) of the India US DTAA. ii. The passengers under code sharing arrangements are transported on behalf of the assessee by the third party airlines under the code sharing arrangement on a principal to principal basis where the ticket for the entire journey is issued by the assessee bearing specific code. Hence the same would fall within the scope of "operation of aircrafts" the ticket for the entire journey is issued by the assessee bearing specific code. Hence the same would fall within the scope of "operation of aircrafts" iii. The transportation of passengers by the assessee under code sharing arrangement either fully or partly in a third party aircrafts is inextricably linked which is established in assessee's case here” 6.5 The Appellant’s submission is accepted. I find merit in the submission of the Appellant that the income arising from transportation of passengers and cargo in international traffic through third-party carrier, whether for a part of the journey or the entire journey, is covered under Article 8 of the India-USA DTAA as it tantamount to ‘operation of aircrafts’ ‘in international traffic’ within the meaning of Article 8 of the India-USA DTAA. Further, the transportation of passengers either fully or party through third party aircrafts is covered within the ambit of the term ‘charterer’ as per Article 8(2) of the India-USA DTAA and demonstration of transportation linkage is not a pre-requisite to qualify as a ‘charterer’. 6.6 Even though the linkage is not a pre-requisite, the Appellant has furnished requisite documents, during the assessment proceedings for the year under consideration before the Ld. AO, to demonstrate linkage of transportation undertaken by the Appellant through its own aircrafts and through the usage of third-party aircrafts. It is submitted by the Appellant that the said documents are same as what was furnished before the AO and Hon’ble ITAT for AY 2018-19, and were found by the Mumbai ITAT to be establishing the linkage.

6.7 The decisions of the Hon’ble Mumbai ITAT in case of the Appellant for eight AYs(i.e. 2007-08, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17 and 2018- 19) as well as the decisions of this office for AY 2014-15, 2015-16, and 2016-17 which were subsequently upheld by the Hon’ble Mumbai ITAT are squarely applicable to the year under consideration. Following the said decisions, for the detailed reasons recorded by the Hon’ble ITAT for AY 2018-19, the present appeal of the Appellant for AY 2023-24 is allowed with respect to Ground No. 2, 3, 4, 5and 11. Accordingly, the entire receipts of the Appellant (including those in relation to the transportation undertaken entirely using third-party carriers) are covered under the Article 8 exemption. The addition made to the total income by the AO is deleted. 6.8 Since the Appellant’s income is not taxable in India under Article 8(1) and 8(2) itself, the Ground Nos. 6 and 7are academic and hence do not warrant adjudication.”

At the outset Ld. Sr. DR submitted that there are factual differences in the issue for the year under consideration and the earlier years for which the ITAT had granted relief to the assessee therefore, the order of ld. CIT(A) was under wrong appreciation of facts and liable to be set aside.

On the contrary, Ld. AR representing the assessee submitted that, there was no factual difference in the facts, circumstances and the issue before us in the instant case and the cases already decided by the tribunal. Even otherwise,if there isany points for distinguishmentthe onus is on the revenue to brought it on record,to take this case on a different pedestal. In view of such submissions, it is argued that the ld. CIT(A) had relied on the decision of ITAT in assessee’s own case and decided the identical issue in the favour of assessee, the same therefore deserves to be upheld.

We have considered the rival submissions and perused the material available on records. On a thoughtful consideration of the facts for earlier years issue therein and the decision of ITAT for AY 2018-19(07.11.2024), AY 2014-15,2015-16 & 2016-17(19.09.2025) and AY 2007-08, 2011-12, 2012-13 & 2013-14 (28.10.2025), the identical issue, emanating from the ground of appeal of revenue (extracted supra)

Since, aforesaid issues are decided by the coordinate bench of tribunal in orders as detailed herein above, in absence of any contrary fact, binding decision or change in law brought on record by the revenue, we are unable to fathom and persuade with the contentions raised by department vide the grounds appeal assailed herein. We, thus, do not find any infirmity in the impugned order of Ld. CIT(A), more so as the same was passed in line with and following the ratios / findings emerging from the order of tribunal under similar set of facts. For the sake of brevity to refrain from repetition, we are not reproducing the findings of Tribunal in earlier order, being available on public domain and also furnished by the Ld. CIT(A) in his findings (supra).

Accordingly, the ground of appeal raised by the revenue in present appeal are rejected, in terms of aforesaid observations.

10.

In result the appeal of revenue stands dismissed.

Order pronounced in the open court on 04th of August, 2026.

Sd/- Sd/-

BEENA PILLAI ARUN KHODPIA JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated: 04 /08/2026. Kunal, P.S.

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

DCIT(IT)-2(1)(2), MUMBAI vs. DELTA AIR LINES INC, MUMBAI

What did the Tribunal hold?

What were the facts?

What were the issues?

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