AIR FRANCE,DELHI vs. DCIT, CIRCLE 1(1)(1) INT. TAXATION, DELHI

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ITITA 20/DEL/2026Status: DisposedITAT Delhi14 May 2026AY 2023-244 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the commission income earned by the assessee from domestic airlines for the domestic leg of travel is directly connected to the operation of aircraft in international traffic and is therefore exempt from taxation in India under Article 8(1) read with Article 8(4) of the India-France DTAA. The Tribunal followed its own coordinate bench's decision in the assessee's own case for AY 2019-20 (IT(IT)A No. 01/Del/2025). The reasoning was that the entire journey, including the domestic leg, is arranged by the assessee, even if the domestic travel is undertaken by a domestic carrier. The commission retained is part of the cost of tickets for the entire travel arranged by the assessee. Consequently, the addition made by the AO on account of commission income was directed to be deleted. The Tribunal also noted that the Revenue had not shown any distinguishing features for the impugned assessment year. The appeal was allowed in terms of this deletion. The Tribunal also directed the AO to expeditiously dispose of a rectification petition filed by the assessee regarding TDS credit.

What were the facts?

The assessee, Air France, an international airline with a branch in India, is appealing an assessment order for Assessment Year 2023-24. The Assessing Officer (AO) treated commission income of Rs. 79,12,395/- earned from domestic airlines for customers travelling on the domestic leg of their journey as taxable in India. The assessee had declared its gross receipts and claimed exemption under Article 8 of the India-France Double Taxation Avoidance Agreement (DTAA), but the AO held that the commission income was not covered by this article. The assessee's appeal before the Tribunal challenges this addition. The procedural history indicates this is a recurring issue, with similar additions made in preceding assessment years.

What were the issues?

1. Whether the commission income earned by the assessee from domestic airlines in respect of customers travelling in the domestic leg of travel is taxable in India, or if it is exempt under Article 8 of the India-France DTAA? Assessee's Contention: The assessee argues that this issue is squarely covered by a Coordinate Bench decision in its own case for AY 2019-20, where similar commission income was held to be exempt under Article 8 of the DTAA. They rely on the Tribunal's order in IT(IT)A No. 01/Del/2025 decided on 16.03.2026. Revenue's Contention: The Revenue defended the assessment order and prayed for the dismissal of the appeal. However, the CIT(DR) fairly conceded that the issue is identical to that considered in preceding assessment years.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “D”, DELHI

Hearing: 13/05/2026Pronounced: 13/05/2026

आयकर अपीलीय अधिकरण धिल्ली पीठ “डी”, धिल्ली श्री धिकास अिस्थी, न्याधयक सिस्य एिं श्रीमती रेणु जौहरी, लेखाकार सिस्य के समक्ष IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आअसं.20/धिल्ली/2026 (धि.ि. 2023-24) IT(IT)A No.20/DEL/2026 (A.Y.2023-24) Air France, LB-46, Prakash Deep Building, 7, Tolstoy Marg, New Delhi 110001 ...... अपीलार्थी/Appellant PAN: AAACA-5284-B बिाम Vs. Deputy Commissioner of Income Tax, Circle-1(1)(1), International Taxation, ..... प्रधििािी/Respondent E-2, Block, Civic Centre, New Delhi 110001 अपीलार्थी द्वारा/Appellant by : S/Shri Anil K Makhija, Advocate & Sunil Anand, Chartered Accountant प्रधििािीद्वारा/Respondent by : Shri M.S Nethrapal, CIT(DR) सुििाई की धिधर्थ/ Date of hearing : 13/05/2026 घोषणा की धिधर्थ/ Date of pronouncement : 13/05/2026 आिेश/ORDER PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the assessment order passed u/s.143(3) r.w.s. 144C(13) of (hereinafter referred to as ‘the Act’) dated 24.12.2025, for assessment year 2023-24.

2.

The solitary issue raised by the assessee in appeal is taxation of commission income earned by the assessee from domestic airlines in respect of customers travelling in the domestic leg of travel.

3.

Shri Anil K. Makhija, appearing on behalf of the assessee submits that the issue raised by the assessee in appeal is squarely covered by the decision of Coordinate Bench of the Tribunal in assessee’s own case for A.Y. 2019-20. The ld. Counsel placed

2 IT(IT)A No. 20/DEL/2026 (AY 2023-24) on record a copy of the Tribunal order in IT(IT)A No. 01/Del/2025 decided on 16.03.2026.

4.

Per contra, Shri M.S. Nethrapal, representing the Department vehemently defended the assessment order and prayed for dismissing appeal of the assessee. However, the ld. DR fairly stated that the issue raised by the assessee in the present appeal is identical to the one considered by the Tribunal in assessee’s own case in the preceding assessment years.

5.

Both sides heard, orders of the authorities below examined. The assessee company was incorporated in France and has a branch office in India with the approval of Reserve Bank of India (RBI). The assessee is engaged in the business of operation of aircraft in international traffic. For the impugned assessment year, the assessee has declared gross receipts at Rs.1876,30,32,178/- and has claimed its entire income as exempt from taxation in India under Article 8 of the India-France Double Taxation Avoidance Agreement (DTAA). In addition to the above, the assessee has earned commission income of Rs.79,12,395/- from its operations. The Assessing Officer (AO) held that the commission received by the assessee from domestic airlines in respect of passengers travelling in the domestic leg of travel is in the nature of business income and is not covered by Article 8 of the India-France DTAA. Hence, the AO treated the commission income as taxable in India.

6.

We find that the issue raised in appeal by the assessee is recurring. Similar addition was made by the AO in A.Ys. 2019-20 and 2020-21. The Coordinate Bench in ITA No.01/Del/2025 (supra) an appeal filed by the Revenue, following earlier decision of the Tribunal in assessee’s own case, upheld findings of the CIT(A) in deleting the addition in respect of commission income. The findings of the Tribunal on the issue in AY 2019-20 are as under:-

3 IT(IT)A No. 20/DEL/2026 (AY 2023-24) “8. Commission Income (Rs.18,73,269/-) Briefly stated the Ld. AO made an addition of Rs.18,73,269/- on account of commission received by the assessee from domestic airlines for the domestic leg of travel of the passengers. He held that the same cannot be said to be derived from the operation of aircraft in international traffic and hence not eligible for exemption under Article 8 of DTAA. 8.1 Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who allowed the appeal after noting that the issued has already been decided in asseeess’s favour by the ITAT vide order dated 24.02.2023(supra). 8.2 Aggrieved, the revenue is in appeal before the Tribunal. After hearing the rival submissions, we hold that the issue is squarely covered in assessee’s favour by the order dated 24.02.2023(supra) of the Hon’ble Co-ordinate Bench. Relevant portion of the order is reproduced below: “22. We have considered rival submissions and perused the material on record. The facts on record reveal that when a passenger travels in assessee's airlines, for instance, from Paris to New Delhi and then to Chennai the assessee books ticket for the entire travel including the domestic leg, though, the domestic leg travel is taken up by the domestic airlines. A part of the cost of tickets of the domestic travel payable to the domestic airlines is retained by the assessee as commission. Thus, in our view, the entire journey of the passenger from the starting point to the destination is arranged by the assessee, though, the domestic leg of travel is completed by a domestic carrier. Thus, in our view, the commission income earned by the assessee is directly connected to operation of aircraft in international traffic, hence, covered under Article 8(1) read with Article 8(4), therefore, is exempt from taxation in India. Accordingly, ground raised by the assessee is allowed, whereas, the Revenue's ground is dismissed.” Respectfully following the above order, we uphold the order of Ld. CIT(A) on this issue and the addition of Rs. 18,73,269/- on account of commission income is hereby deleted. Revenue’s appeal on this ground is also rejected. In the result, the revenue’s appeal is dismissed.” 7. The Revenue has not been able to show any distinguishing feature in the impugned assessment year. In the absence of any change in facts, we see no reason to take a different view. Following the order of the Coordinate Bench in the preceding assessment years, we direct the AO to delete the addition on account of commission income. In the result ground of appeal No. 2 to 5 are allowed.

4 IT(IT)A No. 20/DEL/2026 (AY 2023-24) 8. In Ground No. 6 of appeal, the assessee has assailed findings of the AO in not granting TDS credit claimed in the return of income in the computation sheet. The ld. Counsel for the assessee submitted that a rectification petition has already been filed before the AO in this regard. The AO is directed to dispose of the said rectification petition expeditiously, in accordance with law.

9.

The other grounds raised by the assessee i.e. grounds no. 7 to 9 are consequential, hence, not separately deliberate upon.

10.

In the result, appeal of the assessee is allowed in terms aforesaid.

Order pronounced in the open court on Wednesday the 13th day of May, 2026.

Sd/- Sd/- (RENU JAUHRI) (VIKAS AWASTHY) लेखाकार सिस्य/ACCOUNTANT MEMBER न्याधयक सिस्य/JUDICIAL MEMBER धिल्ली/Delhi, धििांक/Dated 14/05/2026 NV/- प्रधिधलधप अग्रेधषिCopy of the Order forwarded to : अपीलार्थी/The Appellant , 1. प्रधििािी/ The Respondent. 2. 3. The PCIT धिभागीय प्रधिधिधि, आय.अपी.अधि., दिल्ली /DR, ITAT, धिल्ली 4. गार्ड फाइल/Guard file. 5.

BY ORDER, //True Copy//

(Asstt. Registrar) ITAT, DELHI

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