High Court of Delhi · Judgments and reasoned final orders
British Airways PLC v. Assistant Commissioner of Income Tax, Circle (Int. Tax.) 1(1)(2), New Delhi & Anr.
W.P.(C) 18856/2025 ·
Quashing of Section 197 certificate dated 25.09.2025 prescribing 0.1% TDS on aircraft/cargo operations of a UK tax-resident airline exempt under Article 8 of the India-UK DTAA; mandatory direction to issue a NIL withholding certificate within 7 days and for future years within 30 days of application.
1. FACTS OF THE CASE
British Airways PLC, a UK tax resident whose profits from operation of aircraft and cargo in international traffic are exempt in India under Article 8 of the India-UK DTAA read with Section 90, had consistently been granted NIL withholding certificates under Section 197 for 16 years, including for Rs. 3,700 crore of receipts in the first part of FY 2025-26. However, for a supplemental application covering Rs. 3.98 crore, the AO passed an order dated 25.09.2025 issuing a certificate at 0.1% citing erroneous outstanding demands (which the Department later admitted in its counter-affidavit did not exist, with refunds actually due to the petitioner).
2. DISCUSSION BY THE COURT
The Division Bench held that once the order itself acknowledged that income from operation of aircraft is exempt under Article 8 of the India-UK DTAA, and the respondents' own affidavit admitted that no tax demand was outstanding against the petitioner, issuing a 0.1% TDS certificate after 16 years of uninterrupted NIL certificates—and after granting a NIL certificate for Rs. 3,700 crore in the very same financial year—reflected non-application of mind and arbitrary bureaucratic inconsistency.
3. JUDICIAL DECISION
Allowing the writ petition, the High Court quashed the impugned order and certificate dated 25.09.2025, directed the Competent Authority to issue a NIL rate certificate under Section 197 within 7 days, and further directed the authority to continue issuing NIL rate certificates for airline operations in subsequent years within 30 days of application (or latest by 15.05.2026) unless there is a change in law or transaction character.
4. OUTCOME
Assessee - Writ petition allowed; 0.1% certificate quashed and Competent Authority directed to issue NIL Section 197 certificate within 7 days and for future years within 30 days.
5. AKHB REVIEW POINT
Where an international airline's traffic receipts are exempt under Article 8 of the applicable DTAA and no tax is payable on airline operations in completed assessments, the TDS officer cannot impose even a token 0.1% withholding rate under Section 197.
Source and verification
5-page official High Court of Delhi judgment PDF (DLHC011006682025_1_2026-02-17.pdf, 95,848 bytes).
Original PDF: 5 pages · SHA-256: 9c338f1a14c3691a16642fa7a032660c60a641858c82c4fe5631703d48765947
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies Sections 90, 195, and 197 of the Income-tax Act, 1961 read with Article 8 of the India-UK DTAA. Income-tax Act, 2025 equivalence is not verified.
Full 5-page primary judgment PDF text read and verified page-by-page. Enforces Article 8 of the India-UK DTAA and administrative consistency in issuing Section 197 NIL withholding certificates for international airline operations.
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General research only. Read the complete judgment and verify applicable law and subsequent treatment before reliance.