INCOME TAX ACT, 1961

Section 254

Appeal (Tribunal) - Rectification of Tribunal's order - ITAT order has inadvertently mentioned that the ratio of CLC to TLC should not be more than 7.5%, instead of 4% -

Assessee was engaged in integrated air and ground transportation of time-sensitive and time-definitive shipments across the world. He claimed income from airline activities as not liable to tax in India by applying beneficial provisions of Article 8 of the India-USA Tax Treaty. However, Department has sought to tax assessee's income from airline activities attributable to third party aircrafts by arbitrary enhancing the ratios in arriving at the income attributable to usage of third party aircrafts, i.e., Commercial Linehaul Charge (CLC) to Total Linehaul Charge (TLC) and FedEx Global Profit Rate. Assessee enhanced the ratio of CLC to TLC from actual ratio of CLC to TLC at 2.08 per cent to 4.00 per cent. AO had denied the benefit of Article 8 of India- USA Tax Treaty and computed the income attributable to the usage of third party aircrafts by adopting the ratio of CLC to TLC as 10%. DRP reduced the ratio of CLC to TLC to 7.5%. ITAT had inadvertently mentioned that the ratio of CLC to TLC should not be more than 7.5%, instead of 4%. Thus, there was mistake apparent on record. Held: The plea of assessee was indeed correct. AO himself had adopted 4% as CLC/TLC ratio, and the same was required to be adopted this year as well. The mention of 7.5% as adjusted CLC/TLC ratio was clearly an inadvertent error. Therefore, it would be deemed fit and proper to recall the matter on this point, and refix the matter for adjudication afresh on that point. The Registry is directed to refix the matter for the above purposes, before the regular Bench.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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