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By:

Quaid Najmi

4 January 2025 at 3:26:24 pm

AI’s Maharaja smiles joyfully

All 30 grounded aircrafts now fly Mumbai : Air India’s Maharaja is all pleased as punch at 80. After years of huge costs and efforts, the last of the grounded 30 aircraft – inherited by the Tata Group during the privatization in Jan. 2022 – is now resurrected fully and took to the skies gracefully on Monday.   The aircraft is the gleaming VT-ALL, a Boeing 777-300ER, that was gathering grime since February 2020, and becomes the final among the two-and-half dozen aircraft that have been revved...

AI’s Maharaja smiles joyfully

All 30 grounded aircrafts now fly Mumbai : Air India’s Maharaja is all pleased as punch at 80. After years of huge costs and efforts, the last of the grounded 30 aircraft – inherited by the Tata Group during the privatization in Jan. 2022 – is now resurrected fully and took to the skies gracefully on Monday.   The aircraft is the gleaming VT-ALL, a Boeing 777-300ER, that was gathering grime since February 2020, and becomes the final among the two-and-half dozen aircraft that have been revved up and revived in the past few years, AI official sources said.   It marked a symbolic milestone for Air India itself - founded in 1932 by the legendary Bharat Ratna J. R. R. Tata - which once ruled the roost and was India’s pride in the global skies.   Once renowned for its royal service with the iconic Maharaja welcoming fliers on board, in 1953 it was taken over by the government of India. After years of piling losses, ageing aircraft, decline in operations and standards – almost like a Maharaja turning a pauper - it returned to the Tata Group four years ago.   This time it was not just the aircraft, the brand and the deflated Maharaja coming into the large-hearted Tata Group stables, but a formidable challenge to ensure that the airline could regain its old glory and glitter. Of the total around 190 aircraft in its fleet were 30 – or 15 pc – that had been grounded and neglected for years.   At that time, the late Ratan N. Tata had directed that all these valuable aircraft must be revived as far as possible and join the fleet. Accordingly, the VT-ALL, languishing at Nagpur for nearly five years, was ‘hospitalized’ at the Air India Engineering Service Ltd., its MRO facility in May 2025.   New Avatar Then started a thorough, painstaking nose-to-tail restoration of an unprecedented scale, in which over 3000 critical components were replaced, over 4,000 maintenance tasks executed, besides key structural upgrades like the longeron modification, engines, auxiliary power units, avionics, hydraulics, landing gears and almost every vital system was rebuilt or replaced.   After the repairs, the old aircraft was reborn, under the gaze of the Directorate General of Civil Aviation and technical assistance from Boeing, and the new ‘avatar’ jetliner emerged with the highest global safety standards.   The aircraft cleared all the rigorous checks, a successful test flight, earned the mandatory Airworthiness Review Certificate and then made its maiden commercial flight from Monday, March 16 – after a wait of six years.   Sturdy Fliers Created in 1946 to become an instant global icon, the Air India’s mascot Maharaja now sports a youthful and chic look, a welcome with folded hands, closed eyes, featuring a bejewelled turban, stylish jootis, and a textured kurta in Air India’s new colours. He is prominently visible at various touch-points in a flyer’s journey, such as First Class, exclusive lounges, and luxury products.   Today, he commands a mix fleet of around 190 narrow and wide-body Airbus and Boeing aircraft like : A319, A320, A320neo, A321, A321neo, A350-900 and B787-8, B787-9, B7770200LR, B-777-300ER. With the merger of Vistara and agreements signed for 10 A350 and 90 A320 aircraft, the Maharaja’s fleet is slated to soar to some 570 in the near future.

DTAA vis-à-vis Domestic Tax Law: A Critical Analysis

In India, tax treaties are not mere guidelines—they form part of domestic law and can override statutory provisions when more beneficial to the taxpayer.

In an era of globalised trade, digital services and multinational business models, conflicts between domestic tax laws and international tax treaties have become increasingly frequent. Double Taxation Avoidance Agreements (DTAAs) are intended to eliminate double taxation, allocate taxing rights between countries and provide certainty to cross-border transactions. For India, with its extensive treaty network and growing international economic footprint, the interaction between DTAAs and the Income-tax Act, 1961, is of significant practical importance.


The Income-tax Act, 1961, expressly recognises tax treaties under Sections 90 and 91. Section 90(2) provides that where a DTAA exists, the provisions of the Act shall apply only to the extent they are more beneficial to the assessee. This provision establishes that treaty benefits prevail over domestic law when favourable, while domestic provisions continue to apply where they offer greater relief. Accordingly, DTAAs operate not as an override but as a beneficial exception to domestic tax legislation.


Treaty Supremacy

Indian courts have consistently upheld the binding nature of DTAAs. In Union of India v. Azadi Bachao Andolan, the Supreme Court affirmed that tax treaties entered into under Section 90 form part of Indian law and must be interpreted in good faith in line with international principles. The Court also recognised that legitimate tax planning within the framework of a treaty cannot be disregarded merely on suspicion of revenue loss.


This principle was reaffirmed in the Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT (2021), where the Supreme Court held that payments for off-the-shelf software made to foreign suppliers did not constitute “royalty” under the applicable DTAAs. Despite a broader definition under domestic law, the more beneficial treaty provisions were held to prevail, thereby exempting such payments from withholding tax.


Income, Treaty Protection

Disputes frequently arise in relation to the characterisation of income, particularly in respect of royalties, fees for technical services and capital gains. In DIT v. New Skies Satellite BV, the Delhi High Court ruled that retrospective amendments to the Income-tax Act expanding the scope of “royalty” could not be imported into tax treaties. The judgement reinforced that treaty provisions cannot be unilaterally modified through domestic legislation.


Similarly, in Vodafone International Holdings BV v. Union of India, the Supreme Court emphasised that, in the absence of a specific charging provision under the treaty, India could not tax indirect transfers solely by applying domestic law principles.


PE, Business Profits

The taxation of business profits of foreign enterprises hinges on the existence of a Permanent Establishment (PE). In E-Funds IT Solution Inc. v. ADIT, the Supreme Court held that the mere presence of a subsidiary or outsourcing arrangement in India does not automatically constitute a PE under the DTAA. The ruling clarified that treaty thresholds must be strictly satisfied before taxing foreign business profits in India.


GAAR, Procedural Compliance

While DTAAs provide relief, they are subject to anti-abuse provisions. The introduction of General Anti-Avoidance Rules (GAAR) and India’s adoption of the OECD BEPS framework through the Multilateral Instrument (MLI) empower tax authorities to deny treaty benefits where arrangements lack commercial substance. At the same time, procedural requirements—such as furnishing a valid Tax Residency Certificate under Section 90(4)—remain mandatory under domestic law.


DTAAs and domestic tax law operate in a harmonious and complementary manner. While domestic law provides the charging and procedural framework, DTAAs offer relief from double taxation and certainty in cross-border taxation. In case of conflict, the provision more beneficial to the assessee prevails, subject to anti-avoidance safeguards. For tax professionals, a sound understanding of treaty jurisprudence and recent judicial developments is essential in navigating today’s complex international tax landscape.


(The writer is a Chartered Accountant based in Thane. Views personal.)


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