Section 44 BBA provides a 5% deduction for income received by non-resident airlines from carriage of passengers, livestock, mail or goods originating from or traveling to India. To qualify, the non-resident must be engaged in the business of operating aircraft. However, rental income received under a wet leasing agreement with an Indian airline like Air India is exempt from tax under this section.

1. Section 44 BBA

2. It is for income in respect of foreign airlines: It is available for non residents. Conditions: The assessee must be engaged in the business of operation of aircraft. The assesee should be a non resident.

3. Amount of Deduction 5% of the following Amount received (in or out of India) by the taxpayer or on his behalf on account of carriages of passenger, livestock, mail or goods from any place in India and Amount received or deemed to be received in India by or on behalf of the taxpayer on account of carriage of passenger, livestock, mail or goods from any place outside India

4. Meaning of business of operation of aricraft: It is a comprehensive term visualizing the carrying on of the entire activities necessary for running the business of airlines engaged in the carriage of passengers, livestock, mail or goods. Exception: Where a non resident, enters into a wet leasing agreement with Air India aircraft, rental income received by the non resident from Air India cannot be brought to tax under 44 BBA