ITAT held that the lease rentals received by an Irish resident...

ITAT held that the lease rentals received by an Irish resident lessor from leasing two A320s to an Indian carrier do not accrue or arise in India and are not taxable there. Applying the disposal test under Article 5(1), the Tribunal found no fixed-place PE: mere presence of high-value aircraft in India and protective lessor rights did not demonstrate that the lessor carried on business through a place at its disposal. The Tribunal further held that Article 8(1) governs profits from rental of aircraft in international traffic and, even if a PE were found, such rental profits would be taxable only in the State of residence. The AO's alternative characterization as interest was set aside.

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