2024 (9) TMI 1522

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....ssment action which has been initiated for Assessment Year [AY] 2016-2017. As is manifest from the reasons which have been ascribed and which appear to have weighed upon the Assessing Officer [AO] to come to the conclusion that income had escaped assessment was a receipt of INR 6,35,91,111/- by the petitioner from one M/s Global Vectra Helicorp Ltd during Financial Year 2015-2016. The respondent had proceeded on the assumption that the aforesaid receipt was on account of aircraft leasing. It was on the aforesaid premise that the AO had proceeded to hold that the consideration received by the writ petitioner would be in the nature of "royalty" for use of aircraft and thus taxable both in terms of Section 9 (1) (vi) of the Income Tax Act,1961....

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....ntific experience; (b) The term "fees for technical services" means payment of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel but does not include payments for services mentioned in Articles 14 and 15 of this Convention. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the  other Contracting State in which the royalties or fees for technical services arise through a permanent establishment situated therein, or performs in that other State independent personal s....

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....visions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention." 3. We find that it is the respondent who had proceeded on the premise that the revenue and consideration received was in connection with aircraft leasing and would thus amount to "royalty" by virtue of the relevant provisions of the DTAA. However, on a plain reading of Article 12 (3) (a) of the DTAA, the view as taken is rendered wholly unsustainable. 4. We are also of the considered opinion that it would be wholly impermissible for the AO to invoke Section 9 (1) (vi) of the Act in ligh....