TaxTMI 
TaxTMI 
2025 (10) TMI 844
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....e DTAA. The underlying facts and grounds pertaining to both the assessee's are identical and common in the captioned appeals, and therefore they were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. Both the parties before us fairly agreed that ITA No. 665/DEL/2025 pertaining to Pratt and Whitney Canada Corp, be taken as the lead case and the decision rendered thereon would apply with equal force for other assessee also in the same group in view of identical facts, except with variance in figures. Accordingly, we proceed to take up the appeal in ITA No. 665/DEL/2025. ITA No. 665/DEL/2025 [A.Y. 2018-19] [M/s Pratt & Whitney Canada Corp] 4. Grounds raised by the assessee in this A.Y read as under: "1. erred in assessing the income of Appellant at INR 2,42,65,46,501 as against Nil returned income. Final assessment order passed is time-barred 2. erred in not passing the final assessment order within the time limit prescribed under section 153 of the Act which is the outer time limit for passing the final assessment order and hence, the final assessment order dated 06.01.2025 is time barred and liable to be....
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.... under section 234F of the Act of INR 10,000. Initiation of penalty proceedings u/s 270A of the Act 10. erred in initiating penalty proceedings under section 270A of the Act against the Appellant. The Appellant submits that each of the above grounds is independent and without prejudice to one another." 5. Ground Nos. 1 is general in nature and need no adjudication. Ground Nos. 2 and 3 are not pressed and dismissed as not pressed. 6. Ground Nos. 4 to 6 pertain to repair and maintenance services rendered by the assessee. 7. Briefly stated, the facts of the case are that the assessee is a company established under the laws of Canada. The assessee specializes in design, manufacturing, sale and servicing of gas turbine engines, such as turbofan, turboprop and turboshaft engines and Auxiliary Power Units (APU). PWCC aftermarket business includes the production and sale of parts and the provision of maintenance, repair and overhaul (MRO) services for the engines it develops, manufactures, and sells to aerospace business customers. 8. For the subject year, the assessee did not file any return of income. On the basis of information that the assessee ha....
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....on 9(1)(vii) of the Act and under the provisions of India - Canada DTAA. 13. Aggrieved, the assessee went in appeal before the DRP who confirmed the same and the AO passed assessment order under section 144C(1) r.w. 144C(13) of the Act on 06.01.2025 assessing the income of the assessee at Rs. 242,65,46,501/-. Aggrieved the assessee is before us. 14. Before us, the ld. counsel for the assessee argued that receipt from Indian customer on account of repair and maintenance on aircraft engines are not to be treated as FTS because the 'make available' clause in the India Canada DTAA as well as India Singapore are not satisfied. The ld. counsel for the assessee relied on decisions of the following: i) Goodrich Corporation ITA No. 173/2025 (Del) ii) Goodrich Corporation ITA No. 988/Del/2024 (Del-Tri) iii) Rockwell Collins Southeast Asia Pte Ltd ITA No. 2409/DEL/23 iv) Global Vectra Helicorp Ltd. vs DCIT [2024] 159 taxmann.com 282 (Delhi - Trib.), v) Relx Inc 160 taxmann.com 109(DHC) 15. The ld AR further submitted that the ld AO had followed the assessment orders for AY 2014-15, AY 2016-17 and AY 2020-21. The ld AR stated that the asses....
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.... to any individual or firm of individuals (other than a company) for professional services as defined in Article 14. Similarly, the India-Singapore DTTA defines FTS similarly as follows: Article 12 (4). The term "fees for technical services" as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received ; or (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein ; or (c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. 18. We find that both the Treaties incorporate the "make available" clause for treating the payments as FTS. On the iss....
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....der: 15. Similarly, in order for that income to fall within the ambit of "fees for included services", it was imperative for the Department to establish that the assessee was rendering technical or consultancy services and which included making available technical knowledge, experience, skill, know-how or processes. As has been found by the Tribunal, the access to the database did not constitute the rendering of any technical or consultancy services and in any case did not amount to technical knowledge, experience, skill, know-how or processes being made available. 16. We note that while explaining the meaning liable to be ascribed to the expression "make available", the court in CIT v. BioRad Laborataries (Singapore) Pte. Ltd. had affirmed the following opinion as expressed by the Tribunal. This is evident from a reading of paras 14, 14.1 and 15, which is extracted below (459 ITR p. 7): (SCC OnLine Del paras 14 and 15) " 14. According to the Tribunal, the agreement between the respondent-assessee and its Indian affiliate had been effective from 1-1-2010, and if, as contended by the appellant-Revenue, technical knowledge, experience, skill, and other proc....
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....A No. 988/DEL/2024 Goodrich Corporation order dated 22.08.2024 had held as under: "3. The assessee is a non-resident, TRC holder of USA primarily engaged in the business of providing services in the nature of repair & maintenance of aircraft equipment. 4. Before the AO, the assessee submitted that for the purpose of repair & maintenance, the aircraft equipment are shipped outside India where they are repaired and sent back to Indian customer to India and hence they do not qualify the clause of 'make available'. However, the AO held that the on ground aircraft services provided by the assessee qualify it as 'make available'. 5. The ld. DRP held that "repair and maintenance services of aircraft parts is a very specialized field requiring technical expertise skill and experience at every stage. They are specific and customer based. Customer of the assessee are airlines which operate passenger and goods carrier. They are not equipped in handling the issues related to break down of aircraft. It is a complete and separate science and art in itself. The services provided by way of repair and maintenance are technical in nature and fall under ambit of services un....
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....ansfer of technology, no transfer of skill or knowledge or processes. There is no imparting of experience or benefit. The ld. DRP wrongly interpreted that the 'enduring benefit' gained by the client by the way of repairs & maintenance is akin to 'make available' which cannot be accepted. Rather, it should be the enduring benefit to the clients to undertake repairs & manage the maintenance services, then only it can be considered that the 'make available' clause is satisfied. Since, such 'make available' clause is not satisfied, the services cannot be treated as FTS as per India-USA DTAA." 20. The ld. counsel for the assessee also relied on the decision of the co-ordinate bench in the case of Rockwell Collins Southeast Asia Pte Ltd ITA No. 2409/DEL/23 dated 14.11.2024 wherein it has followed the order of the ITAT, Delhi in the case of Goodrich Corporation [supra] and has held as under: "the revenue earned by the assessee from rendition of repairs and maintenance services of aircraft equipment cannot be construed as FTS both under the Act as well as under the treaty. Accordingly, Ground Nos. 4 and 5 raised by the assessee are allowed." 21. There is a recent development....
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....spective non-resident entities, who undertake the repairing/overhauling of such parts. On receipt of such repair order and parts, the non-resident entities issue an estimate/quote of charges for repair and maintenance work. On approval of such estimate/quote by the Procurement Department, the non-resident companies undertake necessary repair and maintenance work of the said parts. After repair/overhaul, the non-resident entities send the repaired parts/item along with invoices for repair and maintenance work carried out. On receipt of the invoices and helicopter parts, the assessee makes the payments after taking necessary declaration and documents from the non-resident entity. It is further evident, to support its contention that there was no requirement for deduction of tax at source as the income of the non-residents are not taxable in India, the assessee had furnished the details of maintenance/repair, sample copies of invoices, sample copies of airway bills evidencing that the parts of the helicopters were sent outside India for carrying out necessary repair and sample copies of Form 15CB and 15CA etc. The Assessing Officer, however, held that the services rendered by the non-....
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.... been made available to the service recipient by the service provider. Thus, in absence of any contrary material brought on record by the Revenue, we concur with the view expressed by learned first appellate authority. Once the payments do not qualify as FTS under the respective treaty provisions, in terms with section 90(2) of the Act, treaty provisions being more beneficial would override the provisions contained in the domestic law. That being the legal position, in our view, the payments made to the residents of USA, UK, Australia, Canada and Singapore, being not chargeable to tax in India, section 195 is not applicable. Accordingly, we hold that the assessee was not required to deduct tax at source while making payment to residents of the aforesaid countries." 23. The factual matrix in the instant case of the assessee is that the assessee manufactures, sells and provide servicing of gas turbine engines, such as turbofan, turboprop and turboshaft engines and Auxiliary Power Units (APU). When a customer purchases an aircraft from an aircraft manufacturer, it also purchases the engine associated with the aircraft which belongs to PWCC. As opposed to the large commercial engine....