TaxTMI 
TaxTMI 
2025 (11) TMI 907
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....Act') by the Assistant Commissioner of Income Tax, Circle International Tax-3(1)(1), Delhi ['Assessing Officer'/'AO']. 3. The common core issues emerged in these appeals filed by different assessee are as under: (i) Validity of assessment order on the ground of limitation w.r.t. section 153 of the Act; (ii) Lease entered into by the appellant assessee as Lessors with the Lessees for leasing of aircrafts (helicopters) - Whether Operating or Financial Lease ?; (iii) Whether the appellant assessee are eligible for benefit of Article 8 of India-Ireland DTAA ?; (iv) Taxability of lease rent/receipts as royalty under section 9(1)(vii) of the Act and also interest as per India-Ireland DTAA; (v) Interest income taxable @ 5% under section 194LC of the Act; 4. Facts in these two appeals are similar. The assessee companies were incorporated in Ireland in the year 2012 and is a tax resident of Ireland. The assessee company have leased helicopters. The case of the assessee is that the agreement between the assessee as lessor and the lessee is that of an operating lease; hence, lease rentals received by the assessee are not taxable in India as t....
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....ther the lease agreement entered into between the lessees of the helicopters and the lessors was in the nature of Operating Lease or Financial Lease had already been decided by the Coordinate Bench of the Tribunal in the case of Celestial Aviation Trading 15 Ltd. [176 taxmann.com 902] (Delhi Trib.). The undisputed fact admitted by both parties were that the lessors were incorporated in Ireland and were holding valid TRC of the Ireland. Referring to the aforesaid decision the Ld. Sr. Counsel submitted that the Coordinate Bench after examining the Terms and Conditions of Aircraft Specific Lease Agreement, Aircraft Lease Common Term Agreement, the RBI Circular No. 24 dated 01.02.2022 and the decision of Special Bench of the Tribunal in the case of InterGlobe Aviation Ltd. (IndiGo) vs. ACIT, 131 taxmann.com 98 held that the lease agreement is in the nature of operating lease and not financial lease. The lease agreements of the present cases were quite similar to those of Indigo. The Ld. Sr. Counsel submitted that the key feature of a Financial Lease was the transfer of ownership of leased asset to the lessee at the end of the lease period. In the present cases, there were no such condi....
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....r Aircraft Leasing Limited in ITA no 1107/Mum/2025. The Tribunal in the case of Sky-High Appeal XLIII Leasing Company Ltd. (supra) had already considered the issue of applicability of Article 8 and had decided the issue in favour of assessee. He submitted that Article 8, apart from profits from operation of ships and aircrafts refers to rental of ships or aircrafts in international traffic. Profits from 'rentals' was peculiar to India-Ireland treaty. This issue had been elaborately discussed in the case of Sunflower Aircraft Leasing Limited (supra). The Ld. Counsel drew our attention to para 38 to 44 of the Tribunal's order in the case of Sky-High Appeal XLIII Leasing Company Ltd. (supra) where decision in the case of Sunflower Aircraft Leasing Limited (supra) has been quoted and followed. 12. On the other hand, Shri Indruj Singh Rai, Ld. Special Counsel agreed that the issue had been considered by Mumbai Bench of the Tribunal; however, he sought liberty to make three folds submissions with respect to applicability of Article-8 on dry lease receipts for use of aircraft (including helicopter). He asserted that Article-8(1) of India-Ireland DTAA was not applicable to dry leases. I....
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....ide India. He submitted that the Ld. AO/Ld. DRP had sought information/data from the assessee with respect to profits derived from international usage of helicopters, but the same was never provided by the assessee during assessment proceedings. The onus was on the assessee to show usage of helicopters outside India i.e. in international traffic, the assesses failed to discharge said onus. He submitted that even if Article8(1) was to be interpreted in accordance with the findings of the Tribunal in the case of Sky-High Appeal XLIII Leasing Company Ltd. (supra). 15. In the rejoinder, Shri Sachit Jolly reiterated that the issue had already been decided by the Tribunal Mumbai Bench. He pointed that the Ld. Special Counsel representing the Revenue had referred to the definition of "international traffic" as per OECD. The definition of international traffic as per OECD and India-Ireland DTAA were at variance. Therefore, to say the definition of "international traffic" was not workable in the facts of instant case was an incorrect statement. Dehors, the fact of operation of the helicopter by the lessee in international traffic, such usage had nothing to do with the rentals. The rental....