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of <h1>India-Ireland DTAA shields aircraft lease income; MLI PPT inapplicable absent section 90(1) notification, Article 8(1) applies</h1> The Mumbai ITAT held that Irish special-purpose lessors leasing aircraft to an Indian airline under dry operating leases were entitled to India-Ireland DTAA benefits. It ruled that the Multilateral Instrument Principal Purpose Test could not be applied absent a specific section 90(1) notification and, even otherwise, that the structure had commercial substance and was not abusive. The leases were characterised as operating, not finance, leases; rentals were not 'interest.' The presence of aircraft in India did not create a fixed place permanent establishment, as operational control rested with the Indian airline and leasing activities were conducted from Ireland. Article 8(1) was applied to treat aircraft rental income from international traffic as taxable exclusively in Ireland, barring Indian source taxation.
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