Celestial Aviation Trading 15 Ltd. Vs ACIT (ITAT Delhi)
Lease transaction operating in nature, not taxable under Article 11 of India – Ireland DTAA in absence of PE
Executive Summary:
The Delhi Bench of the Tribunal examined the nature of the lease agreement entered into between the lessors (Assessees) and the lessee. The Tribunal held that the transaction was operating in nature and not financial which results into the rental income being not taxable in India in accordance with Article 8 of the India – Ireland DTAA
Facts of the Case:
1. The Assessees namely, Celestial Aviation Trading 15 Ltd., Celestial Aviation Trading 32 Ltd., Celestial Aviation Trading 38 Ltd., Celestial Aviation Trading 100 Ltd., and Einn Volant Aircraft Leasing Ireland 1 Ltd, are tax-residents of Ireland and engaged in the business of Aircraft leasing. .
2. During the relevant Financial Year (FY) i.e., FY 2021-22 the Assessees leased out aircraft to M/s. Inter Glove Aviation Ltd. (IndiGo) under “Aircraft Specific Lease Agreements” (ASLA) which were governed by a master “Aircraft Lease Common Terms Agreement” (CTA).
3. During the relevant Assessment Year (AY) i.e., AY 2022-23 the Assessees filed their return of Income declaring NIL income.
4. The return of Income filed by the Assessees were taken up for scrutiny for examining the nature of rental lease income.
