GILEAD AVIATION IRELAND 1 LIMITED,IRELAND V. ACIT INTERNATIONAL TAXATION CIRCLE 1(3)(1) NEW DELHI, NEW DELHI

ITA 1290/DEL/2025

AI Insights

The case involves multiple appeals by various aviation leasing companies against the assessment orders passed by the Assistant Commissioner of Income Tax, International Taxation, which treated the lease agreements as financial leases, subjecting the lease rentals to tax in India. The primary legal issues revolved around the classification of the leases as operating or financial, the applicability of the MLI to the India-Ireland DTAA, and the existence of a Permanent Establishment (PE) in India. The Tribunal examined precedents, the terms of the leases, and the provisions of the India-Ireland DTAA and MLI, ultimately deciding in favor of the assesses.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 777785 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Appeal Filed On: 03-03-2025
• Other Referred Cases: Celestial Aviation Trading 15 Ltd. vs. ACIT, InterGlobe Aviation Ltd. (IndiGo) vs. ACIT, Sky High Appeal XLIII Leasing Company Ltd. vs ACIT, Sunflower Aircraft Leasing Limited vs. ACIT, SC Lowy P.I. (LUX) SARL vs. ACIT, DAE Leasing (Ireland) 18 Ltd. vs. ACIT, DAE Leasing (Ireland) 19 Ltd. vs. ACIT, AWAS 36698 Ireland Ltd. vs. ACIT, AWAS 39427 Ireland Ltd. vs. ACIT, DAE Leasing (Ireland) 4 Ltd. vs. ACIT, DAE Leasing (Ireland) 17 Ltd. vs. ACIT, DAE Leasing (Ireland) 20 Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE S SANJEEV MENON; INDRUJ SINGH RAI; SPECIAL COUNSEL
• Assessee Lawyers: PERCY PARDIWALLA
• Keywords: Business expenditure; Depreciation; Capital Gains; TDS; Competent authority; Initiation of penalty proceedings; Validity of assessment; Double taxation relief; Permanent establishment; Application of stay; Extension of stay
• Section: 143(3); 90; 234B; 37(1); 5(2)

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “डी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी अवधेश क ुमार िमŵा, लेखाकार सद˟क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER आअसं.994/िदʟी/2025(िन.व. 2022-23) ITA No.994/DEL/2025 (A.Y.2022-23) Kosi Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICK-6199-B ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 2(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1027/िदʟी/2025(िन.व. 2022-23) ITA No.1027/DEL/2025 (A.Y.2022-23) Hoohly Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAFCH-6609-C ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 2(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1070/िदʟी/2025(िन.व. 2022-23) ITA No.1070/DEL/2025 (A.Y.2022-23) Luni Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAECL-5180-H ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 2(2)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 2 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1071/िदʟी/2025(िन.व. 2022-23) ITA No.1071/DEL/2025 (A.Y.2022-23) Subria Five Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: ABFCS-4860-H ...... अपीलाथᱮ/Appellant बनाम Vs. Assitant Commissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1072/िदʟी/2025(िन.व. 2022-23) ITA No.1072/DEL/2025 (A.Y.2022-23) Subria Four Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: ABFCS-4857-C ...... अपीलाथᱮ/Appellant बनाम Vs. Assitant Commissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1073/िदʟी/2025(िन.व. 2022-23) ITA No.1073/DEL/2025 (A.Y.2022-23) Subria Three Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: ABFCS-4856-D ...... अपीलाथᱮ/Appellant बनाम Vs. Assitant Commissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 3 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1091/िदʟी/2025(िन.व. 2022-23) ITA No.1091/DEL/2025 (A.Y.2022-23) Sabarmati Aviation Leasing Ltd., 32, Molesworth Street, Dublin 2, Ireland, DO2 Y512 PAN : ABDCS-5840-F ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1156/िदʟी/2025(िन.व. 2022-23) ITA No.1156/DEL/2025 (A.Y.2022-23) Padma Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AALCP-7901-M ...... अपीलाथᱮ/Appellant बनाम Vs. Assitant Commissioner of Income Tax, International Taxation, Circle 2(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1157/िदʟी/2025(िन.व. 2022-23) ITA No.1157/DEL/2025 (A.Y.2022-23) Mahi Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAOCM-3126-A ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 2(2)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 4 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1158/िदʟी/2025(िन.व. 2022-23) ITA No.1158/DEL/2025 (A.Y.2022-23) DAE 9 Ireland Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AAJCD-0296-K ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1159/िदʟी/2025(िन.व. 2022-23) ITA No.1159/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1901 Co. Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8299-E ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1160/िदʟी/2025(िन.व. 2022-23) ITA No.1160/DEL/2025 (A.Y.2022-23) Ahar Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAUCA-7980-N ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 5 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1161/िदʟी/2025(िन.व. 2022-23) ITA No.1161/DEL/2025 (A.Y.2022-23) Subria Six Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: ABFCS-4858-P ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1162/िदʟी/2025(िन.व. 2022-23) ITA No.1162/DEL/2025 (A.Y.2022-23) DAE Leasing (Ireland) 18 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1216-N ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1192/िदʟी/2025(िन.व. 2022-23) ITA No.1192/DEL/2025 (A.Y.2022-23) DAE Leasing (Ireland) 19 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1214-Q ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 6 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1193/िदʟी/2025(िन.व. 2022-23) ITA No.1193/DEL/2025 (A.Y.2022-23) AWAS 36698 Ireland Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AATCA-4985-G ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1194/िदʟी/2025(िन.व. 2022-23) ITA No.1194/DEL/2025 (A.Y.2022-23) AWAS 39427 Ireland Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AATCA-5017-B ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1195/िदʟी/2025(िन.व. 2022-23) ITA No.1195/DEL/2025 (A.Y.2022-23) DAE Leasing (Ireland) 4 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAFCD-9885-L ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 7 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1196/िदʟी/2025(िन.व. 2022-23) ITA No.1196/DEL/2025 (A.Y.2022-23) DAE Leasing (Ireland) 17 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1088-A ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1197/िदʟी/2025(िन.व. 2022-23) ITA No.1197/DEL/2025 (A.Y.2022-23) DAE Leasing (Ireland) 20 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1215-R ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1198/िदʟी/2025(िन.व. 2022-23) ITA No.1198/DEL/2025 (A.Y.2022-23) Lunar Aircraft Trading Company 7 C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAFCL-1871-J ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 2(2)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 8 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1199/िदʟी/2025(िन.व. 2022-23) ITA No.1199/DEL/2025 (A.Y.2022-23) Lunar Aircraft Trading Company 10 C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAFCL-1872-M ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 2(2)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1201/िदʟी/2025(िन.व. 2022-23) ITA No.1201/DEL/2025 (A.Y.2022-23) AWAS 2908 LLC C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AATCA-5015-D ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1202/िदʟी/2025(िन.व. 2022-23) ITA No.1202/DEL/2025 (A.Y.2022-23) Subria Two Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: ABFCS-4861-G ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant ommissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 9 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1203/िदʟी/2025(िन.व. 2022-23) ITA No.1203/DEL/2025 (A.Y.2022-23) Aptree Aviation Trading 2 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AATCA-6036-A ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1204/िदʟी/2025(िन.व. 2022-23) ITA No.1204/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1902 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AAICG-8296-M ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1205/िदʟी/2025(िन.व. 2022-23) ITA No.1205/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1903 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AAJCG-6060-E ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 10 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1206/िदʟी/2025(िन.व. 2022-23) ITA No.1206/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1904 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AAJCG-8303-K ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1207/िदʟी/2025(िन.व. 2022-23) ITA No.1207/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1905 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN: AAJCG-8302-J ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1208/िदʟी/2025(िन.व. 2022-23) ITA No.1208/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1906 Co. Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8301-M ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 11 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1209/िदʟी/2025(िन.व. 2022-23) ITA No.1209/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1907 Co. Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8300-L ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1210/िदʟी/2025(िन.व. 2022-23) ITA No.1210/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1908 Co. Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8298-F ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1211/िदʟी/2025(िन.व. 2022-23) ITA No.1211/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1909 Co. Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAJCG-6087-H ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 12 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1246/िदʟी/2025(िन.व. 2022-23) ITA No.1246/DEL/2025 (A.Y.2022-23) Narmada Aviation Leasing Ltd., 32, Molesworth Street, Dublin 2, Ireland, DO2Y512 PAN : AAGCN-9207-P ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 2(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1270/िदʟी/2025(िन.व. 2022-23) ITA No.1270/DEL/2025 (A.Y.2022-23) White OAK Aviation (AOE2) Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AADCW-0290-N ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 3(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1271/िदʟी/2025(िन.व. 2022-23) ITA No.1271/DEL/2025 (A.Y.2022-23) GY Aviation Lease 101 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAHCG-8986-F ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 13 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1272/िदʟी/2025(िन.व. 2022-23) ITA No.1272/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1301 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8297-L ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1273/िदʟी/2025(िन.व. 2022-23) ITA No.1273/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1201 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-3574-G ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1274/िदʟी/2025(िन.व. 2022-23) ITA No.1274/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1205 Co. Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8295-J ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 14 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1275/िदʟी/2025(िन.व. 2022-23) ITA No.1275/DEL/2025 (A.Y.2022-23) AWAS Aviation Leasing (4294) Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AATCA-4988-M ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1276/िदʟी/2025(िन.व. 2022-23) ITA No.1276/DEL/2025 (A.Y.2022-23) AWAS Aviation Leasing (4443) Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AATCA-4983-A ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1286/िदʟी/2025(िन.व. 2022-23) ITA No.1286/DEL/2025 (A.Y.2022-23) AWAS 5158 Ireland Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AATCA-5018-Q ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 15 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1288/िदʟी/2025(िन.व. 2022-23) ITA No.1288/DEL/2025 (A.Y.2022-23) Ravi Aviation Leasing Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAKCR-8052-N ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 3(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1289/िदʟी/2025(िन.व. 2022-23) ITA No.1289/DEL/2025 (A.Y.2022-23) Gandak Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8528-L ...... अपीलाथᱮ/Appellant बनाम Vs. Assisant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1290/िदʟी/2025(िन.व. 2022-23) ITA No.1290/DEL/2025 (A.Y.2022-23) Gilead Aviation Ireland 1 Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAJCG-4985-A ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 16 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1291/िदʟी/2025(िन.व. 2022-23) ITA No.1291/DEL/2025 (A.Y.2022-23) Berach Aviation Leasing Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAJCB-6404-F ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1292/िदʟी/2025(िन.व. 2022-23) ITA No.1292/DEL/2025 (A.Y.2022-23) DAE 8 Ireland Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAJCD-0298-H ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1293/िदʟी/2025(िन.व. 2022-23) ITA No.1293/DEL/2025 (A.Y.2022-23) Sota Aviation Leasing Ltd. C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : ABFCS-4862-F ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 17 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1294/िदʟी/2025(िन.व. 2022-23) ITA No.1294/DEL/2025 (A.Y.2022-23) GAL MSN 4535 & 4954 Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICG-8529-M ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1295/िदʟी/2025(िन.व. 2022-23) ITA No.1295/DEL/2025 (A.Y.2022-23) AWAS 3 Ireland Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAWCA-4224-D ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1296/िदʟी/2025(िन.व. 2022-23) ITA No.1296/DEL/2025 (A.Y.2022-23) AWAS 4 Ireland Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAWCA-4223-E ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 18 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1474/िदʟी/2025(िन.व. 2022-23) ITA No.1474/DEL/2025 (A.Y.2022-23) Dohan Aviation Leasing Ltd., 32, Molesworth Street, Dublin 2, Ireland, DO2Y512 PAN : AAGCD-1970-H ...... अपीलाथᱮ/Appellant बनाम Vs. Assisant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1487/िदʟी/2025(िन.व. 2022-23) ITA No.1487/DEL/2025 (A.Y.2022-23) AWAS 5007 Ireland Ltd., 70, Sir John Rogersons Quay Dublin 2, Ireland, DO2R296 PAN : AAUCA-7873-Q ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1488/िदʟी/2025(िन.व. 2022-23) ITA No.1488/DEL/2025 (A.Y.2022-23) CDB Aviation Owner Ltd., 1 GQ, Georges Quay, Dublin 2, Ireland, D02Y098 PAN : AAJCC-2759-G ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 19 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1506/िदʟी/2025(िन.व. 2022-23) ITA No.1506/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1819 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3577-F ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1507/िदʟी/2025(िन.व. 2022-23) ITA No.1507/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1723 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3563-H ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1508/िदʟी/2025(िन.व. 2022-23) ITA No.1508/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1730 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3725-D ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 20 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1509/िदʟी/2025(िन.व. 2022-23) ITA No.1509/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1728 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3572-A ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1510/िदʟी/2025(िन.व. 2022-23) ITA No.1510/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1804 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3571-D ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1511/िदʟी/2025(िन.व. 2022-23) ITA No.1511/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1732 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3564-A ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 21 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1512/िदʟी/2025(िन.व. 2022-23) ITA No.1512/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1722 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3724-C ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1513/िदʟी/2025(िन.व. 2022-23) ITA No.1513/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1803 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3566-C ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1514 /िदʟी/2025(िन.व. 2022-23) ITA No.1514 /DEL/2025 (A.Y.2022-23) GY Aviation Lease 1801 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3569-P ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 22 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1515 /िदʟी/2025(िन.व. 2022-23) ITA No. 1515/DEL/2025 (A.Y.2022-23) GY Aviation Lease 1801 Co. Ltd., 1GQ, Georges Quay, Dublin 2, Ireland, DO2Y098 PAN : AAICG-3568-N ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1516/िदʟी/2025(िन.व. 2022-23) ITA No.1516/DEL/2025 (A.Y.2022-23) GY Aviation Leasse 1729 Co. Ltd., 1 GQ, Georges Quay, Dublin 2, Ireland, D02 Y098 PAN : AAICG-3562-G ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1517/िदʟी/2025(िन.व. 2022-23) ITA No.1517/DEL/2025 (A.Y.2022-23) GY Aviation Leasse 1731 Co. Ltd., 1 GQ, Georges Quay, Dublin 2, Ireland, D02 Y098 PAN : AAICG-3565-B ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(3)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 23 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1526/िदʟी/2025(िन.व. 2022-23) ITA No.1526/DEL/2025 (A.Y.2022-23) Blackbird Capital II Ltd. 3rd Floor, Kilmore House, Park Lane Spencer Block, Dublin-1, Ireland DO1XN99 PAN : AAJCB-8128-L ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1540/िदʟी/2025(िन.व. 2022-23) ITA No.1540/DEL/2025 (A.Y.2022-23) ALC Blarney Aircraft Ltd., 22, Earlsfort Terrace, Dublin 2, Ireland DO2E277 PAN : AAVCA-1356-K ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1631/िदʟी/2025(िन.व. 2022-23) ITA No.1631/DEL/2025 (A.Y.2022-23) IBJL Aircraft Lotus Co. Ltd., 32 Molesworth Street, Dublin 2, Ireland 999999 PAN : AAFCI-8412-G ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 2(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 24 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1855/िदʟी/2025(िन.व. 2022-23) ITA No.1855/DEL/2025 (A.Y.2022-23) Connolly Aviation Capital 2 Ltd., C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAICC-5229-Q ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 2(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1856/िदʟी/2025(िन.व. 2022-23) ITA No.1856/DEL/2025 (A.Y.2022-23) Jackson Square Aviation Ireland Ltd., (Successor of Connolly Aviation Capital 1 Ltd., And Connolly Aviation Capital 3 Ltd.) C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AAECJ-7129-G ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 2(1)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.1857/िदʟी/2025(िन.व. 2022-23) ITA No.1857/DEL/2025 (A.Y.2022-23) Primat Capital 2019-II Designated Activity Company (Successor of Primat Capital MSN 1957 Designated Activity Company) C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AALCP-8803-A ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 2(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 25 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आअसं.1858/िदʟी/2025(िन.व. 2022-23) ITA No.1858/DEL/2025 (A.Y.2022-23) Primat Capital 2019-II Designated Activity Company (Successor of Primat Capital MSN 2138 Designated Activity Company) C/o DMD Advocates, 30, Nizamuddin East, New Delhi 110013 PAN : AALCP-8804-H ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 2(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.2008/िदʟी/2025(िन.व. 2022-23) ITA No.2008/DEL/2025 (A.Y.2022-23) West III Engines (Ireland) Ltd., Connaught House, 1, Burlington Road, Dublin-4, Ireland-DO4C5Y6 PAN : AACCW-2539-D ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 3(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent आअसं.2022/िदʟी/2025(िन.व. 2022-23) ITA No.2022/DEL/2025 (A.Y.2022-23) West IV Engines (Ireland) Ltd., Connaught House, 1, Burlington Road, Dublin-4, Ireland-DO4C5Y6 PAN : AACCW-3658-D ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 3(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 26 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals SA No. 501/Del/2025 (Arising out of ITA No.1162/Del/2025, A.Y 2022-23) DAE Leasing (Ireland) 18 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1216-N ...... आवेदक/Applicant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent SA No. 502/Del/2025 (Arising out of ITA No.1192/Del/2025, A.Y 2022-23) DAE Leasing (Ireland) 19 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1214-Q ...... आवेदक/Applicant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent SA No. 503/Del/2025 (Arising out of ITA No.1193/Del/2025, A.Y 2022-23) AWAS 36698 Ireland Ltd. 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AATCA-4985-G ...... आवेदक/Applicant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 27 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals SA No. 504/Del/2025 (Arising out of ITA No.1194/Del/2025, A.Y 2022-23) AWAS 39427 Ireland Ltd. 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AATCA-5017-B ...... आवेदक/Applicant बनाम Vs. Deputy Commissioner of Income Tax, International Taxation, Circle 1(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent SA No. 505/Del/2025 (Arising out of ITA No.1195/Del/2025, A.Y 2022-23) DAE Leasing (Ireland) 4 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAFCD-9885-L ...... आवेदक/Applicant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent SA No. 506/Del/2025 (Arising out of ITA No.1196/Del/2025, A.Y 2022-23) DAE Leasing (Ireland) 17 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1088-A ...... आवेदक/Applicant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent Printed from counselvise.com 28 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals SA No. 507/Del/2025 (Arising out of ITA No.1197/Del/2025, A.Y 2022-23) DAE Leasing (Ireland) 20 Ltd., 70, Sir John Rogersons Quay, Dublin 2, DO2 R296, Ireland PAN : AAGCD-1215-R ...... आवेदक/Applicant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 1(2)(2), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by :Shri Percy Pardiwalla Sr. Advocate with Shri Madhur Agarwal, Advocate Shri Sachit Jolly, Sr. Advocate with Ms. Rashi Khanna, Ms. Viyusti Rawat, Shri Devansh Jain, Ms. Disha Jham, S/Shri Sohum Dua, Abudaya Shankar Bajpai & Hardeep singh Chawla, Advocates Shri Sriram Seshadri, Advocate Shri Ravi Sharma, Advocate with S/Shri Kshitij Bansal, Girish Gurnani, Kumar Saorabh Sharma, Mudit Kakaria, Hrithik Bhatt& Ishan Bhargava, Chartered Accountants ŮितवादीȪारा/Respondent by :Shri Indruj Singh Rai, Special Counsel for Revenue with S/Shri Sanjeev Menon, Junior Special Counsel & Gaurav Kumar, Advocate सुनवाई कᳱ ितिथ/ Date of hearing : 18/09/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 30/09/2025 Printed from counselvise.com 29 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals आदेश/ORDER PER BENCH: These bunch of 75 appeals by different assesses are taken up together for adjudication as the facts germane to the issues raised in these appeals are common and identical issues have been raised by the assesses in their respective appeals. 2. These appeals by the assesses/appellants are directed against the assessment orders passed in respective cases by the Assessing Officer (AO) u/s. 143(3) r.w.s 144C(13) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), for AY 2022-23. 3. Sh. Sachit Jolly, Sr. Advocate at the outset made statement at Bar that the assesses have inter-alia assailed validity of assessment order on the ground of limitation w.r.t. section 153 of the Act. The said ground is not pressed. In light of the statement made by ld. Senior Advocate, the ground of appeal challenging validity of assessment order on limitation in the appeals represented by him are dismissed as not pressed. 4. The common key issues that emerges in the appeals filed by different assesses are as under: (i) Lease entered into by the assesses/appellants as Lessors with the Lessees for leasing of aircrafts - Whether Operating lease or Financial lease?; (ii) Applicability of Multilateral Instruments (MLI) vis a vis India-Ireland Double Taxation Avoidance Agreement (DTAA); Printed from counselvise.com 30 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals (iii) Whether the assesses/appellants are eligible for benefit of Article 8 of India-Ireland DTAA?; & (iv) Whether the aircraft leased by the assesses/appellants to an Indian lessee constitutes a PE?. Apart from above four primary issues there are certain other consequential and peripheral issues arising in certain appeals which will be dealt with at a later stage, if need arises. 5. As pointed earlier the facts in all these appeals are similar, therefore, for the sake of convenience appeal in the case of Kosi Aviation Leasing Ltd. i.e. ITA No. 994/Del/2025 for AY 2022-23 is taken up as a lead case. Hence, the facts are narrated from the said appeal. The assessee company was incorporated in Ireland in the year 2017 and is a tax resident of Ireland. This fact has been acknowledged by the Revenue. The principle activity of the assessee company is leasing of commercial aircrafts. The assessee entered into an Aircraft Specific Lease Agreement on 19.10.2017 with M/s. Inter Globe Aviation Ltd. (Indigo) an Indian company for leasing of aircraft AIRBUS A320- 271N bearing Manufacturer’s Serial Number (MSN) 7961, initially for a period of 72 months which was subsequently extended to the period of 120 months. The said agreement is at page 158 to 311 of the paper book. Similar lease agreements have been entered between the other assesses as lessor and Indigo as lessee for leasing of A320 AIRBUS Aircrafts (the other lessees being Air India Ltd. and Spice Jet Ltd.). The case of the assessee is that the agreement between the assessee as lessor and Indigo as the lessee is that of an operating lease, hence, lease rentals received by the assessee are not taxable in India as they are covered under Article 8 of India-Ireland DTAA. Printed from counselvise.com 31 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 6. Per contra, the Assessing Officer treated the said lease as financial lease and held that the interest accruing on financing of Aircrafts and paid as part of lease rentals by the Indian lessee to the assessee (as lessor) are taxable in India under Article 11 of India-Ireland DTAA. Further, the Assessing Officer held that India -Ireland DTAA is a ‘Covered Tax Agreement’ under the Multilateral Convention to implement Tax Treaty measures to Prevent Base Erosion and Profit Shifting (BEPS) signed by Ireland and by India on 7/6/2017. In terms of Article 6 & 7 of MLI, the assessee must qualify Principal Purpose Test (PPT). The MLI has the effect of modifying India-Ireland DTAA, in light of the modified provisions of the India-Ireland DTAA, the amount received by the assessee/lessor of the aircraft is liable to tax in India. Hence, the present appeal by the assessee. 7. The key issues raised in the appeals have already been culled out and are mentioned above in paragraph 4 above. Our findings on each issue is as follows: (i) Operating Lease vs. Financial Lease: 8. Shri Sachit Jolly, Senior Advocate representing the assesses/appellants, submitted that the issue whether the lease agreement entered into between the lessees of the aircraft and the lessor(Indigo) is in the nature of Operating Lease or Financial Lease has already been considered by the Coordinate Bench of the Tribunal in the case of Celestial Aviation Trading 15 Ltd. vs. ACIT, [176 taxmann.com 902] (Delhi Trib.).The aircraft lease agreements entered between Irish lessor’s and the Indian lessee are uniform. This fact has not been disputed by the Department. The fact that the lessees are incorporated in Ireland and are holding valid TRC is also not in dispute. Referring to the aforesaid decision he submitted that the Coordinate Bench after examining the Terms and Conditions Printed from counselvise.com 32 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 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. 9. The ld. Counsel submits that the key feature of Financial Lease is the transfer of ownership of leased asset to the lessee at the end of the lease period. In the present case, there is no such condition in the lease agreement. The aircraft at the end of lease period is returned to the lessor who is thereafter at liberty to re-lease the aircraft either to the same lessee or to any other entity. The ld. Counsel further asserted that the DRP has erred in coming to the conclusion that the aircraft is transferred back to the assessee only after exhausting economic life of the asset. The DRP in an arbitrary manner and without any basis has determined economic life of the Aircraft as 8 years. The said findings of the DRP are contrary to the facts and documents available on record. As per DGCA Circular of 1993, the economic life of aircraft is 20 years or 60,000 landing/pressurization cycle. Whereas, in the present case the lease period even after extension is only 120 months i.e. 10 years. The aircraft has still remaining operational life of 10 years. Therefore, it cannot be said that the aircraft was utilized by the lessee for substantial economic life of the asset. 10. On the other hand, Shri Indruj Singh Rai, Special Counsel for the Department relied on the DRP directions dated 29.12.2024 and the impugned assessment order. Printed from counselvise.com 33 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 11. Both sides heard, orders of the authorities below examined. We find that the issue, whether the lease agreement between the Lessee (assessee) and the Lessor (Indigo) is financial lease or operating lease has been examined by the Coordinate Bench of the Tribunal in the case of Celestial Aviation Trading 15 Ltd. vs. ACIT (supra). After examining the lease agreements threadbare, the Coordinate Bench held as under: “12. We have heard the submissions made by both sides in extenso, perused the orders of authorities below and have considered the documents and decisions referred to during the course of submissions by the rival sides. The assessee in appeal has primarily assailed the addition of Rs.74,37,77,694/- on account of interest income taxable at the rate of 10% holding lease rentals received by the assessee out of Financial Lease. Undisputedly, the assessee is tax resident of Ireland and is engaged in the business of Leasing of Aircrafts. During the period relevant to assessment year under appeal, the assessee leased out three aircrafts bearing MSN 10689, 9382 and 9561 to Indigo. The case of the assessee is that the lease entered into between the assessee and Indigo is operating lease. Hence, the lease rentals received by the assessee from said lessee are not exigible to tax in India. The AO has re-characterized the nature of lease agreement and has held the lease to be finance lease and the lease rentals received by the assessee in the nature of interest taxable at the rate of 10% in accordance with Article 11 of India-Ireland DTAA. 13. To begin with, it would be relevant to refer to the Lease Agreement entered into between the assessee, the lessor and Indigo, the lessee. The assessee has placed on record Aircraft Specific Lease Agreement (in short 'ASLA) dated 15.04.2021 at page 162 to 209 of the paper book in respect of aircraft bearing MSN 10689. The assessee has also placed on record a copy of Aircrafts Lease Common Terms Agreement (CTA) dated 20.06.2006 entered into between GE Commercial Aviation Services Ltd. and Indigo. To understand the issue, both agreements have to be read together. Aircraft Specific Lease Agreement as the name suggests is in respect of a particular aircraft, whereas, the terms and conditions spelled out in Aircraft Lease Common Terms Agreement is the standard agreement which would be applicable to all the aircrafts taken on lease by Indigo. Printed from counselvise.com 34 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals A perusal of ASLA would show that the assessee is the Lessor and Indigo is the Lessee. The duration of agreement is for a period of 120 months extendable at the option of Lessee to be conveyed in writing to the Lessor before the expiry of 18 months prior to the original scheduled expiry date. Clause 3 of ASLA specifically states that the owner of the aircraft shall be the ‘Lessor’. In the entire ASLA there is no covenant which refers to the condition that after the end of duration of lease term, the ownership in aircraft shall be transferred to the lessee or the lessee at any point of time can exercise option to purchase the aircraft. Clause 10 of ASLA requires the Lessee to pay deposit in cash or in the form of Letter of Credit prior to delivery of aircraft. The Lessor shall return such deposit to the Lessee upon occurrence of the events specified in ASLA which includes, ‘on completion of the Return Occasion. “Return Occasion” is defined in Schedule-I of CTA as: “Return Occasion means the date on which the Aircraft is redelivered to Lessor in accordance with Clause 12”. Clause 12 of CTA reads as under: “12. RETURN OF AIRCRAFT 12.1 RETURN On the Expiry Date or redelivery of the Aircraft pursuant to Clause 13.2 or termination of the leasing of the Aircraft under the Lease, Lessee will, unless an Event of Loss has occurred, redeliver the Aircraft and the Aircraft Documents and Records at Lessee's expense to Lessor at the Redelivery Location, in accordance with the procedures and in compliance with the conditions set out in Schedule 6, free and clear of all Security Interests (other than Lessor Liens) and in a condition suitable for immediate operation under FAR Part 121 or as otherwise agreed by Lessor and Lessee and, in any case, qualifying for and having a valid and fully effective certificate of airworthiness issued by the Air Authority. If requested by Lessor, Lessee shall thereupon cause the Aircraft to be deregistered by the Air Authority Lessor shall reasonably cooperate (and shall procure that the Owner reasonably cooperates) with the Lessee in order to effect such deregistration.” The above clause makes it unambiguously clear that at the end of Lease period, Lessee is under obligation to return aircraft to the lessor. And on the return of aircraft the lessor shall refund the deposit. Printed from counselvise.com 35 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 14. Some of the vital covenants of the CTA are examined to determine the nature of lease as under:- (i) Schedule-I to CTA contains definitions. “Owner” has been defined as under: “Owner means the Person identified in the Aircraft Specific Lease Agreement as Owner or, subject to clause 14.3, such other person as Lessor may notify Lessee from time to time.” The owner as per ASLA is the assessee. (ii) Clause 8.4 of CTA deals with sub-leasing. “8.4 Subleasing (a) At no time prior to the Return Occasion will Lessee sub-lease, wet- lease or otherwise give possession of the Aircraft to any Person except: (i) when the prior written consent of Lessor has been obtained (not to be unreasonably withheld or delayed); or (ii) where the Aircraft is delivered to a manufacturer or maintenance facility for work to be done on it as required or permitted under the Lease; or (iv) to a Permitted Sub-Lessee as set forth in Clause 8.4(b); or (v) on a wet lease complying with the provisions of the following of this clause 8.4(a).” Clause 8.4 of the CTA restricts the lessee to sub-lease, wet lease or otherwise give possession of aircraft to any person except under certain conditions with prior consent of lessor. (iii) Clause 8.6 of CTA explains Ownership; Property Interest; Related matters. The relevant extract of the same is reproduced as under: “8.6 Ownership; Property Interests; Related Matters (a) Lessee will: Printed from counselvise.com 36 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals (i) fix and maintain Nameplates in a prominent position in the cockpit or cabin of the Aircraft and on each Engine stating \"This Aircraft/Engine is owned by (insert name of Owner and is leased to [insert name of Lessee] and may not be or remain in the possession of or be operated by, any other person without the prior written consent of linsert name of Lessor]\"; and (ii) take all reasonable steps to make sure that other relevant Persons know about the interests of Owner and Lessor as owner and lessor respectively in the Aircraft, including (without limitation) ensuring that wherever necessary as a matter of applicable Law in the State of Registry or in the jurisdiction of incorporation of any Permitted Sub-Lessee or the State of Incorporation, the interests of Lessor and Owner are duly registered in the International Registry. (b) Lessee will not: (i) represent that it is the owner of the Aircraft or that it has an economic interest (equivalent to ownership) in the Aircraft for Tax treatment or other purposes; (ii) take any action or fail to take any action if it might reasonably be expected to put Owner's and / or Lessor's rights at risk; (iii) represent to others that Owner or Lessor is associated with or responsible for the business activities and / or flight operations of Lessee; or (iv) allow the Aircraft or Owner's or Lessor's interest in it to become or remain subject to any Security Interest (other than a Permitted Lien); nor (v) consent to any interests conflicting with (whether or not taking priority over) the interests of Lessor or Owner to be registered at the International Registry without the prior written consent of Lessor or Owner (as the case may be).” The aforesaid covenant ensures that the name of the owner at all times is displayed on the aircraft. The reason for having this clause is obviously to display Printed from counselvise.com 37 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals the name of owner and lessee during the period of Lease Agreement which is substantially less than the Economic Life of the Aircraft. (iv) In Clause 8.13 Aircraft Lease Common Terms Agreement deals with title on equipment change, the same reads as under:- “8.13 Title on an Equipment Change Title to any equipment that becomes a Part or an Engine after the Delivery Date (whether by way of replacement, as the result of an Equipment Change or otherwise) shall, save as otherwise provided in a bill of sale or similar instrument delivered by Lessee in favour of Owner) vest in Owner solely by virtue of its attachment to the Airframe or an Engine and it shall then be subject to the Lease as if it were attached to the Aircraft at Delivery. If so requested by Lessor, Lessee will provide a properly executed bill of sale or similar instrument to evidence the vesting of title to any such equipment, free and clear of all Security Interests, in Owner.” A perusal of aforesaid Clause shows that in case of change in any equipment which is part of engine. The ownership in that equipment shall solely vest with the owner by virtue of its attachment of the airframe to the engine. (v) The Clause 9 of the CTA lays down the condition and responsibility on lessee to get the aircraft insured. A perusal of Clause 9.1 reveals that it is the responsibility of lessee to maintain the insurance in full force during the term of lease only. After the expiry of lease, the lessee is not responsible for the insurance of the aircraft. (vi) Clause 10 of CTA binds the lessee to indemnify the lessor. The relevant extract from the said clause is reproduced herein under:- 10. INDEMNITY 10.1 General (a) Lessee agrees to assume liability for and indemnifies each of the Indemnitees against and agrees to pay on demand Losses which an Indemnitee may suffer at any time whether directly or indirectly as a result of any act or omission in relation to: Printed from counselvise.com 38 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals (i)the ownership (but only to the extent arising out of the use, possession, leasing, operation or maintenance of the Aircraft by Lessee or any Permitted Sub-Lesse), maintenance, repair, possession, transfer of ownership or possession, import, export, registration, storage, modification, leasing, insurance, inspection, testing, design, sub-leasing, use, condition or other matters relating to the Aircraft; or (ii) any breach by Lessee of its obligations under the Lease. ‘Indemnity’ has been defined in Schedule-I as under:- Indemnitee means each of Lessor, Owner, GECC, GECAS, the Financing Parties and each of their respective successors and assigns, shareholders, subsidiaries, affiliates, partners, contractors, directors, officers, representative, servants, agents and employees. 13.4 Sale or Re-lease of Aircraft If an Event of Default occurs and is continuing, Lessor may sell or re-lease or otherwise deals with the Aircraft at such time and in such manner and on such terms as Lessor considers appropriate in its absolute discretion, free and clear of any interest of Lessee, as if the Lease had never been entered into. Thus, in the event of default the Lessee has to return aircraft to the Lessor and thereafter, the Lessor can sale or re-lease the aircraft. 14. From perusal of above terms and conditions it can be deduced that the ownership in the aircraft vest with the assessee/lessor at all the time during the period of lease. From conjoint reading of the terms and conditions of CTA and ASLA it emerges that there is no change in the ownership of the aircraft during the currency of lease agreement and at the end of agreement, the lessor continues to be the owner and the Lessee shall pay lease rentals to the assessee/lessor during lease period. 15. Now to understand the difference between financial lease and operating lease, we need to refer to the definition of ‘Financial Lease’ under other Acts as the expression financial lease and operating lease are not defined under the Printed from counselvise.com 39 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals Income Tax Act. Section 2(ma) of the SARFAESI Act, 2002 defines ‘financial lease’ as under:- “financial lease” means a lease under any lease agreement of tangible asset, other than negotiable instrument or negotiable document, for transfer of lessor's right therein to the lessee for a certain time in consideration of payment of agreed amount periodically and where the lessee becomes the owner of the such assets at the expiry of the term of lease or on payment of the agreed residual amount, as the case may be” The Recovery of Debts & Bankruptcy Act, 1993 defines financial lease as under:- ““financial lease\" means a lease under a lease agreement of tangible asset, other than negotiable instrument or negotiable document, for transfer of lessor's right therein to the lessee for a certain time in consideration of payment of agreed amount periodically and where lessee becomes the owner of the such assets at the expiry of the term of lease or on payment of the agreed residual amount, as the case may be” From the aforesaid definitions a subtle trait of financial lease can be identified i.e. \"At the end of the lease period, lessee becomes the owner of the leased asset.\" 16. In the instant case although the AO and the DRP have characterized the nature of lease as financial lease but both the authorities have ignored the fact that at no point of time, ownership in the asset i.e. aircraft is transferred to the lessee, which is the hallmark of financial lease. 17. The assessee has drawn our attention to RBI Circular No. 24 dated 01.03.2002 at page 234 of the paper book which deals with Import of Aircraft/Aircraft engine/Helicopter on lease basis. A perusal of RBI Circular No. 24 dated .01.02.2022 would show that there are separate conditions to be satisfied for acquiring aircraft on operating lease basis and under financial lease. For the sake of ready reference relevant excerpts from the said Circular are reproduced herein below:- “To All Authorized Dealers in Foreign Exchange Madam/Sirs, Printed from counselvise.com 40 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals Import of Aircraft/Aircraft Engine/ Helicopter on lease basis Authorised dealers are aware that the Reserve Bank is considering applications from airline companies and air taxi operators for payment of the lease rentals for import of aircraft/aircraft engine/helicopter on lease basis, based on the approval issued by the Director General of Civil Aviation (DGCA), Government of India. 2. It has been decided that authorised dealers may allow remittance of payment of lease rentals, opening of letter of credit towards security deposit etc. in respect of import of aircraft/aircraft engine/helicopter on operating lease basis, after verifying documents to show that necessary approval from the appropriate authorities, like Ministry of Civil Aviation/Director General of Civil aviation, Government of India has been obtained. In this connection attention is also invited to paragraph 8 of Annexure I to A.D.(M.A. Series) Circular No.11 dated May 16, 2000. 3. It is clarified that financial lease transaction i.e. the lease transaction containing option to purchase the asset at the end of the lease period will continue to require prior approval from the Reserve Bank of India.” The contention of the assessee is that the lessee is paying lease rentals in accordance with aforesaid RBI Circular and for the financial lease transaction where the ownership in the asset is transferred to the lessee, the lessee was required to take prior approval from the RBI, no such approval has been taken by the lessor in the present case. This fact remains un-rebutted. No material is available on record to suggest that the above RBI Circular has been violated by the lessor or the lessee. 18. Further, the ld. Counsel for the assessee has drawn our attention to the observations of the DRP in para 17.3 (ii) of the Directions, where the DRP has determined economic life of the Aircraft as 8 years. Referring to DGCA Circular issued in 1993 the DRP concluded that since lease of the aircraft covers substantial commercial life, therefore, the lease should be termed as financial lease. We find above observations of the DRP contrary to the facts on record and the DGCA Circular. The DGCA vide its communiqué dated 29.07.1996 (at pages 231 to 233 of the paper book) has prescribed economic life of an aircraft as 20 years or 60,000 landings/pressurization cycles. In the instant case the lease Printed from counselvise.com 41 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals agreement has been entered between the parties for a period of 120 months i.e. for 10 years, in other cases the lease period is for lesser period i.e. 72 months as is in the case of MSN 9382 (at page no. 210 to 275 of the paper book) and for MSN 9561 (at pages 276 to 341 of the paper book). Substantial economic life of the aircraft is still left after the end of lease period. Therefore, observations of the DRP on Economic Life of the aircraft being utilized under lease agreement is without any basis, hence, the conclusion to re-characterize nature of lease agreement is erroneous. 19. The ld. DR has vehemently argued that the lessee (Indigo) had originally entered into an agreement for purchase of aircraft with Airbus and it was subsequently that the present assessee stepped in at the time of delivery of aircraft and financed Indigo for acquiring the aircraft from Airbus. The ld. Counsel for the assessee to counter argument of the Revenue has brought to our notice the decision of Special Bench in the case Inter Globe Aviation Ltd. (Indigo) vs. ACIT (supra). Similar arguments were raised by the Revenue in said case. The questions for consideration before the Special Bench was: “(1) Whether FIA (Fleet Introductory Assistance) credit received by the Assessee from IAE and other equipment manufacturers is a Capital or revenue receipt arising out of the transaction? (2) Whether credits so received are taxable under section 28(i) or 28(iv) of the I.T. Act, 1961 or as a \"Commission\" income or \"Income from capital gains\"? (3) Whether the Ld. CIT(A) is right in making disallowance of Rs.268,91,48,934/- out of lease rental payments under section 37(1) of the I.T. Act, 1961? (4) Whether payment of Supplementary Lease Rent of Rs.328,09,64,412 l-is an allowable business expenditure and TDS is not deductible thereon?” 20. While answering the aforesaid questions the Special Bench took note of the agreement between Indigo and Howth Aircraft Leasing Ltd., assignee and observed that Indigo is not the owner of Aircraft and the Revenue failed to demonstrate that the lease is in the nature of operating lease. The Special Bench further observed that the lower authorities have admitted the fact that ownership Printed from counselvise.com 42 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals of the aircraft is with the lessor and depreciation on these aircraft is claimed by the lessor. The relevant extracts of findings of the Special Bench on this issue are reproduced herein below:- “31.4. It is relevant to note under this agreement that there is no consideration flowing from the lessor to the assessee for the assignment of right to acquire the aircraft from Airbus. Post above assignment, the assessee has acquired the aircraft on lease from the lessors. The parties have filed before us copies of lease i) agreement dated 15.12.2016 with M/s MeR. Aviation Limited (ii) agreement dated 14.06.2007 with M/s Genesis Acquisition Limited (paper book pages 481 to 589) (iii) agreement dated 04.07.2007 with Lara Leasing Ltd. (Paper book pages 590 to 600). It is the submission of the learned senior counsel for the assessee that all these agreements are in the nature of operating lease and that generally the terms of the agreement are for six years. This fact is also not disputed by the lower authorities. Learned Special Counsel for the Revenue has filed copies of the 03 Lease Agreements before us in his paper book. However, he was not able to demonstrate from any of these 03 Agreements that the nature of lease is Finance Lease and not Operating Lease. The Hon’ble Supreme Court in the case of Asea Brown Boveri Limited vs Industrial Finance Corporation of India Ltd., reported in 154 Taxman 512 (SC) and Association of Leasing & Financial Services vs Union of India reported in [2011] 2 scc 362 has differentiated and highlighted characteristics of both Operating Lease and Finance Lease. The Learned Special Counsel for the Revenue has not been able to demonstrate how the nature of present lease are not Operating Lease in accordance with the ratio highlighted in the above decisions cited (supra). The Assessing Officer also in his order accepts that the ownership of the aircraft is with the lessor and that the depreciation on these aircrafts, where the engine supplied by the lAE is fitted, is claimed by the lessor. We find the learned CIT(A) has also not disputed this fact and have held that \"since, the delivery schedule of Aircraft spread-over a very long period, the appellant normally replaces its old fleet with new fleet, after the expiry of lease period which is usually six year.\" [Emphasized by us] Printed from counselvise.com 43 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 21. Further, the Special Bench on plea taken by the Revenue that lease rents are taxable in India as interest in accordance with Article 11 of India-Ireland DTAA, held as under:- 44.1 We are not convinced by the submissions made by the ld. Special Counsel for the Revenue. It is an undisputed fact that the basic lease Rent of Rs.673.42 crores paid under the lease agreement is an allowable expenditure and its nature is that of \"Rent.\" In our opinion, the nature of supplementary lease rent cannot be treated otherwise as both these expenses are payments made under the same agreement for use of aircraft. The Id. Special Counsel for the Revenue has filed copies of 3 lease agreements before us in his paper book. However, from none of these agreements he has been able to demonstrate that the nature of lease is financial lease and not operating lease. We have already held above in the preceding paragraph that the nature of lease in the year under consideration is operating lease. Moreover, both the lower authorities have also accepted this fact. We are, therefore, not convinced by the arguments of the Id. Special Counsel for the Revenue that the present leases are financial merely because lease rent is determinable using LIBOR rate or that delivery of aircraft is taken by the assessee from Air Bus. We find that in the present case the aircrafts were leased for a period of six years. Therefore, the lease rent paid cannot be characterized as \"interest.\" We, therefore, find no merit in the above submissions raised by the Revenue.” [Emphasized by us] Once in the case of Indigo, the Revenue accepts that ownership in the Aircraft is with the lessor, the Revenue on similar set of agreements cannot take a reverse position in the case of lessee and argue that lessee is the owner. The Revenue cannot be allowed to approbate and reprobate on the same set of documents and re-characterize the nature of lease agreement to be a financial lease.” 12. The lease agreements considered by the Coordinate Bench in the case of Celestial Aviation Trading 15 Ltd. (supra) are substantially similar to the lease Printed from counselvise.com 44 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals agreement in the case under appeal. The primary reasons given by Coordinate Bench to hold that the lease agreement is in the nature of operating lease are summed up as under:- (i) The prominent character of the Financial Lease – i.e. transfer of ownership in the leased asset, is conspicuously absent in the Aircraft Specific Lease Agreement (ASLA). There is no provision of transfer of ownership in the leased asset i.e. aircraft, in ASLA at any stage. (ii) As per RBI Circular No.24 (supra) in the case of financial lease i.e. where in the lease agreement there is option to purchase asset at the end of lease period, prior approval is required from RBI. No such approval was ever sought and no such approval has been brought on record. (iii) As per DGCA the life span of an aircraft is 20 years or 60,000 pressurization/landing cycles. In the present case the aircraft has been leased for a period of 120 months i.e. 10 years. Thus, even after the end of lease period substantial economic life of the asset i.e. the aircraft, is still available for further lease. (iv) The Department in the case of Indigo (lessee) has accepted the fact that the nature of lease is that of operating lease. (v) The Special Bench of Tribunal in the case of lessee, Inter Globe Aviation Ltd. (Indigo) (supra) has held the nature of lease as operating lease. In the case of lessor/appellant, on same set of agreements and facts, the nature of lease cannot be recharacterized as financial lease. Printed from counselvise.com 45 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 13. The Revenue has not been able to distinguish either facts or findings of the Coordinate Bench in the case of Celestial Aviation Trading 15 Ltd. vs ACIT (supra). Following the aforesaid decision, for parity of reasons we hold that the agreement to lease aircrafts is in the nature of operating lease and not financial lease. The issue is thus decided in favour of the assessee and against the department. (ii) Applicability of MLI to India-Ireland DTAA: 14. The next issue for our consideration is applicability of Article 6 & 7 of MLI. The contention of Revenue is that India and Ireland have ratified MLI and India has notified MLI on 9/8/2019. Since, India-Ireland DTAA is a Covered Tax Agreement, provisions of Article 6 & 7 would apply automatically. The ld. Counsel for the assessee at the outset placing reliance on the decision rendered in the case of Sky High Appeal XLIII Leasing Company Ltd. vs ACIT, 177 taxmann.com 579 (Mum Trib.) submitted that the Coordinate Bench of the Tribunal has examined the issue in detail. The Tribunal in the said case has held that in the absence of specific notification u/s. 90(1) of the Act, MLI does not become a binding force under Domestic law and is not legally enforceable. The general omnibus notification issued on 09/8/2019, is not sufficient to implement the modifications to the India-Ireland DTAA as a result of MLI. A separate notification u/s. 90(1) of the Act is mandatorily required for each country to validate the amendments in the DTAA. The ld. Counsel further submitted that merely for the reason that India- Ireland DTAA is ‘Covered Tax Agreement’ (CTA) the modifications as a result of MLI would not be validated automatically. A separate notification incorporating consequential amendments to the tax treaty is necessary. Article 6 and 7 of MLI cannot be applied unless they are backed by domestic Legislation in the form of Printed from counselvise.com 46 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals notification u/s.90(1) of the Act. The ld. Counsel submitted that the order of Mumbai Bench of the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. vs ACIT (supra) is quite comprehensive and covers all possible facets on the issue arising on applicability of MLI. 15. Per contra, the ld. Special Counsel for the Department submits that the decision rendered by the Mumbai Bench of Tribunal is distinguishable as certain vital aspects have not been considered by Mumbai Bench while dealing with the issue of applicability of MLI. The ld. Special Counsel for the Department submits that MLI is effective and is in force within the Union of India from 01.10.2019, pursuant to notification u/s. 90(1) of the Act dated 09.08.2019. Referring to Explanatory Statement to the Multilateral Convention To Implement Tax Treaty related measures to prevent Base Erosion Profit Shifting (BEPS), he submitted that before deciding the issue it would be first relevant to understand the need of having MLI instead of separate agreements with each Sovereign to modify each DTAA separately. He submitted that implementation of the final BEPS package requires changes to model tax conventions, as well as to the bilateral tax treaties based on those model conventions. Since, the number of bilateral treaties was quite large, it would be cumbersome and time consuming to make bilateral updates to each treaty separately. Thus, it would limit the effectiveness of multilateral efforts. In this backdrop MLI was conceptualized and the same has been universally accepted. He further submitted that MLI does not function in the same way as amending protocol to a single existing treaty. MLI would run parallel to DTAA. MLI works on matching principles. Countries could state their own position and probable list of countries to whom MLI would apply. Only those provisions of an existing treaty would be modified, where there was a match of Printed from counselvise.com 47 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals the positions set out by two countries to the MLI. Where there is no match, the MLI provisions would not modify the CTA. Referring to Compatibility Clause of Explanatory Statement to the Multilateral Convention, he submits that certain provisions of the conventions may overlap with the provisions of Covered Tax Agreements. Where there is a conflict with existing provisions, it is addressed through one or more compatibility clauses. He pointed that provisions of MLI would supersede DTAA provisions wherever there is a conflict between the two and where CTA does not contain relevant provisions as required by MLI, MLI provides for the same. 15.1. Referring to section 90(1) of the Act, the ld. Counsel submits that section 90(1) of the Act empowers the Central Government to enter into an agreement with another Government, which is to be followed by a notification in official gazette for implementation. Without prejudice to the fact that MLI only seeks to modify existing bilateral tax treaties i.e. CTA, section 90(1) of the Act empowers entering into Multilateral Agreements with multiple governments. Section 90(1) of the Act does not cast any restrictions on the Central Government regarding the form, manner and nature of the notification including providing for a future date of coming into effect of the provisions of such notification. MLI provides for anti- avoidance under existing DTAA and only seeks to limit the concessions given under the existing DTAA hence, does not per se require Section 90(1) notification to limit the existing concessions granted i.e. the Central Government does not need further right to limit what it has right to grant in first place. Nonetheless, the Central Government has issued the notification dated 09.08.2019 to implement the MLI. Printed from counselvise.com 48 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 15.2. The ld. Special Counsel for the Department/Respondent further submitted that the past practice is that the Central government by way of a single omnibus notification under section 90(1)of the Act have notified MLI. For example: - Agreement among the Governments of SAARC Member States was brought into effect in India by single notification dated 10.01.2011 u/s 90(1). No separate notification qua each country was made. The SAARC agreement had similar features to MLI including entry into force, depository, effective at a future date, expansion of scope for certain countries etc. - Another Multilateral Convention on Mutual Administrative Assistance in Tax Matter (MAAC) was signed by India at OECD Headquarters on 26/1/2012. The said MLI was ratified and deposited in OECD and thereafter was notified u/s 90(1) on 28/8/2012. No separate notification was issued for each country. - Another Multilateral Competent Authority Agreement(CBCR)was signed by India on 12/5/2016 and notified u/s 286(9) on 28.07.2017, which further refers to agreement u/s 90(1), that had significant impact on rights of taxpayers and casted severe reporting obligations followed by severe penalties in case of default. 15.3. Sh. Indruj Singh further submitted that the global practice amongst most dualist and monist countries is to assimilate MLI into their domestic law by way of single omnibus notification. In fact, countries like Ireland, South Africa etc. also notified MLI under delegated legislative provisions, akin to section 90(1) of the Act. Ireland’s MLI position was ratified on 29.01.2019 and notified on 26.10.2018 to have entry into force from 01.05.2019 i.e. before India ratified and notified its Printed from counselvise.com 49 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals own MLI position. Therefore, at the time of India's notification, the MLI provisions that matched and modified the Indo-Irish DTAA were already known. 15.4 The ld. Counsel for the Department to buttress his argument, referred to the Note by the OECD Directorate of Legal Affairs at page 628 to 636 of the paper book – Vol-Iand submitted that OECD also clarifies that MLI is a multilateral treaty, to be applied alongside existing bilateral tax treaties modifying their applications. The bilateral treaties can be modified in a synchronized and consistent way in order to swiftly implement the tax treaties related BEPS measures. He specifically referred to para 11 to 17 of the aforesaid note by the OECD. The ld. Counsel to explain how the MLI works refer to the flow charts at pages 637 and 638 of the paper book wherein step by step procedure is explained and also refer to flow chart covering Article 7 relating to PPT at page 647 of the paper book Volume I furnished by the Department. 15.5 Shri Indruj Singh Rai, Special Counsel for the Department referring to the judgment rendered by Hon’ble Apex Court in the case of Assessing Officer (International Taxation) vs. Nestle SA, 458 ITR 756 submitted that the Hon’ble Court in the said case has given emphasis on the “treaty practice” being followed for issue of separate notifications for allowing benefit pursuant to Most Favored Nation (MFN) clause provided in protocol. Whereas, in the present case as mentioned earlier there is no practice of issuing separate notification for each country after signing of MLI. Thus, the decision rendered in the case of Nestle SA (supra) will have no impact on the MLI as the “treaty practice” in the case of MLI is to issue signal omnibus notification and no separate notifications are issued for enforcement of MLI for each country. Thus, the observation of the Hon’ble Supreme Court of India on requirement of a subsequent notification was only in Printed from counselvise.com 50 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals the specific facts and pattern with respect to implementation of MFN clause and not for all amendments which are already notified once u/s. 90(1) of the Act. The ld. Special Counsel submitted that the ratio laid down in Nestle SA (supra) rather supports the case of the respondent/Revenue as there is a specific notification u/s. 90(1) of the Act dated 09.08.2019 giving effect to the MLI and also supports the historic behavior and precedent of single omnibus notification for MLI. For example: SAARC agreement, MAAC and CBCR. He pointed that in the case of Sky High Appeal XLIII Leasing Company Ltd. vs. ACIT (supra), the Bench was not assisted with the submissions and was not made aware of the practice of issuing omnibus notification for MLI. 15.6 The ld. Counsel for the Department further referred to the Finance Act, 2020, whereby provisions of section 90 of the Act were amended. He pointed that even Finance Act, 2020, recognizes that MLI is in force w.e.f. Financial Year 2020- 21 onwards. 15.7 The ld. Counsel for the Department finally submitted that the coordinate Bench of the Tribunal in the case of SC Lowy P.I. (LUX) SARL vs. ACIT 170 taxmann.com 475 (Delhi Trib.) adjudicated the issue where reference was made to MLI and PPT by the Department. The Bench did not question validity of MLI. 16. Rebutting the submissions made by ld. Special Counsel on behalf of the Department, Shri Sachit Jolly asserted that the same very set of arguments qua single omnibus notification u/s. 90(1) of the Act were made in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra). The written submissions filed by the Department were taken note of and reproduced in the order. The Tribunal after examining the issue rejected all the arguments advanced by the Department Printed from counselvise.com 51 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals and followed the ratio laid down in the case of Nestle SA (supra). The Revenue in the present set of appeals have all together taken a stand inverted to what was taken in the case of Nestle SA (supra). The ld. Counsel referring to the judgment in the case of Nestle SA (supra) submits that the Hon’ble Apex Court in an unambiguous terms has held that a notification u/s 90(1) of the Act is necessary and a mandatory condition for a Court, Authority or Tribunal to give effect to DTAA or any protocol changing its terms and conditions, which has the effect of altering the existing provisions of law. The MLI has the effect of modifying/altering bilateral tax treaties. The amendments to bilateral tax treaty consequent to the terms of MLI are not enforceable till the time they’re notified. 16.1 He further submitted that the MLIs referred by the Special Counsel for the Department are prior to the judgment rendered in the case Nestle SA (supra) and were never subjected to judicial scrutiny. Nevertheless, the said MLIs are distinguishable. The ld. Counsel pointed that SAARC agreement notified on 10/1/2012 is altogether a different species of agreement. All the parties to the agreement have signed the agreement on the same day. The taxes to be modified are identified, the date from which it is applicable is also identified and the scope of amendments were also identified. There was no scope of any uncertainty regarding the language or effective date for amendments sought to be made. In respect of CbCR he submitted that the said agreement was notified u/s 286(9) of the Act. The said section allows notification of Multilateral Instruments, as the section defines agreement to mean a combination of all existing DTAAs. In any case said MLI does not alter tax liability of any taxpayer. 16.2 Shri Jolly submitted that the Hon’ble Apex Court in penultimate paragraph of the judgement in the case of Nestle SA (supra) emphatically held that a Printed from counselvise.com 52 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals separate notification is necessary u/s 90(1) of the Act to give effect to any DTAA or where any protocol has changed the terms and conditions of any existing provision of law. Therefore, to say that the judgment rendered in the case of Nestle SA (supra) was only with respect to past conventions would be misleading. By nature, MLI is a unilateral instrument that depends on matching principles being satisfied by the respective treaty partner resulting in amendment to existing DTAA on a future date that is yet to be known. He submits that MLI has the effect of amending the DTAA provisions and after each amendment varying the terms and conditions, the DTAA is required to be notified under the provisions of section 90(1) of the Act. 16.3. On the argument of global practice in notifying MLI by single notification Sh. Jolly submitted that the OECD in the note itself states that the position in international law and domestic law is entirely different. Referring to para 28 to 31 of OECD Note he pointed that OECD itself suggested that whatever has been proposed by the OECD BEPS project or the international practice will not dilute or obviate the requirement in domestic legal system. Thus, how to give effect to amendment/modification to the existing DTAA caused by MLI under domestic law is left to each country. 16.4 The learned counsel for the assessee finally submitted that if the contention of Department with respect to Memorandum explaining amendment to section 90 by the Finance Act, 2020 is accepted, the notification of 2019 will not survive, as it is prior to the said amendment and on the date of notification there was no provision under law for notification of MLI. Printed from counselvise.com 53 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 17. Shri Percy Pardiwalla, Senior Advocate supplementing the submissions made by Shri Sachit Jolly Sr. Advocate, filed written submissions. The relevant excerpts from the same are asunder:- “Rebuttal on single omnibus notification as past practice: All the above notifications were issued prior to Nestle SA (supra) decision and have not been tested in light of the legal principles laid down by the Hon'ble Supreme Court in the said case. They cannot, therefore, be relied on to circumvent the mandatory requirement of specific notification of consequences of MLl on tax treaties as required under the provisions of section 90(1) of the Act. Without prejudice, the Appellant submits that the notifications mentioned by the Ld. DR cannot be compared to the MLI which by its very nature drastically amends the scope and ambit of the provisions of the tax treaty and the requirement of a notification under section 90(1) of the Act is mandatory: a. The SAARC agreement is not comparable with the MLl and its operation. The SAARC agreement was signed by all the Member States, fully agreeing to the terms of the Agreement stated therein. Therefore, there is no uncertainty / ambiguity in the application of the provisions of the SAARC agreement, unlike MLI which works on a matching principle. b. The Multilateral Convention on Mutual Administrative Assistance in Tax Matter is primarily an administrative tool for tax authorities to co-operate and share information. It does not amend or override existing bilateral tax treaties and does not change substantive rights and obligations of taxpayers under the tax treaties. c. The MCAA does not amend or override existing tax treaties. It is an administrative arrangement for information exchange, enabled by the Convention, and operates in parallel to bilateral treaties. There is no direct modification of taxpayer rights or obligations under existing tax treaties. In fact, the said notification was issued under section 286 of the Act and is not a notification under section 90(1) of the Act. Furthermore, the contention of the Ld. DR that principles laid down in Nestle SA (Supra) give primacy to'past practice' is also untenable. While the said case was decided in the backdrop of past FN practice, such practice was always carried out Printed from counselvise.com 54 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals strictly in line with section 90(1) of the Act. There was no conflict between past practice and statutory mandate in the MFN context. Unlike this, in instant case the Revenue seeks to apply the MLI without any notification of its consequence on the Tax Treaty as required by section 90(1) of the Act, which is contrary to the provisions of the Act as well as the principle enunciated by the Hon'ble Supreme Court. Rebuttal on global practice: Practices in foreign jurisdictions cannot determine India's legal position on treaty implementation. The Hon'ble Supreme Court in Nestle SA (supra) (Para 46) made it abundantly clear that enforceability in India depends solely on compliance with section 90(1) of the Act. Further, Para 31 of the OECD's Legal Note, relied upon by the Ld. DR (Pg 635 of the Ld. DR's compilation (Vol 1)) itself records that treaty partners need not to have identical domestic procedures for the MLI to operate and the implementation depends on each country's legal framework. The fact that some countries use omnibus notification to implement the consequences of MLI on tax treaties does not dilute India's requirement of separate notifications of consequences of MLI for the respective treaties under section 90(1) of the Act. Rebuttal on Note by the OECD As held by the Hon'ble Supreme Court in Nestle SA (supra) and also considered by the Hon'ble Tribunal in the case of Sky High (supra), a notification under section 90(1) of the Act incorporating the changes to the Tax Treaty by the MLI is mandatory as it has the effect of amending the bilateral tax treaties to the extent of the consensus of both the contracting states The practice suggested by the OCD cannot override the express provisions of the Act. Rebuttal on Memorandum to the Finance Act, 2020: The reliance on Memorandum to Finance Act, 2020 is misplaced. The Memorandum merely notes MLI ratification and aligns section 90(1) with BEPS objectives. It nowhere dispenses with the statutory requirement of treaty-specific notifications as confirmed by the Hon'ble Supreme Court in Nestle SA (Supra). Printed from counselvise.com 55 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 5. Without prejudice to the above submission, the Appellants also humbly submits that Notification No. S.O.2887(E) dated 09.08.2019 ('MLI Notification'), issued by the Central Government under section 90(1) of the Act, purporting to give effect to the provisions of the MLI is not enforceable, as it is invalidly issued 6. Subsequent to the issuance of the MLI Notification in 2019, the provisions of section 90(1)(b) of the Act were amended vide the Finance Act, 2020, with effect from 1 April 2021 which introduces a substantive limitation by inserting the following words into Section 90(1)(b) of the Act: \"...for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, [without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty- shopping arrangements aimed at obtaining reliefs provided in the said agreement for the indirect benefit to residents of any other country or territory)] The above amendment fundamentally alters the statutory basis for the Central Government's power to enter into and notify agreements for the avoidance of double taxation. 7. The Memorandum to the Finance Bill, 2020, explains the need for the said amendment. It explains that India has signed, ratified and deposited the Multilateral Convention to bring into force the MLI in India, which will modify India's tax treaties to curb revenue loss through treaty abuse and base erosion and profit shifting strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out, and will be applied alongside existing tax treaties, modifying their application in order to implement the BEPS measures. Accordingly, it is provided that an amendment to section 90 of the Act is necessary in order to achieve the said purpose. 8. The intent of the subsequent amendment to section 90 of the Act, as explained in the Memorandum, makes it clear that the MLI Notification issued in August 2019, is invalid and does not have the legal sanction to restrict the tax treaty benefits under the existing and notified agreements as the right to enter into an agreement to curb non-taxation or reduced taxation through tax evasion or Printed from counselvise.com 56 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals avoidance, was only given once the amendment in section 90 of the Act was made. 9. In light of the foregoing, it is submitted that MLI Notification is invalid and, further, in any event, it is not enforceable in absence of a separate notification for consequences of MLI as agreed upon between the contracting states as can be discerned from the respective instruments of ratification and incorporation into the synthesized text on the Tax Treaty under section 90(1) of the Act. This position has been conclusively affirmed by the Hon'ble Supreme Court in Nestle SA (Supra) and also followed by the Hon'ble Mumbai Bench in Sky High Appeal XVIII Leasing Company Limited (supra).” 18. Here we would also like to mention that Sh. Ravi Sharma Advocate and Sh. Sriram Seshadri, Advocate have also filed their respective written submissions which are largely on the same lines on which Sh. Sachit Jolly has made his arguments, hence, for the sake of brevity and to avoid repetitiveness their submissions are not reproduced in the order, though, they are taken on record. 19. We have extensively heard both sides on the issue of applicability of MLI. India signed the MLI in 2017 and deposited its instrument of ratification with the OECD in June 2019, along with its final list of choices and reservations. It is an undisputed fact that India-Ireland DTAA is a ‘Covered Tax Agreement’ in the list of documents convey to the OECD. India has notified MLI vide single omnibus notification dated 09/8/2019. The issue for consideration before us is; Whether the MLI lacks legal binding force in the absence of specific notification country wise or the omnibus notification already issued on 09.08.2019 is sufficient to invoke the provisions of MLI that has the effect of modifying/altering tax treaty (in the present case India-Ireland DTAA)?. Printed from counselvise.com 57 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 20. The issue of applicability of MLI and its impact on India-Ireland DTAA has already been considered in detail by Mumbai Bench of the Tribunal in the case of Sky High Appeal XVIII Leasing Company Limited (supra). The Special Counsel for the Revenue fairly admitted that the Mumbai Bench of the Tribunal has decided the issue but he raised his reservations that certain vital aspects were not brought to notice of the Bench when the matter was argued. The crucial aspects not brought to the notice of Bench could have changed the course of decision. He made thus made his submissions on the points which accorded to him were not considered/brought to notice of the Bench in the case of Sky High Appeal XVIII Leasing Company Limited (supra). 21. We find that the Coordinate Bench in a comprehensive order after considering submissions of rival sides, examining provisions of section 90(1) of the Act, India-Ireland DTAA, notification dated 09.08.2019 vide which MLI was notified, need and objective of MLI and the ratio laid down by the Hon’ble Supreme Court of India in the case of Nestle SA (supra) held as under:- “38. Thus, the Hon'ble Supreme Court in Nestle has rendered a landmark ruling on the constitutional status and domestic enforceability of Double Taxation Avoidance Agreements (DTAAs), emphatically clarifying that the assimilation of such international instruments into the Indian legal framework is neither automatic nor mechanical. A DTAA, even when duly signed and ratified, does not per se acquire enforceability within the municipal legal system, unless and until it is expressly brought into force through a notification issued under Section 90(1) of the Income-tax Act. In the absence of such notification, treaty provisions, however binding they may be in international law do not confer enforceable rights upon taxpayers before Indian courts and tribunals. 39. The Court further rejected the contention that benefits granted to a foreign State at a subsequent point of time, whether on account of its accession to the OECD or pursuant to later negotiations and protocols, are automatically grafted Printed from counselvise.com 58 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals onto an earlier DTAA with another State. Unlike domestic legislation, which emanates from parliamentary will, treaties are the product of diplomatic engagement and negotiated consensus, reflecting the constitutional and economic realities of the contracting States. Each DTAA is therefore a self- contained instrument, the interpretation of which must remain tethered to its own text, structure and definitional scope; it cannot be expanded by implication merely because similar expressions appear in another DTAA or because a party has subsequently joined a multilateral organisation. Accordingly, the Court held that any extension of treaty benefits to a new OECD member State can take effect only if India consciously accepts such extension, communicates this position to the treaty partner, and issues a fresh notification under Section 90(1). In the absence of such a deliberate and notified amendment, no parity of treatment or \"trigger- event-driven\" integration can be presumed. In crystallising these principles, the Supreme Court has reaffirmed that: • Parliament retains the exclusive authority to legislate upon treaty provisions where they affect the rights of citizens; • notification under Section 90(1) is a mandatory precondition for the enforceability of any DTAA or protocol that alters existing provisions of law; and • domestic courts cannot apply a rigid black-letter interpretive approach, but must account for the constitutional, diplomatic and practical realities attending upon different treaties. In essence, Nestle lays down that treaty benefits do not cascade automatically by reason of external developments such as OECD membership or subsequent bilateral arrangements, and that only a deliberate, notified act of incorporation can elevate such benefits into enforceable domestic law. 40. In our considered view, the factual matrix of the present case bears a close parallel to that examined by the Hon'ble Supreme Court in Nestle SA (supra). In that decision, as in the matter before us, the original bilateral tax treaty in this case the India-Ireland DTAA stood duly notified. Equally, the subsequent multilateral instrument (MLI) had also been formally notified. The pivotal question, however, was not the mere existence of notifications in respect of both instruments, but rather whether the consequential modification of the earlier Printed from counselvise.com 59 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals DTAA, brought about by virtue of the later multilateral instrument, had itself been separately notified for the purposes of domestic application. On the material available on record, it is expressly admitted that although both the India-Ireland DTAA and the MLI have been notified, \"the consequence/impact of the MLI on the India Ireland DTAA is not admittedly and separately notified.\" 41. The ratio of the Supreme Court in Nestle SA (supra) leaves no room for ambiguity on this issue. Summarising its conclusions in paragraph 88 of the judgment, the Court emphatically held that a notification under Section 90(1) of the Income-tax Act is an indispensable and mandatory condition for any court, authority or tribunal to give effect to a Double Taxation Avoidance Agreement, or to any protocol or instrument that purports to alter the terms or conditions of such agreement. Put differently, any subsequent treaty-based modification of an existing DTAA can be enforced under municipal law only where a specific Section 90(1) notification has been issued incorporating that modification into Indian law. 42. The Revenue has argued that, since the MLI has been duly notified and the India-Ireland DTAA is a \"Covered Tax Agreement\", Articles 6 and 7 (i.e., the PPT suite) automatically apply. With respect, this contention cannot be reconciled with the constitutional and statutory mandate articulated by the Hon'ble Supreme Court in Nestle SA. Indeed, the Revenue's own explanatory note acknowledges that the MLI \"operates to modify tax treaties\", while at the same time conceding that it is \"not an amending protocol\", and that the widely circulated \"synthesised text\" is not in itself a legally binding document. 43. In truth, the so-called synthesised text which incorporates the MLI provisions into the covered tax agreement is nothing more than an expository compilation intended to facilitate understanding. It has neither been notified in the Official Gazette under Section 90(1) nor admitted by the Revenue to be a binding legal instrument. The reason for this is self-evident, unless and until the MLI-based modifications themselves are separately notified, a step which, in light of the principles laid down in Nestle SA, is a mandatory pre-condition the synthesised text, however convenient for reference, cannot be treated as a source of enforceable law. Consequently, the Department cannot rely on the synthesised text to apply the PPT provisions, for that text has no greater legal sanctity than the unincorporated MLI provisions themselves. Printed from counselvise.com 60 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 44. The structural design of the MLI itself reinforces this conclusion. Under its operational framework, each contracting State is required to deposit with the OECD a list of bilateral treaties that it wishes to designate as \"covered agreements\" along with its specific positions and reservations. The effectiveness of those positions, however, remains contingent upon the principle of reciprocity and, most importantly, upon the manner in which each State gives effect to such positions under its own domestic law. It is, therefore, not enough that India has merely notified the MLI or identified the India-Ireland DTAA as a covered tax agreement. Unless the changes contemplated in the MLI are expressly incorporated into Indian law through the statutory mechanism, namely, a specific notification under Section 90(1) those changes cannot operate to alter the manner in which the domestic authorities apply the DTAA. That position now constitutes the law of the land by virtue of the judgment of the Hon'ble Supreme Court in Nestle SA, which makes it clear that neither the MLI nor any synthesised text can have domestic legal efficacy unless duly notified under Section 90(1) of the Act. 45. Against this settled backdrop, the approach adopted by the Assessing Officer and the learned DRP in treating the Principal Purpose Test under the MLI as self- executing in relation to the India-Ireland DTAA is wholly unsustainable. Not only does it run counter to the Revenue's own description of the MLI, namely, that it \"modifies existing treaties\" but it is also directly inconsistent with the binding precedent of the Supreme Court. The contradiction is plain: the Revenue recognises that the MLI modifies tax treaties, yet it sidesteps the very legal requirement that Nestle SA describes as an indispensable precondition, namely, a separate Section 90(1) notification incorporating those treaty modifications into Indian law. 46. When the ratio of Nestle SA (supra) is applied to the facts of the present case, the inevitable conclusion is that the MLI cannot be invoked to curtail or otherwise restrict the benefits available to the assessee under the India-Ireland DTAA unless the specific consequence of the MLI has been notified under Section 90(1). In the absence of such notification, neither the bare provisions of the MLI nor any synthesised text reflecting its intended application can form the basis for altering the application of an already notified DTAA. Printed from counselvise.com 61 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 47. We are therefore constrained to hold, as a threshold matter, that Articles 6 and 7 of the MLI cannot be invoked against the assessee in the present assessment year, inasmuch as there is no Section 90(1) notification incorporating those provisions into the India-Ireland DTAA. Consequently, the Revenue's attempt to deny treaty benefits by invoking the MLI's Principal Purpose Test must, on this ground alone, fail. The assessment must proceed on the footing that the MLI has no application in the absence of a statutorily issued notification under Section 90(1). 48. Having thus resolved the threshold question in favour of the assessee, it bears reiteration that this conclusion is not reached on a technicality divorced from substance, but rests on the very constitutional and statutory architecture governing how international agreements enter the domestic legal order. The Hon'ble Supreme Court in Nestle SA (supra) did not propound an abstract procedural nicety; it articulated a substantive safeguard that treaty modifications altering existing rights or liabilities cannot be judicially enforced until procedure is followed in line with Section 90(1) of the Act. 49. This safeguard is especially critical in the MLI context, where multiple jurisdictions opt into certain provisions, reserve on others, and often apply them with modifications or deferrals. Without a domestic notification that identifies the exact contours of the modification to a given DTAA, there is a real risk that an Indian court or authority may apply an MLI provision in a form or scope that was never domestically assented to. Section 90(1) operates as a bulwark against that risk, ensuring that only those changes consciously adopted into Indian law acquire binding force. 50. We also note that the OECD's own commentary on the MLI recognises the role of each jurisdiction's domestic law in determining how the MLI takes effect. It expressly acknowledges that a \"synthesised text\" is a non-binding explanatory aid; it does not, and cannot, supplant the requirement for a legally valid act of incorporation in each jurisdiction. Thus, even on the OECD's own terms, the Revenue's reliance on a non-notified synthesised text is misplaced. 51. The Department's suggestion that the MLI, once notified in general terms, becomes immediately self-executing vis-a-vis all covered agreements, would in effect render otiose the careful statutory scheme of Section 90(1). That Printed from counselvise.com 62 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals interpretation would also run counter to the binding pronouncement in Nestle SA, which squarely holds that each modification with the effect of altering existing law must itself be the subject of a distinct notification. 52. We are conscious that the MLI was conceived as a swift and efficient vehicle for implementing the BEPS treaty-related measures across jurisdictions without the need to bilaterally renegotiate each covered agreement. However, efficiency in the multilateral sphere cannot displace the domestic rule of law requirement that any such modification be consciously received into municipal law through the statutorily prescribed process. 53. The principles enunciated by the Hon'ble Supreme Court in Nestle SA (supra) apply to the facts of the present case with full force. • First, the India-Ireland DTAA, which was duly notified in 2002, continues to remain the operative and governing instrument for determining the tax treatment between the two Contracting States. Under domestic law, this position endures unless and until any modification to the DTAA is expressly incorporated by way of a separate notification issued under Section 90(1) of the Income-tax Act. • Second, although the Multilateral Instrument was notified in India in 2019, the mere fact of such notification does not, by itself, alter, curtail or restrict the operative provisions of the India-Ireland DTAA. Such alteration or restriction can take effect only where the specific provisions of the MLI sought to be applied have been expressly incorporated into domestic law through a distinct notification under Section 90(1). • Third, and most material to the present dispute, in the absence of any domestic notification incorporating Articles 6 and 7 of the MLI into the India-Ireland DTAA, the Principal Purpose Test contained in those Articles cannot be invoked against the assessee. In light of the foregoing, we hold that the absence of a specific Section 90(1) notification incorporating Articles 6 and 7 of the MLI into the India-Ireland DTAA is fatal to the Revenue's case. Consequently, the invocation of the MLI to deny the treaty benefits otherwise available under the DTAA cannot be upheld in law.” Printed from counselvise.com 63 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 22. The Coordinate Bench following the ratio laid down in Nestle SA(supra) held that MLI has the effect of modifying/altering India-Ireland DTAA. For giving effect to the altered/modified DTAA notification u/s 90 (1) of the Act is mandatory. Omnibus single notification issued on 9/8/2019 u/s 90(1) does not assimilate DTAA modified/altered by MLI into Municipal laws. A separate notification qua each DTAA is necessary to give the amended DTAA a legislative status. In the absence of specific notification u/s. 90(1) of the Act amendment/modification MLI cannot be invoked to deny benefit of India-Ireland DTAA. 23. The Coordinate Bench further held that PPT provisions as encompassed in Article 6 & 7 of MLI would also not operate. Though not necessary at this stage but for the sake of completeness the concluding findings of the Coordinate Bench to this effect are reproduced here in under:- “77. It is well settled that the object and purpose of a treaty must be ascertained in a holistic and purposive manner, having regard to the intention of the Contracting States. In the present case, a careful reading of Articles 8 and 12 of the India-Ireland DTAA shows that the treaty consciously departs from the OECD and UN Model Conventions in so far as it limits the source country's taxing rights in respect of aircraft-leasing income. This represents a deliberate and considered policy choice of the two sovereign States. We therefore find merit in the assessee's submission that the very object and purpose of the treaty is to exclude aircraft-leasing income from source-based taxation. 78. The Hon'ble Supreme Court in Azadi Bachao Andolan (supra) has unequivocally recognised that States are entitled, for legitimate policy reasons, to contractually restrict their own taxing rights in order to promote trade, attract investment, and foster economic cooperation. Applying that principle to the facts at hand, it becomes clear that the Principal Purpose Test is not intended to negate treaty benefits that are claimed in furtherance of the very purpose for which the treaty was concluded. Articles 8 and 12 of the India-Ireland DTAA are specifically Printed from counselvise.com 64 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals designed to remove aircraft-leasing income from the ambit of source-country taxation. A taxpayer claiming such treaty relief is not seeking to subvert the treaty; on the contrary, it is availing a benefit that the treaty itself was designed to confer. 79. In light of the foregoing analysis, we hold that relief from source-country taxation of aircraft-leasing activity constitutes a stated and substantive object of the India-Ireland DTAA. Accordingly, even de hors our threshold finding regarding the non-applicability of the Principal Purpose Test on account of the absence of a Section 90(1) notification, the assessee would, in any event, be entitled to treaty protection. The relief claimed aligns squarely with the treaty's object and purpose. We accordingly so hold.” 24. Thus, the Coordinate Bench on the issue of operation of MLI gave a conclusive finding that in the absence of specific notification in accordance with section 90(1) of the Act, the MLI would not be operative as the MLI has the effect of amending/overriding provisions of DTAA. 25. The ld. Special Counsel for the Revenue has urged that in case of Sky High Appeal XVIII Leasing Company Limited vs. ACIT (supra)some vital aspects remain to be submitted, hence, were not examined which will have bearing on the outcome of the issue. According to him following substantive points remain to be considered:- i. The decision rendered in the case of Nestle SA (supra) was not examined in the light of specific behavior and precedent of historic MLIs implemented in India by way of a single omnibus notification u/s. 90(1) of the Act. ii. Global practice followed by other dualist and monist countries in assimilation of MLI in domestic law by a single omnibus notification. Printed from counselvise.com 65 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals iii. The working of MLI framework including the flow chart that reflect that all consequences were completed by the MLI with certainty of available options and there was no requirement for further dialogue or negotiation for implementation of MLI. iv. Memorandum of Finance Act, 2020 while providing for amendment to section 90(1) of the Act with respect to new DTTA’s to be entered into by India reflect that MLI was in effect from FY 2020-21 onwards, whereby, putting the issue of legislative assimilation to rest. v. The order of the Tribunal in the case of SC Lowy P.I. (LUX) S.A.R.L.vs.ACIT (International Taxation) 170 taxmann.com 475, where provisions of MLI i.e. PPT were interpreted in the context of modification of existing DTAA between India-Luxembourg. The ld. Special Counsel focused his submissions on the above aspects. 26. To begin with it would be pertinent to first refer to the relevant provisions of section 90(1) of the Act that mandates for the notification whenever the Central Govt. enter into an agreement with the Government of any country outside India or any amendment/alteration to existing DTAA is made by way of subsequent protocol, agreement, etc. The provisions of section 90(1) of the Act are reproduced herein under: “90(1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India,- (a) for the granting of relief in respect of- (i) income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or Printed from counselvise.com 66 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals (ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or (b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, or (c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be, or investigation of cases of such evasion or avoidance, or (d) for recovery of income-tax under this Act and under the corresponding law in force in that country or specified territory, as the case may be, and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement. and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.” 27. Before the Hon’ble Apex court in the case of Nestle SA (supra) one of the issue for consideration was; “Whether the Most Favoured Nation (MFN) clause is to be given effect automatically or it is to only come into effect after notification is issued?” The argument of the assesses in the said case was when the DTAA and the Protocols - including the MFN clause contained in the concerned Article of the Protocol was already notified under section 90(1) and it has come into force, there is further no legal requirement to notify any subsequent amendment to the DTAA which becomes operative automatically as a consequence of the trigger of the MFN clause to the DTAA. Printed from counselvise.com 67 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 28. On behalf of the Revenue inter alia on the issue of applicability of amendments to the DTAA following submissions were made: “7. The revenue argues, through the Additional Solicitor General, Shri N. Venkatraman (hereafter \"ASG\") that the impugned judgments are unsustainable. The revenue points out that under the Indian Constitution, especially by operation of Articles 253 (read with Entries 13, 14 and 15 of List I of the Seventh Schedule) of the Constitution of India, Parliament has exclusive power to legislate in respect of any treaty or convention, entered into by India, with any other nation; such treaty can only be entered into in exercise of executive power of the Union. It was urged that without Parliamentary legislation, such treaties are unenforceable, having regard to the express terms of Article 2531-2 which clothe Parliament alone with the power to make laws \"notwithstanding\" other provisions in that chapter- which delineates and distributes legislative power between the Union and States. Counsel submitted that India follows the \"dualist\" practise, which means that international treaties and conventions are not, upon their ratification, automatically assimilated into municipal law (i.e. the national legal system) but would require enabling legislation. This is in contrast to those countries which are \"monist\", wherein the treaty provisions are enforceable like municipal law, and are to be given equal weight by courts. 8. The ASG relied upon the decisions in Gramaphone Co. of India Ltd. v. Birendra Bahadur Pandey 1984 [2] SCR 664 and Union of India v. Azadi Bachao Andolan [2003] 132 Taxman 373/263 ITR 706/2003 (Supp 4) SCR 222 to urge that the position in India is entrenched that without enabling legislation, any convention or event flowing from a convention, as in creation of rights and liabilities of third parties to conventions or treaties, do not operate on their own, and needs an intervening action by the Union, giving effect to such obligation. 9. The ASG relied on section 90 which requires the issuance of a notification, to give effect to any treaty or convention. It is argued that in the absence of any law, mere entering into a treaty or convention or protocol cannot give rise to any right under the taxation laws having regard to the structure of section 90. Therefore, in the present case, the trigger to the MFN clause can occur at a later point in time when India enters into a treaty or convention with other nations which happens to be a member of the OECD at the time it enters into treaty or convention with India and if the DTAA with such country provides for taxation at rate lower than or benefit over and above conferred upon the parties of the existing DTAA between India and the other nation. However, it would still require issuance of a notification to give effect to such consequence. The incident involved in the present case - i.e., the mere fact that India entered into Printed from counselvise.com 68 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals DTAAs with Slovenia, Lithuania, and Columbia at certain points in time and that some of them gained membership of OECD, ipso facto could not lead to claims by the respondents assessees that similar or identical treatment had to be extended to them as tax residents of Netherlands, France, and Switzerland respectively.” [Emphasized by us] Thus, the Revenue emphatically argued that the amendment to DTAA by way of Protocol would only assimilate into the legal system if it is notified. Having regard to provisions of section 90 of the Act, mere entering into a treaty or convention or protocol cannot give rise to any right under taxation laws. 29. The Hon’ble Apex Court after considering submissions of the Revenue, examining provisions of section 90 of the Act, Article 253 of the Constitution and various decisions summed up as under:- “44. The holding in the decisions discussed above may thus be summarized: (i) The terms of a treaty ratified by the Union do not ipso facto acquire enforceability; (ii) The Union has exclusive executive power to enter into international treaties and conventions under Article 73 [read with corresponding Entries - Nos. 10, 13 and 14 of List I of the VIIth Schedule to the Constitution of India] and Parliament, holds the exclusive power to legislate upon such conventions or treaties. (iii) Parliament can refuse to perform or give effect to such treaties. In such event, though such treaties bind the Union, vis a vis the other contracting state(s), leaving the Union in default. (iv) The application of such treaties is binding upon the Union. Yet, they \"are not by their own force binding upon Indian nationals\". (v) Law making by Parliament in respect of such treaties is required if the treaty or agreement restricts or affects the rights of citizens or others or modifies the law of India. Printed from counselvise.com 69 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals (vi) If citizens' rights or others' rights are not unaffected, or the laws of India are not modified, no legislative measure is necessary to give effect to treaties. (vii) In the event of any ambiguity in the provision or law, which brings into force the treaty or obligation, the court is entitled to look into the international instrument, to clear the ambiguity or seek clarity.” The Hon’ble Apex Court, after accepting contentions of the Revenue that issuance of notification u/s 90(1) of the Act is necessary to give effect to any amendment in the existing DTAA and to make it legally enforceable held: “46. The legal position discernible from the previous discussion, therefore is that upon India entering into a treaty or protocol does not result in its automatic enforceability in courts and tribunals; the provisions of such treaties and protocols do not therefore, confer rights upon parties, till such time, as appropriate notifications are issued, in terms of Section 90(1).” The Hon’ble Court in an explicit manner held that notification u/s. 90(1) of the Act is mandatory to give effect to a DTAA that has been altered/modified by way of any protocol or treaty or convention. 30. India has notified 93 DTAAs as Covered Tax Agreements, these DTAAs are subject to modifications. Though, the Special Counsel for the Revenue has not accepted in too many words that the MLI has the effect of amending the DTAA but from the submissions made by ld. Counsel for the assessee it emerges that provisions of MLI would override the provisions of DTAA where there is conflict. In other words the provisions of MLI as the effect of amending/altering DTAA provisions and wherever the provisions of DTAA are amended/altered they would assimilate into legal framework only after mandatory notification u/s. 90(1) of the Act. Printed from counselvise.com 70 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 31. Before proceeding further, it would be relevant to understand the stage of effectuating MLI. India has signed MLI and has included over 90 DTAA’s in the list as Covered Tax Agreements and has conveyed it to the OECD which is the depository under Article 39 of MLI. The depository maintains database of Covered Tax Agreements conveyed by the parties to the depository. The MLI operates matching principles. However, it does not specify the date and text. Thus, the date of acceptance and the text can be amended by the other country. The MLI would come into force with the other country only when both countries notify MLI in their respective countries. The acceptance of MLI in full or in part by the other country at a future datehas the effect of modifying tax treaty between the parties. The fact that MLI operates to modify tax treaty between two or more parties have been accepted by the Revenue in the written submissions filed before Mumbai Bench of the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra). Sequitur to modification to covenants of DTAA by the MLI, to give a legal binding force is issuance of notification u/s. 90(1) of the Act. 32. The contention of the Revenue is that while rendering the judgment in the case of Nestle SA (supra) emphasis has been given on the ‘past practices’ of issuance of notification for each country to give effect to MFN clause that was introduced by way of protocol. Whereas, in the case of MLI the past practices is only to issue one omnibus notification u/s. 90(1) of the Act and not separate notifications for each country. In support, the Department has referred to MLI with SAARC nations. In so far as MLI in respect of SAARC countries is concerned (available at page no. 1 to 16 of the paper book Vol- II filed by the Department). We find that the said agreement has been signed by all the member countries on the same date accepting all the Terms and Conditions in the said agreement. Printed from counselvise.com 71 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals Thus, there is no concept of a matching principle therein. Further reliance is also placed on MAAC MLI. It is an administrative pact to cooperate and share information and does not amend or override existing bilateral tax treaties. Hence, it does not modify /alter substantive rights and obligations under Treaty. Reference has also been made to CBCR. We find that it does not override existing tax treaties. It is administrative arrangement for information exchange. The said MLI was in fact notified u/s 286 of the Act. The provisions of said section provides for notifications of MLI, hence, cannot be equated with the provisions of notification under section 90(1) of the Act. Be that as it may, one relevant fact that needs to be noted here is that omnibus notification in respect of aforementioned MLIsnever faced judicial scrutiny. The question of validity of MLI having effect of modifying/altering existing treaty first faced legal test in the cases where MFN protocols were signed and had the effect of amending relevant DTAAs with the other countries. The Hon’ble Apex Court in Nestle SA (supra) made it clear that any amendment to DTAA would come into force only after notification u/s.90(1) of the Act. The same analogy has to be applied in the case of MLI which have the effect of amending existing DTAAs. 33. The next argument advanced by the Revenue is that, as per global practice, single omnibus notifications are issued for the assimilation of MLI into domestic law. The global practice of single omnibus notification does not determine India legal position on treaty implementation. Section 90(1) of the Act mandates for notification of any treaty. The Hon’ble Apex Court in the case of Nestle SA (supra) in para 46 (reproduced above) made it explicit that the amendment to DTAA is enforceable only on notification u/s. 90(1) of the Act. The Note by the OECD on Printed from counselvise.com 72 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals MLI (at page 628 to 636 of the paper book Vol- I of the department) also explains the situation in domestic implementation of MLI. While dealing with the situation in domestic law OECD explained:- “28. In terms of domestic law, jurisdictions will have different methods for ensuring the implementation at the domestic level of the modifications made by the MLI to bilateral tax treaties. The method will depend on the legal framework which governs the implementation of international rights and obligations in each jurisdiction, e.g. whether the ratification of an international treaty automatically results in the integration of the rights and obligations set out in that treaty into domestic law (a \"monist\" system) or whether domestic legislation is required in order to transpose the rights and obligations in the treaty into domestic law (a \"dualist\" system). In the first case, changes to the rights and obligations of taxpayers may flow directly from the ratification of the MLI while, in the second case, such changes to the rights and obligations of taxpayers will generally flow from domestic legislation. 29. The approach to the domestic implementation of the MLI will generally follow the way in which bilateral tax treaties themselves are implemented at the domestic level. In some jurisdictions, the reference to the applicable rule in domestic law will be directly to the bilateral treaty (typically in monist systems) while in other jurisdictions, the reference to the applicable rule in domestic law will be to domestic legislation which transposes the bilateral treaty (typically in dualist systems). Accordingly, when the MLI has modified a tax treaty, the reference to the applicable rule in domestic law may either be to the bilateral treaty itself as modified by the MLI (the same answer as in public international law terms) or it may be to domestic legislation which transposes the modifications made by the MLI to the bilateral treaty (hence a different answer in public international law terms and domestic law terms). 30. xxxxxx 31. It is important to note that, while the answer to question a) above is the same for all jurisdictions, the answer to question b) may well be different for each Contracting Jurisdiction to a bilateral tax treaty. In line with well-established treaty law and practice, it is not necessary for two treaty partners to adopt the Printed from counselvise.com 73 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals same approach to the domestic implementation of a treaty, and the approach adopted will depend on their domestic legal system. Accordingly, it is not necessary for pairs of Contracting Jurisdictions to agree on a common approach for domestic implementation of the modifications made by the MLI to their tax treaty.” [Emphasized by us] Thus, global practice would not define as to how MLI is to be made effective in India and practice of single omnibus notification is not suffice in India to make MLI workable. The OECD also clarifies that when MLI modifies tax treaty, the domestic legislation which transposes the modification made by MLI to the bilateral treaty has to be followed for domestic implementation of the MLI. Thus what emanates from Note by OECD Directorate of Legal Affairs is: - MLI has the effect of modifying DTAA; - For giving effect to MLI the provisions under domestic law has to be complied with for legislating the modifications made by MLI. 34. The argument made on behalf of the Revenue is that MLI is applied alongside existing tax treaties modifying their application with respect to BEPS measure. All consequences were contemplated by the MLI with certainty of available option and there is no requirement for further dialogue or negotiations for implementation of MLI. Eventually, the MLI has the effect of altering/modifying bilateral treaty provisions. The Hon’ble Supreme Court of India in the case of Nestle SA(supra) and the decision rendered by the Coordinate Bench of the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra) after considering the ratio laid down in Nestle SA (supra), has held that notification u/s. 90(1) of the Act incorporating the changes to the tax treaty by Printed from counselvise.com 74 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals MLI is mandatory as it has effect of amending the bilateral tax treaties to the extent of the consensus of both contracting states. 35. The ld. Special Counsel has placed reliance on the Memorandum to the Finance Act, 2020, where the reasons to amend the provisions of section 90 of the Act have been explained. The provisions of section 90(1) of the Act have been amended to align DTAA with MLI. That means prior to said amendment there was no substantive provision for assimilating MLI into legislation. As a corollary the notification u/s 90 of the Act is valid only after the section makes provision for the same. Further, it is discernable from the said amendment that MLI has the effect of amending DTAA to implement BEPS measures. Such amendments are not enforceable in absence of separate notification for effectuating amended provisions of the DTAA. 36. The last argument of the ld. Special Counsel for the department is that in the case of SC Lowy P.I. (LUX) S.A.R.L.(supra) provision of MLI i.e. PPT were interpreted in the context of modification of existing DTAA between India and Luxemburg. We find that Revenues reliance on the said case is misplaced. The issue of applicability of MLI was never raised before the Tribunal in the said case. The issue before the Coordinate Bench in the said case was denial of DTAA benefits on wrong assumption of facts. The appellant in the said case never challenged applicability of MLI in the absence of specific notification U/s 90(1) of the Act, which has the effect of modifying India-Luxembourg DTAA. A specific query was made to ld. Special Counsel for the Department, i.e. as to whether issue of notification u/s 90(1) of the Act was before the Tribunal in the said case. He fairly answered in negative. Hence, there was no occasion for the Coordinate Bench to give findings on this issue. Printed from counselvise.com 75 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 37. We have considered all the alleged substantive issues purportedly not raised before the Coordinate Bench in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra). We have answered the same in detail above and find no substance therein. In the case of Sky High Appeal XLIII Leasing Company Ltd. (supra) all the issues have already been dealt with. Thus, in light of our above findings and the decisions referred above we hold that single omnibus notification u/s 90(1) of the Act already issued would not legislate the amendments/modifications in existing DTAA. A specific notification for each country is required u/s. 90(1) of the Act where the MLI has the effect of amending /altering bilateral treaties. Hence, this issue is decided in favour of the appellants and against the Revenue. (iii) Application of Article 8 of India-Ireland DTAA:- 38. Shri Sachit Jolly submitted that the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra) has already considered the issue of applicability of Article 8 and has 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’ is peculiar to India-Ireland treaty. This issue has been elaborately discussed in the case of Sunflower Aircraft Leasing Limited vs. ACIT in ITA no 1107/Mum/2025 which has been followed in Sky High Appeal XLIII Leasing Company Ltd. (supra). The ld. Counsel refers to the findings in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra) para 38 to 44 where decision in the case of Sunflower Aircraft Leasing Limited (supra) has been quoted and followed. Printed from counselvise.com 76 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 39. Shri Indruj Singh Rai, Special Counsel agreed that the issue has 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. He asserted that Article 8(1) of India-Ireland DTAA is not applicable to dry leases. In fact, the provisions are not workable in respect of dry leases. Article 8(1) allocates taxing rights with respect to profits derived from the operation or rental of ships or aircraft in international traffic. ‘International Traffic’ is defined in Article 3(1)(f) of the Tax Treaty. The definition of “international traffic,” seeks to allocate taxing rights between the resident state and the source state, with the source state having exclusive rights to tax where operations/transport are carried out solely within the source state. Such exclusion provided in the definition of “international traffic” makes the definition an integral and inseparable part of Article 8(1). The definition of “international traffic” is workable only in the case of wet leases, i.e., where Irish entity is operating the aircraft itself. In such cases, the income of the Irish entity will be exempt under Article 8(1), unless the income arises solely from operations carried out within India.If the definition is applied to the facts of the given case, it leads to an absurdity, as the exception for domestic operations would apply only to operations carried out solely within Ireland. Referring to OECD commentary on Article 8, he contended that OECD never envisaged dry lease. He further submitted that, since the definition of “international traffic” is not workable for a dry lease, the corresponding exemption Article 8(1) cannot be allowed without adequate definition. He further submitted that the treaty is to be interpreted strictly on the basis of its text, and words cannot be read into the definition to make it workable. Printed from counselvise.com 77 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals The second limb of his argument, without prejudice to his primary submission above, is that Article 8(1) seeks to exempt profit from operations that are to be computed with reference to each flight and not in relation to each aircraft. Thus, what is to be examined for the purpose of determining ‘international traffic’ is each journey, and not the aircraft. Accordingly, profits from operations of flights solely within India would not fall within the meaning of “international traffic” and hence, would not be exempt under Article 8(1) 40. The ld. Special Counsel further submitted that without prejudice to his previous arguments on Article 8, even, if the profits are to be treated qua aircraft, what is to be seen is whether each aircraft has ever flown outside India. He submitted that the AO/DRP had sought information/data from the assesses with respect to profits derived from international usage of aircrafts, but the same was never provided by the assessee during assessment proceedings. The onus is on the assessee to show usage of aircraft outside India i.e. in international traffic, the assesses failed to discharge said onus. He furnished list of 73 assesses from whom such information/data was asked. He submitted that even if Article 8(1) is to be interpreted in accordance with the findings of the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra) i.e. the use of aircraft in international traffic in a financial year, the assessee has to demonstrate with documentary evidence the usage of each aircraft in international traffic. 41. Controverting the arguments made on behalf of the department in respect of applicability of Article 8, Shri Sachit Jolly reiterated that the issue has already been decided by the Mumbai Bench. He pointed that the ld. Special Counsel for the Department has referred to the definition of “international traffic” as per OECD. The definition of international traffic as per OECD and India-Ireland DTAA Printed from counselvise.com 78 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals are at variance. Therefore, to say the definition of “international traffic” is not workable in the facts of instant case is an incorrect statement. Dehors, the fact of operation of the aircraft by the lessee in international traffic, such usage has nothing to do with the rentals. The rentals have been received by the assessee for leasing the aircrafts. 41.1. The ld. Counsel for the assessee further submitted that in the case of Sunflower Aircraft Leasing Ltd. (supra) in para 38 and 39 of the order has examined the distinction in the language of Article 8 in India-Ireland DTAA vis-a- vis the OECD Convention and the definition of “international traffic\" in India- Ireland DTAA. Further, in para 42 of the order, the Coordinate Bench has held that the definition of \"international traffic\", if read in the context of Article 8, does not lead to any absurd result but leads to a clear understanding that if aircraft is not used solely within India/Ireland, it constitutes “international traffic”. The fact that lessee InterGlobe Aviation Ltd. (\"IndiGo\") is free to use the aircraft for international operations is enough for the assessee to claim exemption under Article 8 of the India-Ireland DTAA. With respect to the second limb of argument he submitted that the definition of Article 8 under the India-Ireland DTAA differs materially from the OECD Convention. Therefore, reliance placed by the Revenue on the OECD commentary dealing with taxation on the basis of voyages undertaken, is wholly erroneous. In fact, this interpretation makes the use of word 'rental' otiose since in a case of rental, the aircraft will never be operated by the lessor and the exemption under Article 8 of the India-Ireland DAA for rental of aircraft would be left meaningless. 41.2. In respect of third argument of Special Counsel, Sh. Jolly submitted that when the aircraft was given on lease in the year 2017, the Lessee i.e. IndiGo was Printed from counselvise.com 79 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals an international operator. There was no restriction in the lease agreement that the aircraft cannot be used for international operation. There is not even a whisper or allegation in the Final Assessment Order that there was a prohibition on IndiGo to use the aircraft for international operations or the aircraft was not used for international traffic. In the absence of any substantive evidence to the effect that the aircraft were never used for \"international traffic\", this argument is only an argument of prejudice and in vacuum, which deserves to be rejected. 42. To supplement the submissions made by Shri Sachit Jolly Senior Advocate, Shri Percy Pardiwalla furnished following detailed submission to controvert the arguments advanced by Special Counsel for the department: “At the outset, it is submitted that Article 8 of the India-Ireland Tax Treaty is worded differently as compared to the Article 8 of the OCED model convention. Article 8 of the Treaty disjunctively pairs the word \"operation\" and \"rental\" as independent activities. Comparatively, Article 8 of the OCED model convention is narrower in scope as it restricts taxing rights only to profits earned from operation of aircraft. It does not include \"rental\" as a separate head. Where the Government of India and Ireland deliberately adopt language broader than the OECD Model, that text must be given effect in its ordinary meaning. To import into the provision, a requirement that the lessor must also be an \"operator\" in international traffic (as in cases of wet leases) is equivalent to inserting conditions in the Treaty, which don't actually exist. This is contrary to the principle contained in the Vienna Convention on the Law of Treaties, 1969, that interpretation must be based on the ordinary meaning of the text in its context and object. This issue is squarely covered by favorable decision of the Hon'ble ITAT Mumbai in the case of Sky High Appeal XVIlI Leasing Company Limited (supra) (Para 42, Pg 151-152 of CLC) wherein it was held that \"To superimpose a requirement that the lessor must itself be an operator in international traffic, or that the rental must be subordinate to such operation, is to read into the provision words which are not there.\" Printed from counselvise.com 80 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals As regards the definition of international traffic, it is submitted that when ead literally, in the context of dry operating leases, no absurdity arises, and it is evident that even dry leasing of aircraft is covered within ambit of Article 8(1) read with Article 3. The language of Article 8(1) and Article 3 of the Treaty consciously depart from the corresponding Articles in the OECD Model Convention. Hence, the Ld. DR's reliance on the OCED Model Convention commentary is misplaced. Additionally, this issue is squarely covered in favour of the Appellant by the decision of Hon'ble ITAT Mumbai in the case of Sky High Appeal XVIII Leasing Company Limited (supra) (Para 42, Pg 151-152 of CLC). Article 8(1) allocates the taxing rights to the home country in respect of profits from three streams of business (i) Operation of aircraft in international traffic (i) Rental of aircraft in international traffic; and (iii) Rental of related equipment. Undisputably, the income earned by the Appellant falls within stream (ii) and solely earns rental income from the lease of aircraft (and not income from the operation thereof). The Appellant would continue to earn rentals, even if, for any reasons, the aircraft is not put in operation by Lessee. Once the aircraft is leased to the Lessee without any restriction on its operations in international traffic, rentals from such aircraft should qualify for exclusion from the scope in terms of Article 8(1) of the Treaty so long as they form part of a fleet that operates in international traffic. Reliance is placed on the decisions of Hon'ble ITAT Mumbai in Sky High Appeal XVIII Leasing Company Limited (supra). Even otherwise, as mentioned above, the Appellant has already filed a certificate of deployment of aircraft, issued by the Lessee, which confirms the fact that leased aircraft has not been deployed anywhere in Ireland during the relevant period, is accordingly operated in international traffic as defined in Article 3, and accordingly, exempt from tax in India as per Article 8 of the Treaty.” 43. We have heard the submissions made by rival sides on the issue of applicability of Article 8. The issue has already been considered by the Coordinate Bench of the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra). The Coordinate Bench, while dealing with the issue of applicability of Article 8 has in turn followed the decision in the case Sunflower Aircraft Leasing Printed from counselvise.com 81 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals Limited (surpa). In the said case, the Tribunal inter-alia took note of Article 8 as mentioned in OECD Model Convention and as it exist in India-Ireland DTAA and held as under:- “38. Having so concluded on the primary issue, we turn to the assessee‘s alternative plea that the lease rentals are, in any event, governed by Article 8(1) of the India–Ireland DTAA, and therefore taxable exclusively in Ireland. For the sake of ready reference, the difference in the language of Article 8 of India-Ireland DTAA as compared to Article 8 of OECD model convention is as under:- Article 8(1) of the India-Ireland DTAA reads as under: “… Article 8 SHIPPING AND TRANSPORT 1.Profits derived by an enterprise of a Contracting State from the operation or rental of ships or aircraft in international traffic the rental and of containers and related equipment which is incidental to the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State. …” Article 8 of the OECD Model Convention reads as under: “… Article 8 SHIPPING AND TRANSPORT 1.Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in Contracting State. …” 39. Article 8(1) of this treaty reads in material part: “Profits derived by an enterprise of a Contracting State from the operation or rental of ships or aircraft in international traffic and the rental of containers and related equipment which is incidental to the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State.” The text is notable in two respects: first, it disjunctively pairs “operation” and “rental” as independent income-yielding activities; second, it contains no requirement that the rental be merely ancillary to the lessor‘s own operation of ships or aircraft. This wording differs from the OECD Model‘s narrower formulation, and its deliberate adoption by the Contracting States reflects a conscious policy choice to extend the exclusive taxing right to rental income from ships and aircraft, as a distinct category, when such assets are employed in “international traffic”. Printed from counselvise.com 82 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 40. The assessee‘s case is that it is an Irish enterprise engaged in the business of dry leasing aircraft to IndiGo, that the leased aircraft formed part of IndiGo‘s integrated fleet and were deployed interchangeably on domestic and international routes, and that such integration necessarily brought them within the scope of “international traffic” as defined in Article 3(1)(g) of the treaty. That definition excludes only those cases where the ship or aircraft is “operated” solely between places in the other Contracting State‖; the moment the operation is not exclusively domestic, it satisfies the definition. The assessee points out that IndiGo is an international carrier with scheduled flights to multiple foreign destinations, and that the aircraft type and configurations leased were suitable and certified for such operations. It was emphasised that the treaty text does not stipulate any predominance or threshold of international usage; a single non-incidental use on an international sector suffices to displace the “solely” domestic exclusion. Counsel relied on decisions such as ABN Amro Bank NV and GE Capital Aviation Services, where similar leasing clauses were given their plain, broad meaning. 41. The Revenue, however, has urged that Article 8 was intended to protect the core transport operations of an airline and that the “rental” limb is to be read as ancillary to such operations. Since the assessee is a pure lessor with no airline operations of its own, and since, according to the Revenue, the leased aircraft were predominantly used on domestic Indian routes, it was contended that the income was not covered by Article 8 but instead constituted business profits taxable in India if a PE existed. The LD.DRP adopted this line, essentially importing the OECD Model‘s narrower structure into the India-Ireland text. 42. We are unable to subscribe to this restrictive reading. Treaty interpretation proceeds on the ordinary meaning of the terms used, read in their context and in light of the treaty‘s object and purpose. Where the Contracting States have consciously departed from the OECD Model to insert “rental” as an alternative head to “operation” the text must be given effect in its ordinary sense. To superimpose a requirement that the lessor must itself be an operator in international traffic, or that the rental must be subordinate to such operation, is to read into the provision words which are not there. Likewise, to insist on a quantitative predominance of international usage is to graft a test not found in the treaty. The definition in Article 3(1)(g) sets a binary criterion either the aircraft is operated solely domestically (in which case the exclusion applies) or it is not (in which case it falls within “international traffic”). Once it is shown, as it is here, Printed from counselvise.com 83 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals that the leased aircraft formed part of a fleet used on both domestic and international sectors, the rental income falls within the protective ambit of Article 8(1). 43. We also take note of the commercial reality that airlines today operate fleets on a network basis, with aircraft rotated between domestic and international sectors depending on operational exigencies, maintenance schedules, and route economics. It is artificial, and contrary to industry practice, to freeze an aircraft‘s character by reference to its predominant usage in a given period. The treaty drafters, in our view, intended to avoid such disputes by linking the test simply to whether the aircraft was “operated solely” domestically. In the present case, the factual matrix including IndiGo‘s undisputed status as an international carrier and the unchallenged deployment of the leased aircraft on at least some international sectors brings the income squarely within the Article 8(1) scope. 44. The allocation rule in Article 8(1) is a specific provision which prevails over the general rule for business profits as provided in Article 7. Even if we had found that the assessee had a PE in India, Article 8(1) would nonetheless require the profits from such rental to be taxed only in the State of residence, Ireland. In light of our earlier conclusion that no PE exists, the operation of Article 8(1) fortifies the non-taxability of the lease rentals in India. The LD.DRP‘s contrary view is founded on an impermissible narrowing of treaty language, and cannot be sustained.” In the case of Sky High Appeal XLIII Leasing Company Ltd.(supra) the Coordinate Bench of the Tribunal adopted the above findings rendered in the case of Sunflower Aircraft Leasing Limited (surpa) and concluded that the assessee is entitled to avail benefit of Article 8 of the Treaty. 44. The Special Counsel for the Department has raised some additional arguments on issues with regard to applicability of Article 8. We find that in the case of Sunflower Aircraft Leasing Limited (Supra), the Tribunal has already examined Article 8 in OECD Convention viz a viz India-Ireland DTAA. The provisions of Article 8 as given in India-Ireland DTAA are much broader than the Printed from counselvise.com 84 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals OECD Convention. If the submissions of the ld. Special Counsel for the Department are to be accepted then it would mean that the lessor of the aircraft should also be an operator in international traffic as is the case in wet lease. This amounts to inserting the condition in the treaty which cannot be done. This is contrary to the principles of Vienna Convention on the laws of treaties. The treaties are to be interpreted in the ordinary meaning of the text in its context and object. The treaty cannot be read in a manner which would result in absurdity. 45. The argument of Special Counsel for the Revenue was that “international traffic “must be read with reference to each voyage/journey and not the aircraft. Before proceedings further, it would be relevant to refer to the provisions of Article 8(1) of India-Ireland DTAA, the same reads as under:- “1. Profits derived by an enterprise of a Contracting State from the operation or rental of ships or aircraft in international traffic and the rental of containers and related equipment which is incidental to the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State. Here it would also be relevant to refer to the definition of ‘international traffic’ as defined under Article 3(1)(f) of the Treaty: “the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State,” The definition of “international traffic “if applied in context to facts of the instant case, international traffic means any transport by aircraft operated by an enterprise of India, except when aircraft is operated solely between places in Ireland. Accordingly, an aircraft operated by Indian lessee (Indigo) shall be considered as operating in international traffic. The lessee operates aircraft in and Printed from counselvise.com 85 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals outside India and does not operate aircraft solely in Ireland. Further, neither Article 8(1) nor Article 3(1)(f) defining ‘international traffic’ refers to voyage/journey. Therefore, argument of the ld. Special Counsel for the Department referring to voyage/journey to test check international traffic is misplaced, hence, unsustainable. When the meaning are self-explanatory in the DTAA there is no need to travel to OECD Conventions which are only guiding light and have no binding force. 46. The third limb of the argument by Special Counsel is that each aircraft has to be seen whether it has flown outside and has operated in international traffic. The assessee earns rentals from lease of aircraft. The lessor has no control on the schedule of the aircrafts or the destination of the aircraft where they are operated. The lessor/assesseedoes not lay down any restrictions in the lease agreement as to whether the aircraft shall operate in domestic territory or operate internationally. It is the discretion of the lessee to schedule the operation of the aircraft. It is no denying that lessee/Indigo is operating internationally. Therefore, to presume that the aircraft are not operated internationally is superfluous. Nevertheless, the assesses being the lessor of the aircraft would continue to receive rentals even if the aircraft is not put to operation by the lessee. The assessee has filed a certificate of deployment of aircraft issued by the lessee which confirms the fact that leased aircraft has not been deployed anywhere in Ireland during the relevant period and is operated in international traffic. Thus, the condition of Article 8(1) is satisfied. 47. For the reasons mentioned above and in light of order in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra), we hold the lease rental received by the assessee/appellant are covered by Article 8 of India-Ireland Printed from counselvise.com 86 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals Treaty. Hence, the assessee would get the benefit of Article 8. In the result, this issue is decided in favour of the assessee/appellant and against the Department. (iv) Existence of PE in the form of aircraft in India: 48. Shri Sachit Jolly submitted that the issue regarding existing of Permanent Establishment (PE) in India by virtue of aircraft in India has already been considered by the Mumbai Bench of the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra). He placed reliance on the findings of the Tribunal on this issue. 49. Shri Indruj Singh Rai Special Counsel for the Department fairly stated that he has nothing more to add on this issue and supported findings of the AO and the DRP. 50. In so far as the issue relating to existence of PE is concerned, we find that this issue has been dealt in detail by the Coordinate Bench in the case of Sky High Appeal XLIII Leasing Company Ltd. (supra). The Tribunal after placing reliance on the decision rendered in the case of Sunflower Aircraft Leasing Limited (supra) held that the existence of leased asset i.e. aircraft in India does not constitute PE. No substantial argument has been advanced on this issue from Revenue’s side nor any controverting material has been placed on record by the Revenue to show any distinction in the instant set off appeals. The relevant extract of the findings on the issue in the case of Sunflower Aircraft Leasing Ltd. are as under: “30. We have given our thoughtful consideration to the entire gamut of rival submissions, perused the material placed before us, examined the lease agreements and related correspondence, and considered the applicable Printed from counselvise.com 87 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals law, including the principles laid down by the Hon'ble Supreme Court in; (i) Formula One World Championship Ltd. v. CIT [(2017) 394 ITR 80 (SC) ], (ii) E- Funds IT Solution Inc. v. CIT [(2018) 13 SCC 294], and the latest judgment of, (iii) Hyatt International Southwest Asia Ltd. v. Addl. Director of Income Tax in Civil Appeal No. 9766 of 2015 (SC), all of which illuminate the contours of the concept of \"Permanent Establishment\" under tax treaties. The relevant principles laid down by the Hon'ble Supreme Court Hyatt International Southwest Asia Ltd. can be summarized in the following manner:- I. Disposal Test for PE (Article 5(1) of the DTAA): A \"fixed place\" Permanent Establishment (PE) is constituted when a foreign enterprise possesses a fixed place of business in India that is at its disposal, and through which its business is wholly or partly carried on. The exclusive legal possession is not a prerequisite; even temporary or shared access, if coupled with meaningful control and business use, is sufficient. This interpretative standard draws strength from the Supreme Court's exposition in Formula One World Championship Ltd. v. CIT. II. Tripartite Attributes of a PE: A valid PE, in jurisprudential contemplation, must reflect three core characteristics: • Stability - an enduring and identifiable physical presence; • Productivity - the conduct of substantive commercial operations; and • Dependence - functional reliance on the said location for business activities. III. Economic Substance Prevails Over Legal Form: The existence of a separate legal entity, such as Hyatt India Pvt. Ltd., managing day-to-day operations does not nullify the presence of a PE, if the foreign enterprise continues to exercise effective strategic and operational control. The Court reaffirmed that it is the economic reality and not merely the corporate form that governs PE determination. IV. Remuneration Structure as Evidence of Commercial Nexus: Printed from counselvise.com 88 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals The nature of consideration under the SOSA being directly linked to gross operating profits and revenues evinces a deep-rooted commercial nexus with the core operations of the hotel. Such performance-based remuneration goes well beyond passive consultancy or auxiliary functions. V. Intermittent Presence of Employees is Sufficient to Establish Continuity: The Court clarified that continuous and coordinated business engagement, even through multiple short-term visits by employees, suffices to establish a PE. The absence of a single individual exceeding the nine-month threshold under Article 5(2)(i) is not determinative, so long as business presence is substantively maintained. VI. Exclusion for Auxiliary Activities Inapplicable: Rejecting the assessee's reliance on the judgment of UAE Exchange Centre, the Court held that the strategic oversight, managerial control, and supervisory authority exercised by the appellant were central to the hotel's core operations and could not be characterized as mere preparatory or auxiliary activities. VII. Profit Attribution Unaffected by Global Losses: The Court unequivocally held that taxability of profits attributable to a PE in India stands independent of the foreign enterprise's global profit or loss. Article 7 of the DTAA entitles the source State to tax income attributable to the PE, based on local economic presence and business activity, irrespective of consolidated group profitability. 31. The essence distilled from these authorities is that a fixed place PE under Article 5(1) requires three cumulative elements: (i) the existence of a \"place of business\", (ii) that such place must be \"fixed\", and (iii) that the enterprise must carry on its business wholly or partly through that place. The \"disposal test\" whether the foreign enterprise has the place at its disposal so as to be able to conduct its business from there is pivotal. Mere ownership of an asset or the exercise of protective rights as an incident of ownership does not ipso facto satisfy this requirement. The business of the foreign enterprise, as a matter of factual and functional analysis, must be conducted through the place in question; the mere fact that the asset generating income is situated in the source State is not determinative. Printed from counselvise.com 89 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 32. Applying these principles to the present case, the aircraft leased by the assessee to IndiGo were indeed present in India for extended periods. However, the crucial question is whether they constituted a \"fixed place of business\" at the disposal of the assessee through which its business was carried on. The assessee's business is that of dry leasing aircraft an activity executed entirely from Ireland, with negotiations, contract execution, and management undertaken outside India. Operational control over the aircraft, including deployment, routing, scheduling, and crewing, vested exclusively with IndiGo. The rights retained by the assessee such as periodic inspection, ensuring compliance with maintenance standards, and repossession in default are standard lessor protections safeguarding the value of the asset, not indicia of the asset being at the lessor's disposal for carrying on business in the source State. In the Hyatt case, the Supreme Court emphasised that a foreign enterprise's business must actually be conducted through the alleged PE; here, no such conduct of business in India is shown. The aircraft, though valuable business assets, did not serve as a \"place\" through which the assessee's leasing business was carried on in India. Thus, we reject the premise that continuous physical presence of high value asset in India ipso facto supplies \"fixed place\" limb. The Hon'ble Supreme Court has emphasised that mere location or access is insufficient unless the enterprise can, as a matter of right and in practice, employ that place as an instrumentality of its business; the aircraft here could not be accessed or used by the assessee at will for its business every entry to airside/hangar areas required IndiGo's operational consent and regulatory clearances, and inspections were episodic, noticed, and ancillary to ownership protection. The assessee's business is the grant of lease rights executed offshore; the asset's Indian location under IndiGo's aegis does not convert the aircraft into a fixed establishment at the assessee's disposal. 33. The Revenue's contention that the aircraft themselves constituted a \"place of business\" because they were the source of the assessee's income overlooks this distinction between the situs of the asset and the locus of business activity. In Formula One, the Supreme Court held that the race circuit in India was at the disposal of the foreign enterprise during the race event, enabling it to carry on its core business there. Here, by contrast, the Printed from counselvise.com 90 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals aircraft were never placed at the disposal of the assessee in India to conduct its business they were placed at the disposal of the lessee, which operated them for its own commercial purposes. The absence of the assessee's personnel or operational infrastructure in India further reinforces the absence of a fixed place PE. In the light of the functional analysis mandated by E-Funds, the \"disposal test\" is not met. 34. Here in this case there is nothing on record to show that there were any stationed personnel of the assessee and otherwise also ld. DRP observation on PE was not predicated on Article 5(2) of service PE at all. 35. In so far as finding that leasing business is carried on through the aircraft, the said finding is patently incorrect. The leasing business of the assessee was carried on from outside India and not through the aircraft in India. It is nobody's case that the assessee or IndiGo executed the lease agreement sitting in the aircraft in India. Therefore, apart from the non-satisfaction of the disposal test in the instant case, no part of the business of the assessee can be said to be carried on in India. If the logic of the DRP is accepted then in every lease of equipment, the foreign enterprise will be held to have a PE in India. The Madras High Court in Van Oord ACZ (supra) and benches of the Tribunal have held this in several decisions. 36. Insofar as the decision of the Madras High Court in Poomphuar (supra) is concerned, the Madras High Court in the case of Van Oord ACZ (supra) dealt with the case of leasing dredging equipment by a Dutch company to an Indian Company. The Revenue contended the presence of the ship/barge constituted PE of the Netherlands Company in India. In response, the Assessee therein contended that the leasing of equipment on bareboat basis/ dry lease would not constitute a PE in India. The Madras High Court after analyzing another earlier decision of the Madras High Court in Poompuhar Shipping Corporation Ltd. (supra) held that leasing of equipment on bareboat basis/ dry lease would not constitute PE of the Netherlands entity in India since the entire control of the equipment was with the Indian Company. The Hon'ble Madras High Court also pointed out that the earlier decision in Poompuhar Shipping (supra) dealt with the case of wet leasing, i.e. leasing equipment Printed from counselvise.com 91 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals with Master and Crew and therefore not applicable. This aspect is of crucial importance since the Ld. DRP's findings in the present case are based entirely on the earlier decision of the Madras High Court in Poompuhar Shipping(supra). The relevant findings of the Hon'ble Madras High Court in the case of Van Oord (supra) are extracted hereunder for ready reference: \"34.In Poompuhar Shipping's case, referred supra, it was a case of hiring of ship on time-charter basis, whereas in the present case, dredging equipment is leased out on bareboat basis, namely, without master and crew. Therefore, on facts, the decision in Poompuhar Shipping case, referred supra, is distinguishable. 35. The learned standing counsel for the Department referring to paragraph (2) of article 5 which states that an installation or structure used for the exploration of natural resources is a permanent establishment, provided that the activities continue for more than 183 days, pleaded that the stand of the Department is justified. 36. We are not inclined to accept such a plea, as in the case on hand the dredging equipment was leased out on bare boat basis, viz., without master and crew. Therefore, it will not come under the permanent establishment and the entire control over the equipment was not with the foreign company but with the Indian company.\" 37. Before us ld. Counsel had relied upon the decision of the Co-ordinate Bench in the case of Nederlandsche Overzee Baggermaatsehappiji (supra) and also judgment of ITAT Hyderabad Bench in the case of Dharti Dredging & Infrastructual Ltd.(supra) wherein the aforesaid judgment of the Hon'ble Madras High Court has been considered. Accordingly, we hold that there is no PE of the assessee in India in terms of Article 5 of India-Ireland DTAA.” 51. Thus, following the decision of Coordinate Bench on identical set of facts, we hold that assessee/appellant has no PE in India in terms of Article 5 of India- Printed from counselvise.com 92 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals Ireland DTAA. The issue is decided in favour of the assessee/Appellant and against the Department. (V) Other Issues: 52. Apart from above four primary issues, other grounds have also been raised in appeals. Some of the grounds are on jurisdictional issues. Since, the assesses/appellants got relief on the primary issues, these issues have become academic at this stage. The gist of such issues is as under: i. Applicability of Article 6 & 7 of MLI- Principal Purpose Test (PPT); ii. Taxability of receipts as royalty u/s.9(1)(vii) of the Act and also interest as per India-Ireland DTAA; iii. Interest income taxable @5% u/s. 194LC of the Act; iv. Directions issued by the DRP are beyond jurisdiction; v. Final Assessment Order passed in contravention of the draft assessment order, as the total income determined therein is higher than that computed in the draft assessment order; vi. Draft assessment order issued in the name of a non-existing entity; vii. Erred in Passing two final assessment orders, both assessment orders are non-est as there cannot be two Final Assessment Orders for the same assessee for the same AY; viii. Incorrect demand raised vide notice of demand issued u/s 156 of the Act; ix. The assessee in ITA No. 2008 & 2022/Del/2025 has assailed the additionon the concept of Real Income Theory, i.e. during AY Taxing income was not received by the assessee. Printed from counselvise.com 93 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals 53. A bare reading of above grounds would show that some of the grounds go to the root of validity of assessment order but no submissions have been made on these grounds, at this stage. The ld. Counsel has prayed that the assesses be given liberty to make submissions on the above grounds, if the need so arises at later stage. Since, no submissions have been made on the above grounds, there are left open to be dealt with at the appropriate stage. 54. The appellants have assailed charging of interest u/s. 234A and/or 234B of the Act. Charging of interest under aforesaid sections is mandatory and consequential, hence, the said ground of appeal is dismissed. 55. The appellants have assailed initiation of penalty proceedings u/s. 270A of the Act. Challenge to penalty proceedings at this stage is premature; hence, the aforesaid ground raised in the respective appeals is dismissed. 56. In the result, appeals of the assesses are allowed, pro tanto. SA Nos. 501 to 507/Del/2025 57. The following applicants/assessees have filed Stay Application seeking extension of stay on recovery of outstanding demand: 1. DAE Leasing (Ireland) 18 Ltd; 2. DAE Leasing (Ireland) 19 Ltd; 3. AWAS 36698 Ireland Ltd; 4. AWAS 39427 Ireland Ltd; 5. DAE Leasing (Ireland) 4 Limited; 6. DAE Leasing (Ireland) 17 Limited; & 7. DAE Leasing (Ireland) 20 Limited Printed from counselvise.com 94 ITA No.994/Del/2025 (A.Y.2022-23)& Other Group Appeals Since appeals of the assesses/applicants have been decided, the Stay Applications have become infructuous, hence, the same are dismissed as such. Order pronounced in the open court on Tuesday the 30th day of September, 2025. Sd/- Sd/- (AVDHESH KUMAR MISHRA) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 30/09/2025 NV/- ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी/DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Asstt.Registrar)ITAT, DELHI Printed from counselvise.com "