PRATT & WHITNEY CANADA (SEA) PTE. LTD.,SINGAPORE V. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE 2(2)(2), NEW DELHI, NEW DELHI

ITA 620/DEL/2025

AI Insights

The case involves multiple appeals by M/s Pratt & Whitney Canada Corp and M/s Pratt & Whitney Canada (Sea) Pte Ltd against the orders of the Deputy Commissioner of Income Tax, which had assessed substantial income from repair and maintenance services as FTS. The primary legal contention was whether the services rendered constituted 'technical services' under the DTAAs with India, which would make them taxable. The Tribunal examined the 'make available' clause in the DTAAs and previous judicial decisions to determine if the services provided met the criteria for FTS. The Tribunal found that the services did not meet the 'make available' requirement as the technical knowledge or skills were not imparted to the customers in a manner that they could independently apply it in the future.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 778133 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 31-01-2025
• Other Referred Cases: Goodrich Corporation ITA No. 173/2025 (Del), Goodrich Corporation ITA No. 988/Del/2024 (Del-Tri), Rockwell Collins Southeast Asia Pte Ltd ITA No. 2409/DEL/23, Global Vectra Helicorp Ltd. vs DCIT [2024] 159 taxmann.com 282 (Delhi - Trib.), Relx Inc 160 taxmann.com 109(DHC)
• Laws Referred To: India Canada DTAA, India Singapore DTAA, Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIKHIL KUMAR GOVILA
• Assessee Lawyers: I GOODRICH CORPORATION ITA NO. DEL; RAJAN VOHRA
• Keywords: Earning of tax free income; Initiation of penalty proceedings; Double taxation relief
• Section: 147; 148; 133(6); 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH, NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 665/DEL/2025 [A.Y 2018-19] ITA No. 666/DEL/2025 [A.Y 2022-23] M/s Pratt & Whitney Canada Corp. Vs. The Dy. C.I.T [resulted out of amalgamation of Pratt & Circle – 2(2)(2) Whitney Canada Corp and Turbo Engines Corp International Taxation 1000, Boul Marie Victorin, Longueuil New Delhi Quebec –J4G1A1 PAN – AAPCP 1595 F ITA No. 620/DEL/2025 [A.Y 2018-19] ITA No. 626/DEL/2025 [A.Y 2022-23] M/s Pratt & Whitney Canada (Sea) Pte Ltd Vs. The Dy. C.I.T 10, Loyang Crescent, Loyand Industrial Circle – 2(2)(2) Estate 509010 Singapore International Taxation New Delhi PAN – AAFCP 6345 K F (Applicant) (Respondent) Assessee By : Shri Rajan Vohra, CA Ms. Aaradhana Chauhan, CA Shri Rishab Jain, CA Department By : Shri Nikhil Kumar Govila, CIT-DR Date of Hearing : 10.07.2025 Date of Pronouncement : 06.10.2025 Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 2 of 25 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- The above captioned bunch of 4 separate appeals by two separate but connected assessees are preferred against the order of the ld. DCIT Cir. Int. Tax 2(2)(2) New Delhi dated 06.01.2025 pertaining to Assessment Year 2018-19 and dated 03.01.2025 for AY 2022-23. 2. The assessee M/s Pratt & Whitney Canada Corp. is governed by India Canada DTAA while the assessee M/s Pratt & Whitney Canada (Sea) Pte Ltd is governed by the India Singapore DTAA. The underlying facts and grounds pertaining to both the assessees are identical and common in the captioned appeals, and therefore they were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. Both the parties before us fairly agreed that ITA No. 665/DEL/2025 pertaining to Pratt and Whitney Canada Corp, be taken as the lead case and the decision rendered thereon would apply with equal force for other assessee also in the same group in view of identical facts, except Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 3 of 25 with variance in figures. Accordingly, we proceed to take up the appeal in ITA No. 665/DEL/2025. ITA No. 665/DEL/2025 [A.Y. 2018-19] [M/s Pratt & Whitney Canada Corp] 4. Grounds raised by the assessee in this A.Y read as under: “1. erred in assessing the income of Appellant at INR 2,42,65,46,501 as against Nil returned income. Final assessment order passed is time-barred 2. erred in not passing the final assessment order within the time limit prescribed under section 153 of the Act which is the outer time limit for passing the final assessment order and hence, the final assessment order dated 06.01.2025 is time barred and liable to be quashed; Order issued under section 147 read with 144C(13) of the Act following the DRP directions dated 06.01.2025 is void and invalid on account of the directions being issued in violation of Circular No. 19/2019 dated 14 August 2019 3. erred in issuing the impugned final assessment order following the DRP directions dated 20.12.2024 where the DRP directions are in contravention of Circular No. 19/2019 dated 14.08.2019 and thereby, vitiating the entire assessment proceedings; Taxability of repair and maintenance services rendered by the Appellant 4. erred in making an addition of INR 2,42,65,46,501 by treating total income received from repair and maintenance services rendered by the Assessee as Fee for technical services ('FTS') Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 4 of 25 under the provisions of the Act without appreciating the fact that repair and maintenance services were performed in Canada and do not constitute technical services as per the provisions of the Act as well as India- Canada Double Taxation Avoidance Agreement ('DTAA'). 5. erred in making an addition of INR 2,42,65,46,501 by treating total income received from repair and maintenance services rendered by the Assessee as FTS under the provisions of Article 12 of the India- Canada DTAA without appreciating the fact that repair and maintenance services do not 'make available' any technical knowledge, know-how or skill to the customers in India and hence, not taxable under Article 12 of India- Canada DTAA. 6. erred in alleging that INR 4,90,89,728, representing difference between amount reported by India Flysafe Aviation Limited in response to notice issued under section 133(6) of the Act (i.e., INR 4,92,58,837) and the amount disclosed by the Assessee in Income Tax Return filed for the subject year (i.e., INR 1,69,109) is taxable in the hands of the Assessee as FTS, without providing the transaction wise details to the Appellant during the course of Assessment proceedings. Levy of interest under section 234A of the Act 7. erred in charging the interest under section 234A of INR 14,69,61,360. Levy of interest under section 234B of the Act 8. erred in charging interest under section 234B of the Act of INR 21,51,93,420. Levy of late filing fee under section 234F of the Act Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 5 of 25 9. erred in charging late filing fee under section 234F of the Act of INR 10,000. Initiation of penalty proceedings u/s 270A of the Act 10. erred in initiating penalty proceedings under section 270A of the Act against the Appellant. The Appellant submits that each of the above grounds is independent and without prejudice to one another.” 5. Ground Nos. 1 is general in nature and need no adjudication. Ground Nos. 2 and 3 are not pressed and dismissed as not pressed. 6. Ground Nos. 4 to 6 pertain to repair and maintenance services rendered by the assessee. 7. Briefly stated, the facts of the case are that the assessee is a company established under the laws of Canada. The assessee specializes in design, manufacturing, sale and servicing of gas turbine engines, such as turbofan, turboprop and turboshaft engines and Auxiliary Power Units (APU). PWCC aftermarket business includes the production and sale of parts and the provision of maintenance, repair and overhaul (MRO) services for the engines it develops, manufactures, and sells to aerospace business customers. 8. For the subject year, the assessee did not file any return of income. On the basis of information that the assessee had received Rs 112,39,45,004/- on account of Royalty/FTS from one of its Indian Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 6 of 25 customers i.e., M/s India Flysafe Aviation Limited ('India Flysafe'), the Ld. AO issued a notice under section 148A(b) of the Act dated 31.03.2022 and consequently passed an order u/s 148A(d) dated 22.04.2022. The AO issued a notice u/s 148 dated 22.04.2022 in response to which the assessee filed a RoI declaring nil Income and claiming the receipt of Rs 237,74,56,773/- as exempt income. 9. During the year under consideration, the Assessee had the following receipts from its Indian customers: Sl. No Nature of income Amount (in INR) Taxability in return of income filed Income from repair and maintenance of aircraft engines 2,36,18,82,958 Non-taxable Sale of Publications in relation to aircraft engines 1,38,86,712 Receipts from engineering service 12,86,000 Support Services in relation to aircraft engines 4,01,103 Total receipts declared in the return of income filed 2,37,74,56,773 10. The assessee had claimed receipts from aforesaid services as non- taxable while filing return of income for the subject year on the ground that since the services of repair, maintenance, publication, engineering and support services resulting in income of Rs. 2,37,74,56,773/-, did not “make available” any technical knowledge, experience, skill, know-how or processes or consisted of the development and transfer of a technical Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 7 of 25 plan or technical design, the same did not qualify as Fees for Technical Services ('FTS') as per the provisions of India-Canada Double Taxation Avoidance Agreement ('DTAA'). 11. Further, during the course of assessment proceedings, the Assessing Officer also noticed that the assessee had also received from India Flysafe amounting an amount of Rs. 4,90,89,728/- which he treated to be in the nature of FTS and held the same to be taxable under the provisions of the Act as well as India - Canada DTAA. 12. The Assessing Officer passed draft assessment order under section 144C(1) of the Act on 23.03.2024 and held that the payments received from the Indian customers on account of repair, maintenance and related services amounting to Rs. 242,65,46,501/- is taxable income of the assessee as Fees for Technical services ('FTS') under the provisions of section 9(1)(vii) of the Act and under the provisions of India - Canada DTAA. 13. Aggrieved, the assessee went in appeal before the DRP who confirmed the same and the AO passed assessment order under section 144C(1) r.w. 144C(13) of the Act on 06.01.2025 assessing the income of the assessee at Rs. 242,65,46,501/-. Aggrieved the assessee is before us. 14. Before us, the ld. counsel for the assessee argued that receipt from Indian customer on account of repair and maintenance on aircraft Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 8 of 25 engines are not to be treated as FTS because the ‘make available’ clause in the India Canada DTAA as well as India Singapore are not satisfied. The ld. counsel for the assessee relied on decisions of the following: i) Goodrich Corporation ITA No. 173/2025 (Del) ii) Goodrich Corporation ITA No. 988/Del/2024 (Del-Tri) iii) Rockwell Collins Southeast Asia Pte Ltd ITA No. 2409/DEL/23 iv) Global Vectra Helicorp Ltd. vs DCIT [2024] 159 taxmann.com 282 (Delhi - Trib.), v) Relx Inc 160 taxmann.com 109(DHC) 15. The ld AR further submitted that the ld AO had followed the assessment orders for AY 2014-15, AY 2016-17 and AY 2020-21. The ld AR stated that the assessment order for AY 2014-15 was quashed by the ITAT on technical ground following the decision of Hon’ble Supreme Court in the case of Rajeev Bansal. The ld AR further submitted that the assessment for AY 2016-17 and AY 2020-21 are pending before the CIT(A). For AY 2015-16 and 2017-18 there was no such addition made. 16. Per contra, the ld DR strongly relied on the orders of the AO and the Ld DRP and did not controvert the status of earlier years as stated by the ld AR. 17. We have heard the rival submissions and have carefully perused the materials on record. The issue before us to be adjudicated is the taxability of receipts from Indian customer on account of repair and maintenance on aircraft engines to be treated as FTS under the India- Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 9 of 25 Canada DTAA and the India-Singapore DTAA. We find that both the India- Canada DTAA and the India -Singapore DTAA have the “make available” clause to be complied with for the receipts being treated as FTS. Article 12(4)(b) of India-Canada DTTA provides as follows: Article 12.4. For the purposes of this Article, 'fees for included services' means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or (b) make available technical knowledge, experience, skill, know-how, or processes or consist of the development and transfer of a technical plan or technical design. 5. Notwithstanding paragraph 4, 'fees for included services' does not include amount paid: (a) for services that are ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of property other than a sale described in paragraph 5(a); (b) for services that are ancillary and subsidiary to the rental of ships, aircraft, containers or other equipment used in connection with the operation of ships or aircraft in international traffic; (c) for teaching in or by educational institutions; (d) for services for the personal use of the individual or individuals making the payment; or (e) to an employee of the person making the payments or to any individual or firm of individuals (other than a company) for professional services as defined in Article 14. Similarly, the India-Singapore DTTA defines FTS similarly as follows: Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 10 of 25 Article 12 (4). The term \"fees for technical services\" as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received ; or (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein ; or (c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. 18. We find that both the Treaties incorporate the “make available” clause for treating the payments as FTS. On the issue of meaning of and satisfaction of the clause “make available”, the Hon'ble Jurisdictional High Court in the case of Goodrich Corporation ITA No. 173/2025 (Del) vide order dated 23.05.2025 has held as under: “14. In CIT v. De Beers India Minerals P. Ltd.: (2012) 346 ITR 467, the Karnataka High Court had explained the import and meaning of ‘make available’ as used in Article 12(4) of the India- USA DTAA as under: “21. What is the meaning of \"make available\". The technical or consultancy service rendered should be of such a nature that it \"makes available\" to the recipient technical knowledge, know-how and the like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 11 of 25 payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology \"making available\", the technical knowledge, skills, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered \"made available\" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. In other words, payment of consideration would be regarded as \"fee for technical/included services\" only if the twin test of rendering services and making technical knowledge available at the same time is satisfied.” 15. This court in a recent decision in CIT v. Relx Inc.: (2024) 470 ITR 611 had concurred with the view of this court in CIT Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 12 of 25 v. Bio-Rad Laboratories (Singapore) Pte. Ltd.: (2023) 459 ITR 5 and observed as under: 15. Similarly, in order for that income to fall within the ambit of “fees for included services”, it was imperative for the Department to establish that the assessee was rendering technical or consultancy services and which included making available technical knowledge, experience, skill, know-how or processes. As has been found by the Tribunal, the access to the database did not constitute the rendering of any technical or consultancy services and in any case did not amount to technical knowledge, experience, skill, know-how or processes being made available. 16. We note that while explaining the meaning liable to be ascribed to the expression “make available”, the court in CIT v. BioRad Laborataries (Singapore) Pte. Ltd. had affirmed the following opinion as expressed by the Tribunal. This is evident from a reading of paras 14, 14.1 and 15, which is extracted below (459 ITR p. 7): (SCC OnLine Del paras 14 and 15) “ 14. According to the Tribunal, the agreement between the respondent-assessee and its Indian affiliate had been effective from 1-1-2010, and if, as contended by the appellant-Revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period. Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 13 of 25 14.1. Notably, this aspect is adverted to in paras 17 to 23 of the impugned order. For convenience, the relevant paras are extracted hereafter: ‘A perusal of the aforementioned provision shows that in order to qualify as fees for technical services, the services rendered ought to satisfy the “make available” test. Therefore, in our considered opinion, in order to bring the alleged managerial services within the ambit of fees for technical services under the India-USA Double Taxation Avoidance Agreement, the services would have to satisfy the “make available” test and such services should enable the person acquiring the services to apply the technology contained therein agreement is effective from 1-1-2009 and we are in Assessment Years 2018- 2019 and 2019-2020. In our considered opinion, if the assessee had enabled the service recipient to apply the technology on its own, then why would the service recipient require such service year after year every year since 2009? This undisputed fact in itself demolishes the action of the assessing officer/Dispute Resolution Panel. The facts on record show that the recipient of the services is not enabled to provide the same service without recourse to the service provider i.e. the assessee. In our humble opinion, mere incidental advantage to the recipient of services is not enough. The real test is the transfer of technology and on the given facts of the case, Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 14 of 25 there is no transfer of technology and what has been appreciated by the assessing officer/learned Commissioner of Income Tax (Appeals) is the incidental benefit to the assessee which has been considered to be of enduring advantage. In our understanding, in order to invoke make available clauses, technical knowledge and skill must remain with the person receiving the services even after the particular contract comes to an end and the technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider.’ (emphasis is ours) 15. We tend to agree with the analysis and conclusion arrived at by the Tribunal.” 19. The co-ordinate bench of ITAT Delhi in ITA No. 988/DEL/2024 Goodrich Corporation order dated 22.08.2024 had held as under: “3. The assessee is a non-resident, TRC holder of USA primarily engaged in the business of providing services in the nature of repair & maintenance of aircraft equipment. 4. Before the AO, the assessee submitted that for the purpose of repair & maintenance, the aircraft equipment are shipped outside India where they are repaired and sent back to Indian customer to India and hence they do not qualify the clause of ‘make available’. However, the AO held that the on ground aircraft services provided by the assessee qualify it as ‘make available’. 5. The ld. DRP held that “repair and maintenance services of aircraft parts is a very specialized field Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 15 of 25 requiring technical expertise skill and experience at every stage. They are specific and customer based. Customer of the assessee are airlines which operate passenger and goods carrier. They are not equipped in handling the issues related to break down of aircraft. It is a complete and separate science and art in itself. The services provided by way of repair and maintenance are technical in nature and fall under ambit of services under Fee for Technical Services. As discussed above, once it is established that the services which have been provided are specialized customer-based services, what remains to see is whether they pass the test of make available or not under India USA DTAA. Interpretation of make available clause will differ with specific areas of the services under consideration. For instance, interpretation of make available for a concern providing services for the agricultural sector vis-à-vis education sector would be vastly different from each other. In the same way interpretation of make available is different for a concern engaged in providing services revolving around a highly specialized sector such as Aircraft industry. The make available clause deals with not only making available technical knowledge or know-how or processes or consist of the development and transfer of a technical plan or technical design but also deals with imparting experience and skill. Within the make available clause itself the enduring benefit would be different for all the items mentioned in it for example the enduring benefit of a technical design or know-how cannot be same as enduring benefit coming from imparting of skill or experience. In the former case enduring benefit will outlive the enduring benefit brought in by the latter. In case of assessee company, the enduring benefit and make available fall under skill/experience which is shared by assessee company with its customers. Both the parties in these Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 16 of 25 service transactions are engaged in highly specialized work which can be rendered and availed by them only and once the skill/experience is rendered, it continues to give benefit until required again. When it comes to services rendered as skill and experience, the make available and enduring benefit, will almost always have a comparatively short shelf life in this context. This being the case, it cannot be ignored that the make available clause and enduring benefits are satisfied and the service is not of the nature which is so highly technical and specialized that it should be taxed as Fee for Technical Services.” 6. From the above, we find that it could be technical services but the ‘make available’ clause is totally absent. The repairs & maintenance services are ‘not made available’ to the clients so that in future they can repair & maintain their own. There is no transfer of technology, no transfer of skill or knowledge or processes. There is no imparting of experience or benefit. The ld. DRP wrongly interpreted that the ‘enduring benefit’ gained by the client by the way of repairs & maintenance is akin to ‘make available’ which cannot be accepted. Rather, it should be the enduring benefit to the clients to undertake repairs & manage the maintenance services, then only it can be considered that the ‘make available’ clause is satisfied. Since, such ‘make available’ clause is not satisfied, the services cannot be treated as FTS as per India-USA DTAA.” 20. The ld. counsel for the assessee also relied on the decision of the co-ordinate bench in the case of Rockwell Collins Southeast Asia Pte Ltd ITA No. 2409/DEL/23 dated 14.11.2024 wherein it has followed the Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 17 of 25 order of the ITAT, Delhi in the case of Goodrich Corporation [supra] and has held as under: “the revenue earned by the assessee from rendition of repairs and maintenance services of aircraft equipment cannot be construed as FTS both under the Act as well as under the treaty. Accordingly, Ground Nos. 4 and 5 raised by the assessee are allowed.” 21. There is a recent development in the case of the assessee's own customer namely Global Vectra Helicorp Ltd. vs DCIT [2024] 159 taxmann.com 282 (Delhi - Trib.), where the co-ordinate bench has held that repair and maintenance services rendered to Global Vectra are not liable to be taxed either under the provisions of the Act or under the provisions of India-Canada DTAA. In the said case, Global Vectra made payments to certain non-residents including assessee in lieu of repair and maintenance services related to Helicopter parts/engine which was rendered outside India on which tax was not deducted u/s 195 of the Act by Global Vectra reason being the said transactions were not in the nature of FTS and therefore, not taxable in India. In the said case, the ITAT held that the repair services are not liable to be taxed under the provisions of the Act as the entire repair and maintenance of helicopter parts was carried out outside India and nothing was done in India by the non-resident payees. Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 18 of 25 22. Further, in relation to 'make available' clause, the ITAT upheld the order of first appellate authority and held that the payments made by Global Vectra to the residents of countries where the respective tax treaty provisions have 'make available' clause such as USA, UK, Australia, Canada and Singapore are not liable to be taxed in the hands of the payee (including the assessee) and hence, there was no liability to deduct taxes at source u/s 195 of the Act as there was no income chargeable to tax in the hands of the assessee as per section 195 of the Act. In the case of Global Vectra Helicorp Limited [supra], Delhi ITAT held as under: “18. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. Undisputedly, in the assessment years under dispute, the assessee had made payments to certain non-residents towards repair and maintenance of helicopter parts. As per the process followed by the assessee for repair and maintenance, it’s engineering department identifies helicopter parts required for or are due for maintenance/overhaul in terms with DGCA guidelines. Once the engineering department identifies the helicopter parts required for maintenance/overhaul, it puts up a request to the Procurement Department. On receipt of request, the Procure Department issues repair orders and sends the parts to be repaired to the respective non-resident entities, who undertake the repairing/overhauling of such parts. On receipt of such repair order and parts, the non-resident entities issue an Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 19 of 25 estimate/quote of charges for repair and maintenance work. On approval of such estimate/quote by the Procurement Department, the non-resident companies undertake necessary repair and maintenance work of the said parts. After repair/overhaul, the non-resident entities send the repaired parts/item along with invoices for repair and maintenance work carried out. On receipt of the invoices and helicopter parts, the assessee makes the payments after taking necessary declaration and documents from the non- resident entity. It is further evident, to support its contention that there was no requirement for deduction of tax at source as the income of the non-residents are not taxable in India, the assessee had furnished the details of maintenance/repair, sample copies of invoices, sample copies of airway bills evidencing that the parts of the helicopters were sent outside India for carrying out necessary repair and sample copies of Form 15CB and 15CA etc. The Assessing Officer, however, held that the services rendered by the non- residents are technical and consultancy in nature, hence, quantifies as FTS requiring withholding of tax under section 195. 19. On a careful reading of section 195(1) of the Act, it is very much clear that the provision gets triggered only when payment made to the non-resident entity is chargeable to tax under the provisions of the Act. Thus, what is required to be examined is whether the payments made by the assessee to nonresidents are chargeable to tax under the provisions of Act. As discussed earlier, in the assessment years in dispute the assessee has made payment to entities resident in USA, UK, UAE, Australia, Canada, Singapore, Spain, Netherlands and France. Undisputedly, India has Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 20 of 25 entered into DTAAs with all these countries. However, the provisions in the treaties with the respective countries are at variance. 20. Insofar as taxability of FTS is concerned, treaties can be classified in the following categories: i. In the first category USA, UK, Australia, Canada and Singapore are placed since the definition of FTS under these treaties are more or less identical and contain make available condition to qualify as FTS. ii. In the second category countries like, Netherlands, Spain and France can be put in as the definition of FTS in treaties are wider in scope and do not contain make available clause. iii. In the third category UAE can be put as in the treaty with UAE there is no provision concerning FTS. 21. Insofar as the countries falling in the first category, such as, USA, UK, Australia, Canada and Singapore, admittedly, the treaty provisions have make available clause. Therefore, to treat a particular receipt to be in the nature of FTS, it has to be demonstrated that in course of rendition of services, the service provider had made available technical knowledge, know-how, skill etc. to the service recipient so as to enable him to perform such services in future independently without any assistance of the service provider. 22. In the facts of the present appeal, the Assessing Officer has failed to demonstrate with cogent evidence that the make available condition enshrined in the concerned treaties are satisfied. In fact, learned first appellate authority has recorded a categorical factual Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 21 of 25 finding that in course of rendition of service technical knowledge, know-how, skill, etc. has not been made available to the service recipient by the service provider. Thus, in absence of any contrary material brought on record by the Revenue, we concur with the view expressed by learned first appellate authority. Once the payments do not qualify as FTS under the respective treaty provisions, in terms with section 90(2) of the Act, treaty provisions being more beneficial would override the provisions contained in the domestic law. That being the legal position, in our view, the payments made to the residents of USA, UK, Australia, Canada and Singapore, being not chargeable to tax in India, section 195 is not applicable. Accordingly, we hold that the assessee was not required to deduct tax at source while making payment to residents of the aforesaid countries.” 23. The factual matrix in the instant case of the assessee is that the assessee manufactures, sells and provide servicing of gas turbine engines, such as turbofan, turboprop and turboshaft engines and Auxiliary Power Units (APU). When a customer purchases an aircraft from an aircraft manufacturer, it also purchases the engine associated with the aircraft which belongs to PWCC. As opposed to the large commercial engines market or APU, aircraft manufacturers do not typically offer engine alternatives to their platforms for regional aviation, general aviation, oг helicopters (PWCC main products) and Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 22 of 25 hence, customers purchasing an aircraft will necessarily purchase PWCC's engine. The customer acquires title to the engines from the aircraft manufacturer, not from PWCC and generally the repair and maintenance plan with PWCC is decided at the time of sale of engine along with the aircraft to the customers. Under the repair and maintenance services, company offers customers two options for maintenance: (i) enrolling in a Pay Per Hour (PPH) program/maintenance plans or (2) independent repairs as and when required. 24. In such a scenario, what we have to determine is whether when the assessee provides repairs and maintenance services to its customers, does it transfer the technical knowledge and expertise to its customer so that the customer can carry out the repairs and maintenance of the aircraft/engines itself. We find that the AO has not established that such a technical knowledge is transferred to the customer to make them self sufficient/relient in using the technology and that the customer has derived an enduring benefit and utilized the knowledge or know-how on his own in future without the aid of the service provider. We do not find that the technical knowledge, skills, etc remained with the customer receiving the services even after the particular contract comes to an end. Thus, we are of the considered view that the requirement of “make Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 23 of 25 available” clause as per the India-Canada DTAA and India-Singapore DTAA are not satisfied in the case of the assessee. Since the receipts on account of repair and maintenance received by the assessee during the subject year from other customers are of similar nature as the receipts from Global Vectra discussed above, therefore, the above judgement applies to all the receipts from repair and maintenance received by the assessee. In view of the judicial precedence as discussed above, we have no hesitation to hold that the receipts on account of repair and maintenance services received by the assessee are not liable to be taxed as FTS in the hands of the assessee during the subject year. Ground 4 to 6 are allowed. 25. Ground Nos. 7 to 9 are consequential and ground 10 is premature. ITA No. 666/DEL/2025 [A.Y. 2022-23] [M/s Pratt & Whitney Canada Corp] 26. Similar facts have been considered by us in ITA No. 665/DEL/2025 [supra]. The facts being mutatis mutandis similar to those of ITA No. 665/DEL/2025, respectfully following the same, we order accordingly. Grounds no 1 is general. Ground 2 and 3 are not pressed and dismissed as not pressed. Ground 4 and 5 are allowed. Ground 6 is consequential and ground 7 is premature. Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 24 of 25 ITA No. 620/DEL/2025 [A.Y. 2018-19] M/s Pratt & Whitney Canada (Sea) Pte Ltd 27. Similar facts have been considered by us in ITA No. 665/DEL/2025 [supra]. The facts being mutatis mutandis similar to those of ITA No. 665/DEL/2025, respectfully following the same, we order accordingly. Grounds no 1 is general in nature. Ground 2 and 3 are not pressed and dismissed as not pressed. Ground 4 to 6 are allowed. Ground 7 and 8 are consequential and ground 9 is premature. ITA No. 626/DEL/2025 [A.Y. 2022-23] [M/s Pratt & Whitney Canada [Sea] Pte Singapore] 28. Similar facts have been considered by us in ITA No. 665/DEL/2025 [supra]. The facts being mutatis mutandis similar to those of ITA No. 665/DEL/2025, respectfully following the same, we order accordingly. Grounds no 1 is general in nature. Ground 2 and 3 are not pressed and dismissed as not pressed. Ground 4 to 7 are allowed. Ground 8 is consequential and ground 9 is premature. 29. In the result, assessee’s appeals in ITA No. 665, 666, 620 and 626/DEL/2025 are partly allowed. Printed from counselvise.com ITA Nos. 665,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Page 25 of 25 The order is pronounced in the open court on 06.10.2025. Sd/- Sd/- [VIKAS AWASTHY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 06th OCTOBER, 2025. VL/ Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order 2. Date on which the typed draft order is placed before the Dictating Member 3. Date on which the typed draft order is placed before the other Member [in case of DB] 4. Date on which the approved draft order comes to the Sr. P.S./P.S. 5. Date on which the fair Order is placed before the Dictating Member for sign 6. Date on which the fair order is placed before the other Member for sign [in case of DB] 7. Date on which the Order comes back to the Sr. P.S./P.S for uploading on ITAT website 8. Date of uploading, inf not, reason for not uploading 9. Date on which the file goes to the Bench Clerk 10. Date on which the file goes for Xerox 11. Date on which the file goes for endorsement 12. The date on which the file goes to the Superintendent for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order 14. Date on which the file goes to the dispatch section for dispatch the Tribunal order 15. Date of Dispatch of the Order 16. Date on which the file goes to the Record Room after dispatch the order Printed from counselvise.com "