SKY HIGH XCV LEASING COMPANY LIMITED,STATE OUTSIDE INDIA V. THE ASSISTANT COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAX), CIRCLE 3(1)(2), DELHI, DELHI

ITA 1484/DEL/2025

AI Insights

The case involves two appeals by Sky High XXII Leasing Company Ltd. and Sky High XCV Leasing Company Ltd., both of which are tax residents of Ireland and engaged in leasing aircraft to Indian aviation companies. The primary legal issues revolved around the classification of the leases as operating or financial, the applicability of the Multilateral Instrument (MLI) in relation to the India-Ireland Double Taxation Avoidance Agreement (DTAA), and the existence of a Permanent Establishment in India. The Tribunal's decision was influenced by similar cases previously adjudicated, which set a precedent for the current appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785793 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Appeal Filed On: 11-03-2025
• Other Referred Cases: Sky High Appeal XLIII Leasing Company Ltd. vs ACIT, Kosi Aviation Leasing Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, India-Ireland DTAA, Multilateral Instrument (MLI)
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M.S NETHRAPAL
• Assessee Lawyers: PERCY PARDIWALLA
• Keywords: Double taxation relief; Permanent establishment

Judgement Text

" आयकर अपीलीय अिधकरण िदʟी पीठ “डी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी क ृणवंत सहाय, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आअसं.1483/िदʟी/2025(िन.व. 2022-23) ITA No.1483/DEL/2025 (A.Y.2022-23) Sky High XXII Leasing Company Ltd. 2, Grand Canal Square, Grand Canal Harbour, Dublin D02 A342, Ireland PAN: ABFCS-0567-H ...... 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.1484/िदʟी/2025(िन.व. 2022-23) ITA No.1484/DEL/2025 (A.Y.2022-23) Sky High XCV Leasing Company Ltd., 2, Grand Canal Square, Grand Canal Harbour, Dublin D02 A342, Ireland PAN: ABFCS-0568-J ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, International Taxation, Circle 3(1)(2), Civic Centre, Minto Road, New Delhi 110002 ..... ᮧितवादी/Respondent Assessee by : Shri Percy Pardiwalla Sr. Advocate with S/Shri Madhur Agarwal, Harsh R. Shah & Pratik Poddar Advocates Department by : Shri M.S Nethrapal, CIT-DR सुनवाई कᳱ ितिथ/ Date of hearing : 30/09/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 31/10/2025 Printed from counselvise.com 2 ITA Nos.1483 & 1484/Del/2025 (AY 2022-23) आदेश/ORDER PER VIKAS AWASTHY, JM: These two appeals by two different assessees are directed against the assessment orders for AY 2022-23 in their respective cases. Both the impugned assessment orders are of even date i.e. 27.01.2025. Since, the grounds of appeal in both appeals are identical these appeals are taken up together for adjudication and are decided by this common order. 2. Shri Percy Pardiwala, Sr. Advocate appearing on behalf of the appellants/assessees submitted that the grounds raised in the present appeals are identical to the one decided by the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. vs ACIT, 177 taxmann.com 579 (Mum Trib.) and the order of Delhi Bench of Tribunal in the case of Kosi Aviation Leasing Ltd. vs. ACIT in ITA No. 994/DEL/2025 for AY 2022-23 decided on 30.09.2025 . The facts of the case and the nature of Lease Agreements in the instant appeals are identical to the one considered by the Tribunal in the above mentioned cases. The ld. Counsel submits that the submissions made in the above appeals would equally apply to the present appeals. 3. Per contra, M.S Nethrapal representing the department submitted that the department has engaged Special Counsel to argue these matters; hence, he is not in a position to make submissions in these appeals. 4. We have heard the submissions made by ld. Counsel for the assessees and have examined the orders of authorities below. The assessees are tax resident of Ireland and are engaged in the activity of Leasing of Aircrafts. The assessees have Printed from counselvise.com 3 ITA Nos.1483 & 1484/Del/2025 (AY 2022-23) leased AIRBUS, aircrafts to Indian Aviation Companies i.e. Spice Jet Ltd. and Go Air India Ltd., respectively. The Assessing Officer (AO) has inter alia held as under:- (i) The nature of lease is Finance Lease as against assessees claim of Operating Lease; (ii) There is no application of Article 8 of India-Ireland DTAA; (iii) The assessees have Permanent Establishment in India as the aircrafts are operating in India; & (iv) The assessees are not eligible to claim the benefit of India-Ireland DTAA as the said DTAA is a ‘covered tax agreement’, hence, provisions of Article 6 and 7 of Multilateral Instrument (MLI) would apply automatically. 5. The assessees in their respective appeals has assailed the assessment order by raising as many as 19 grounds of appeal. No submissions were made by the Counsel for the assessee in respect of ground no. 2 to 4 of appeal. The issues raised in other grounds of appeal are as under:- (i) Lease entered into by the assesses/appellants as Lessors with the Indian Aviation Companies as 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); (iii) Whether the assesses/appellants are eligible for benefit of Article 8 of India-Ireland DTAA?; & Printed from counselvise.com 4 ITA Nos.1483 & 1484/Del/2025 (AY 2022-23) (iv) Whether the aircraft leased by the assesses/appellants to an Indian lessee constitutes a PE?. 6. We find that the above issues have been considered by the Coordinate Mumbai Bench of the Tribunal in the case of Sky High Appeal XLIII Leasing Company Ltd. vs ACIT (supra) and Delhi Bench of the Tribunal in the case of Kosi Aviation Leasing Ltd. vs. ACIT (supra). The Tribunal after examining the Lease Agreements, Provisions of Act, MLI, India-Ireland DTAA various decisions and other relevant documents decided the primary issues as under:- (i) Lease is in the nature of Operating Lease; (ii) Single omnibus notification u/s.90(1) of the Act 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. Thus, in the instant case Article 6 & 7 of MLI would not render India-Ireland DTAA inoperative; (iii) The assessees are entitled to avail benefit of Article 8 of India-Ireland DTAA; & (iv) Leased Aircraft does not constitute PE in India. Since, the issues in the present set of appeals are identical. The findings given by the Co-ordinate Bench while adjudicating the appeals in the case of Kosi Aviation Leasing Ltd. vs. ACIT (supra) would mutatis mutandis apply to the present appeals as well. Printed from counselvise.com 5 ITA Nos.1483 & 1484/Del/2025 (AY 2022-23) 7. Hence, the present appeals by the assessees are allowed protanto, for parity of reasons. Order pronounced in the open court on Friday the 31st day of October, 2025. Sd/- Sd/- (KRINWANT SAHAY) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 31/10/2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 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 "