ACCIPITER INVESTMENTS AIRCRAFT 2 LIMITED,IRELAND vs. ASSTANT COMMISSIONER OF INCOME TAX INT TAX CIRCLE 1(1)(1) NEW DELHI, NEW DELHI

ITITA 113/DEL/2026Status: DisposedITAT Delhi29 June 2026AY 2023-202437 pages
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What were the facts?

This judgment consolidates twelve appeals filed by various Irish companies (assessees) against assessment orders for Assessment Year 2023-24. The assessees are engaged in leasing commercial aircrafts, primarily to Inter Globe Aviation Ltd. (Indigo) in India. The appeals challenge assessment orders passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961. The assessees are tax residents of Ireland. The revenue, represented by the Assistant Commissioner of Income Tax, International Tax Circle, is the respondent. The appeals were heard together due to common facts and issues. The senior counsel for the assessees stated they would not press the ground of limitation concerning the validity of the assessment orders.

What did the Tribunal hold?

The Tribunal held that the issue concerning the applicability of MLI provisions and their effect on the India-Ireland DTAA is decided in favour of the assessees. The Tribunal reasoned that while the MLI modifies DTAAs, its implementation requires domestic law compliance. Specifically, a notification under Section 90(1) of the Income Tax Act, 1961, is mandatory for legislating the modifications made by the MLI. The Tribunal found that a single omnibus notification issued under Section 90(1) is insufficient to legislate amendments to existing bilateral tax treaties. A specific notification for each country is required where the MLI alters bilateral treaties. Therefore, the amended provisions of the DTAA cannot be given effect without a separate notification as mandated by Section 90(1). Consequently, the issue of MLI applicability and its impact on the DTAA benefits is decided in favour of the assessees. The Tribunal also noted that the DRP had made inappropriate comments on previous Tribunal orders, emphasizing the binding nature of such orders on subordinate authorities, citing the Supreme Court's decision in UOI vs. Kamlakshi Finance Corporation Ltd. The appeals were allowed in full. The stay applications were dismissed as infructuous.

What were the issues?

1. Whether the lease of aircrafts by the assessees constitutes a Finance Lease or an Operating Lease? (Question of fact and law, concerning the nature of the transaction). 2. Whether the assessees are eligible for the benefits of Article 8 of the India-Ireland Double Taxation Avoidance Agreement (DTAA)? (Question of law, concerning treaty interpretation). 3. Whether the provisions of Article 6 and 7 of the Multilateral Instrument (MLI) are applicable, leading to the denial of benefits under the India-Ireland DTAA? (Question of law, concerning the interaction of MLI with DTAA). Assessee's Contentions: The assessees argued that the Assessing Officer (AO) incorrectly re-characterized operating leases as finance leases. They contended that the AO erred in holding that the assessees are ineligible for benefits under the India-Ireland DTAA, asserting that the MLI provisions, specifically Articles 6 and 7, would automatically override the DTAA. They also argued that the AO wrongly denied the benefit of Article 8 of the India-Ireland DTAA. The assessees relied on coordinate bench decisions of the Tribunal in similar cases, such as Celestial Aviation Trading 15 Ltd. vs. ACIT and Kosi Aviation Leasing Ltd. vs. ACIT, which ruled in favour of the assessees on these issues. They also highlighted that the Dispute Resolution Panel (DRP) made adverse comments on the Tribunal's binding decisions. Revenue's Contentions: None appeared for the revenue. The judgment notes that the CIT-DR was on casual leave and no substitute officer was deputed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 90(1)

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Heard together (3 matters)

SA No. 181/DEL/2026
SA No. 182/DEL/2026
SA No. 183/DEL/2026

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अधिकरण, धिल्ली पीठें, नई धिल्ली INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI BENCH: D BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITITA 107/DEL/2026 SA No. 181/DEL/2026 निर्धारण वर्ा/Assessment Year: 2023-24) GILEAD AVIATION IRELAND 1 ASSISTANT COMMISSIONER LIMITED OF INCOME TAX INT TAX CIRCLE 1(3)(1) C/O DMD ADVOCATES 30 Vs. CIVIC CENTRE MINTO ROAD NIZAMUDDIN EAST NEW DELHI NEW DELHI 110002 110013 प्रत्यर्थी Respondent) अपीलार्थी Appellant) Permanent Account Number of Assessee: AAJCG4985A

ITITA 108/DEL/2026 SA No. 182/DEL/2026 निर्धारण वर्ा/ Assessment Year: 2023-24) ASST. COMMISSIONER OF AWAS 3 IRELAND LIMITED INCOME TAX C/O DMD ADVOCATES 30 (प्रत्यर्थी Respondent) (अपीलार्थी Appellant) Permanent Account Number of Assessee: AAWCA4224D

ITITA 109/DEL/2026 SA No. 183/DEL/2026 निर्धारण वर्ा/ Assessment Year: 2023-24) ASSISTANT CELESTIAL AVIATION COMMISSIONER OF TRADING 100 LIMITED INCOME TAX C/O DMD ADVOCATES 30 (प्र

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