PEMBROKE AIRCRAFT LEASING 4 LIMITED,IRELAND vs. DEPUTY COMMISSIONER OF INCOME TAX INT TAX CIRCLE 2(2)(2) NEW DELHI, NEW DELHI

ITITA 127/DEL/2026Status: DisposedITAT Delhi24 June 2026AY 2023-2435 pages
AI SummaryAllowed

What were the facts?

The appeals were filed by seven Irish companies engaged in leasing commercial aircrafts, primarily to Inter Globe Aviation Ltd. (Indigo) in India, for Assessment Year 2023-24. The assessees challenged assessment orders passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961. The Assessing Officer (AO) re-characterized operating leases as finance leases, denied benefits under the India-Ireland Double Taxation Avoidance Agreement (DTAA) citing the applicability of the Multilateral Instrument (MLI) Articles 6 and 7, and held that Article 8 of the India-Ireland DTAA was not applicable. The assessees relied on previous Tribunal decisions. The Revenue did not appear for the hearing, citing reasons including incomplete paper books and seeking time for fair submissions.

What did the Tribunal hold?

The Tribunal held that the issue of whether the leases were finance or operating leases was not pressed by the assessee's counsel. Regarding the applicability of the MLI, the Tribunal, following the decisions in Celestial Aviation Trading Ltd., Kosi Aviation Leasing Ltd., and Sky High Appeal XLIII Leasing Company Ltd., held that the MLI modifies DTAAs. However, for these modifications to be given effect in India, a specific notification under Section 90(1) of the Income Tax Act, 1961, is mandatory for each country where the MLI alters a bilateral treaty. The Tribunal found that a single omnibus notification issued by the government was insufficient to legislate the amendments to the DTAA. Therefore, the amended provisions of the DTAA could not be given effect without a specific notification as mandated by Section 90(1). This issue was decided in favour of the assessees and against the Revenue. Consequently, the appeals were allowed in their entirety. The Stay Applications were dismissed as infructuous.

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the leases entered into by the assessees were finance leases or operating leases (a question of mixed law and fact). 2. Whether the assessees were eligible for the benefits of Article 8 of the India-Ireland Double Taxation Avoidance Agreement (DTAA) (a question of law). 3. Whether Articles 6 and 7 of the Multilateral Instrument (MLI) were applicable, thereby denying benefits under the India-Ireland DTAA (a question of law). Assessee's contentions: - The assessees argued that the AO erred in re-characterizing operating leases as finance leases. - They contended that they were eligible for benefits under Article 8 of the India-Ireland DTAA. - They argued that the MLI provisions (Articles 6 and 7) were not applicable due to the absence of a specific notification under Section 90(1) of the Act for the India-Ireland DTAA, relying on decisions in Celestial Aviation Trading Ltd. vs. ACIT, Kosi Aviation Leasing Ltd. vs. ACIT, and Sky High Appeal XLIII Leasing Company Ltd. vs. ACIT. Revenue's contentions: - The Revenue argued that the MLI is applied alongside existing tax treaties, modifying their application with respect to BEPS measures, and that all consequences were contemplated by the MLI with certainty. - They contended that the MLI has the effect of altering/modifying bilateral treaty provisions and that a notification under Section 90(1) is valid only after the section makes provision for it. - They relied on the Memorandum to the Finance Act, 2020, explaining the amendment to Section 90 of the Act to align DTAA with MLI.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

SA No.174/Del/2026
SA No.175/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 127/DEL/2026 SA No.174/Del/2026 निर्धारण वर्ा/Assessment Year: 2023-24) DEPUTY COMMISSIONER OF INCOME TAX INT TAX PEMBROKE AIRCRAFT CIRCLE 2(2)(2) NEW DELHI LEASING 4 LIMITED DEPUTY COMMISSIONER OF C/O DMD ADVOCATES 30 110013, NEW DELHI-110013, CENTRE, MINTO ROAD NEW DELHI 110002 (अपीलार्थी Appellant) (प्रत्यर्थी Respondent) Permanent Account Number of Assessee: AALCP0694B

ITITA 116/DEL/2026 SA No.175/Del/2026 निर्धारण वर्ा/Assessment Year: 2023-24) DEPUTY COMMISSIONER OF INCOME TAX INT TAX VERMILLION AVIATION CIRCLE 3(1)(1) NEW DELHI (EIGHT) LIMITED DEPUTY COMMISSIONER OF C/O DMD ADVOCATES 30 110013, NEW DELHI-110013, MINTO ROAD NEW DELHI 110002 (प्रत्यर्थी Respondent) (अपीलार्थी Appellant) Permanent Account Number of Assessee: AAHCV7517P

ITITA 127/DEL/2026 & SA 174/DEL/2026 PEMBROKE AIRCRAFT LEASING 4 LIMITED & Other Appeals ITITA

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 144C(13)

All 3,299 judgments and leading authorities on Section 144C(13) →

Recent GST High Court judgments

Search GST case law →