SKY HIGH XCV LEASING COMPANY LIMITED,IRELAND vs. ASSISTANT COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX) CIRCLE 3(1)(2), DELHI , DELHI

ITITA 54/DEL/2026Status: DisposedITAT Delhi24 June 2026AY 2023-246 pages
AI SummaryAllowed

What were the facts?

The appeals by Sky High XCV Leasing Company Limited and Sky High XXII Leasing Company Limited are against assessment orders for AY 2023-24. The Revenue was represented by none. The assessees are tax residents of Ireland, engaged in aircraft leasing to Indian aviation companies. The Assessing Officer (AO) held the leases as finance leases, denied benefits of the India-Ireland DTAA due to MLI applicability, rejected Article 8 of the DTAA, and found a Permanent Establishment (PE) in India. The Dispute Resolution Panel (DRP) adopted its directions from AY 2022-23, noting the Department's non-acceptance of a prior Tribunal order. The assessees argued that the issues for AY 2023-24 were identical to AY 2022-23, where the Tribunal ruled in their favour.

What did the Tribunal hold?

The Tribunal held that the issues in the present appeals for AY 2023-24 are identical to those adjudicated for AY 2022-23, where the Tribunal had ruled in favour of the assessees. The DRP had also acknowledged the identical nature of the issues and adopted its previous year's directions, noting the Department's intention to contest the Tribunal's order. The Tribunal's prior decision for AY 2022-23 had found the leases to be operating leases, held that MLI Articles 6 and 7 did not automatically amend the India-Ireland DTAA without specific notification under section 90(1) of the Act, confirmed the applicability of Article 8 of the DTAA, and concluded that the leased aircraft did not constitute a Permanent Establishment (PE) in India. Therefore, applying the same reasoning mutatis mutandis, the Tribunal set aside the impugned assessment orders. The operative direction was the setting aside of the assessment orders and allowing the appeals.

What were the issues?

1. Whether the directions issued by the Dispute Resolution Panel (DRP) under section 144C(5) of the Income Tax Act, 1961, are valid? (Question of law and fact). 2. Whether the assessment order is barred by limitation? (Question of law). 3. Whether the assessees are eligible to claim the benefit of the India-Ireland DTAA, considering the applicability of Articles 6 and 7 of the Multilateral Instrument (MLI) as the DTAA is a 'covered tax agreement'? (Question of law). 4. Whether Article 8 of the India-Ireland DTAA is applicable? (Question of law). 5. What is the nature of the lease, i.e., Finance Lease or Operating Lease? (Question of fact). 6. Whether the assessees have a Permanent Establishment (PE) in India? (Question of law and fact). Assessee's contentions: The assessees conceded grounds 2 and 3 (DRP directions and limitation). For the core issues, they argued that the facts and issues for AY 2023-24 are identical to AY 2022-23, for which the Tribunal had decided all issues in their favour in a common order dated 31.10.2025. They relied on the Tribunal's decision for AY 2022-23, which held the leases as operating leases, that MLI Articles 6 and 7 did not render the India-Ireland DTAA inoperative due to lack of specific notification, that Article 8 of the DTAA was applicable, and that leased aircraft did not constitute a PE in India. Revenue's contentions: The Revenue was represented by none. No arguments were recorded for the Revenue.

Which sections of the Income-tax Act were involved?

Section 144C(5),Section 90(1)

AI-generated summary — verify with the full judgment below

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 54/DEL/2026 निर्धारण वर्ा/Assessment. Year: 2023-24) (प्रत्यर्थी Respondent) (अपीलार्थी Appellant) Permanent Account Number of Assessee: ABFCS0568J

ITITA 55/DEL/2026 निर्धारण वर्ा/Assessment Year: 2023-24) (अपीलार्थी Appellant) (प्रत्यर्थी Respondent) Permanent Account Number of Assessee: ABFCS0567H S/Shri Madhur Agarwal, Advocate अपीलधर्थी द्वारा/Assessee represented by: (virtual), Harsh Shah, (virtual), Pratik Poodar, Shreyas Sardesai प्रत्यर्थी द्वारा/Revenue represented by: None

सुनवाई की तारीख / Date

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