BOMBARDIER INC.,QUEBEC, CANADA vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(2), DELHI, DELHI

6. The case of the lower authorities is that the nature and scope of SPQ 400 Agreement was in the nature of fee for technical services provided by the Assessee accordingly taxable under section 9(1)(vii) of the Act under the Domestic Law and also under Article 12(4) of India Canada DTAA on the ground that it satisfies the „make available clause‟ provided in Article 12(4) of the treaty. The Assessee objected to the show cause notice issued by the Learned AO by stating that the receipts from the customers are mainly towards supply of spare parts and certain services provided are in the nature of standard services / facilities and do not constitute FTS under section 9(1)(vii) of the Act. On without prejudice basis, the assessee submitted that even if the said services are considered as FTS under the Domestic Act, the same do not qualify as FIS under Article 12(4) of the India-Canada Treaty, as such services do not make available technical knowledge, experience, skill, know-how or processes, etc. to the recipient. Thus it was submitted that the amount of Rs. 41,64,62,765/- is neither taxable as FTS under Section 9(1)(vii) of the Act nor as FIS under Article 12(4) of the India-Canada Treaty. The Learned AO in the draft assessment order proceeded to treat the amounts received from SpiceJet as fee for technical services and brought to tax a sum of Rs 41,64,62,765/- as income of the Assessee and completed the draft assessment order. The Learned DRP issued directions under Section 144C(5) of the Act upholding the addition made by the Learned AO of treating the receipts as taxable both under the domestic law as well as under the Article 12(4) of the India- Canada Treaty, giving a finding that the services rendered duly satisfy the make-available clause provided therein. Pursuant to the directions of the Learned DRP, the Learned AO passed the final assessment order making the same addition of Rs 41,64,62,765/- as FTS taxable both under the Act as well as under the Treaty.

“3.1.4. The customer hereby agrees that at all times all Bombardier aircraft of the same model as the aircraft that is owned, operated or leased by the customer shall be enrolled in SPQ-400 Smart Parts program. Should the customer elect not to enroll all Bombardier SPQ-400 aircraft in the SPQ-400 Smart Parts program or to terminate SPQ-400 Smart Parts coverage with respect to a particular Bombardier aircraft and remain owner, operator or lessor of such aircraft then coverage under this agreement for all Bombardier aircraft owned, operated or leased by the customer shall automatically be terminated. 3.1.5. The customer shall promptly report to Bombardier those Covered Components, installed on the aircraft or customer owned Covered Components to be described in the Schedule VIII attached hereto. Following the commencement date, customer shall promptly notify Bombardier of any service bulletins, pertaining to the Covered Components, which customer intends to implement on the aircraft or to any customers owned Covered Components throughout the term.

Bombardier reserves the right to review the impact on the exchange pool (if applicable), the services fee, or the price of the implementation of the service bulletin. During the term, in the event of a removal of an unserviceable Covered Component of previous configuration other than listed in Schedule II, customer shall be solely responsible for the cost of modification of such unserviceable Covered Component to align it with the Smart Parts standard configuration, unless the parties mutually agree on an alternate commercial solution.

“2.1.8. APU’s fleet management offering – Bombardier has secured, at no additional cost to Customer, a subscription to Revima‟s APU‟s fleet management offering Customer is responsible for providing the data required to achieve the full benefits of this offering. The Fleet Management Offering will include elements of : - APU Health Monitoring System * Advanced web-based visualization system, including customizable graphical trends, alerts and e-mail notifications. - APU technical support for on-wing troubleshooting - Maintenance programs adapted to leading indicators - APU removal forecasting In the instant case of the Assessee herein, supply of goods are made outside India, repairs and refurbishment are done by the Assessee outside India. The Clause 2.1.8. of the SPQ 400 Agreement relied upon by the Learned DR only states that it is subscription to third party supplies which is not at all a relevant criterion to decide participation for replacement of spares.

10. We find that the issue in dispute was subject matter of adjudication by the Hon‟ble Jurisdictional High Court recently in the case of CIT vs Goodrich Corporation dated 23-5-2025 reported in 175 taxmann.com 177 (Del HC) wherein it was held that where assessee, a US company, provided repair and maintenance services of aircraft equipment to Indian airline operators, since said services did not involve any transfer of technology, know-how or skill, receipts from repair and maintenance services were not taxable as FIS under article 12(4) of India-USA DTAA. The relevant operative portion of the said decision is reproduced below:-

“11. The Assessee states repair services provided by it follows two types of arrangements. The explanation regarding the said arrangements, as noted by the DRP in its order, is reproduced below: "Firstly, the Indian customer intimates the assessee about faulty aircraft equipment and sends the aircraft equipment to the designated facility (repair workshop) of the assessee in USA for repair services. On receipt of equipment from customer, the assessee sends the estimate of the proposed service work for the approval of the customer. Once the repair charges are approved the assessee performs the required repair services and sends back the equipment to the Indian customer. The assessee had also email correspondences in relation to workorder/ repair orders executed during the year on sample basis as Annexure7 (copy of submission dated 13 March 2023 along with the relevant annexures is enclosed as Item 3 of Paper-book 1) Further, no activity has been performed by assessee in India. Secondly, the assessee enters into a comprehensive agreement with the customer wherein all terms and conditions are predetermined. Further, the pricing is agreed upfront basis the number of landings during a particular period of time. As and when repairs are required, the customer sends the equipment to the repair facility. The assessee will either provide the customer with a fully refurbished replacement unit in exchange for the customer's equipment or assessee will repair the customer's equipment and send that back to the Indian customer."

……..

16. The issue involved in the present case is covered by the several decisions of this court including Relx Inc. (supra) We find no infirmity with the view of the learned ITAT in regard to taxability of repair and maintenance charges as FIS.”

11. Further the Co-ordinate Bench of Delhi Tribunal in the case of Rockwell Collins Southeast Asia Pte Ltd vs DCIT in & 2410 /Del/2023 dated 14-11-2024 had also decided the similar issue in favour of the Assessee. The facts of that case and the decision rendered thereon are reproduced below:-

7. The assessee provides repair and maintenance service for aircraft equipment to Indian customers. This is the primary business of the Assessee for which the assessee charge repair and maintenance fees. For the purpose of repair and maintenance, the aircraft equipments are shipped outside India where aircraft equipments are repaired and sent back to the customers in lndia. In this regard, the assessee enclosed the specimen document in relation to shipment of equipment including the e-mail communications in pages 301 to 330 of the Paper Book to prove the fact that the repairs were carried out outside India. The assessee earned revenue of 12,78,69,526/- from Indian customers on account of such repairs and maintenance services. The assessee also submitted the copy of agreement, purchase orders along with copy of invoices raised on the Indian customers on sample basis which are enclosed in pages 211 to 248 of the Paper Book. The ld AR drew our attention to the steps involved in the rendition of repairs and maintenance services by the assessee as under:- Step 1: Intimation of need for repair and maintenance services by the customer Step 2: Customer sends the aircraft equipment to the designated facility of the Assessee in Singapore Step 3: On receipt of the equipment, the Assessee evaluates repairs to be undertaken, provides estimate to customer for their approval Step 4: Post receipt of the customer‟s approval, the Assessee performs necessary repairs at the designated facility Step 5: Post completion of repairs at the designated facility in Singapore, the Assessee informs the customer and confirms the place of delivery to ship back the equipment.

“Repairs and Maintenance Services-FTS or not 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.

5. The Id. DRP held that "repair and maintenance services of aircraft parts is a very specialized field 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 Page | 11

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 avallable 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 service transactions are engaged in highly specialized work which can be rendered and avalled 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."

7. The appeal of the assessee on this ground is allowed.”

It is pertinent to note that Delhi Tribunal had relied on the decision rendered by Tribunal in the case of Goodrich Corporation vs ACIT in for AY 2018-19 dated 22-8-2024, which was later approved by the Hon‟ble Delhi High Court reported in 175 taxmann.com 177 supra.

Order pronounced in the open court on 10/12/2025.