PRATT & WHITNEY CANADA (SEA) PTE. LTD.,SINGAPORE vs. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE 2(2)(2), NEW DELHI, NEW DELHI

“1. erred in assessing the income of Appellant at INR 2,42,65,46,501 as against Nil returned income. Final assessment order passed is time-barred 2. erred in not passing the final assessment order within the time limit prescribed under section 153 of the Act which is the outer time limit for passing the final assessment order and hence, the final assessment order dated 06.01.2025 is time barred and liable to be quashed; Order issued under section 147 read with 144C(13) of the Act following the DRP directions dated 06.01.2025 is void and invalid on account of the directions being issued in violation of Circular No. 19/2019 dated 14 August 2019 3. erred in issuing the impugned final assessment order following the DRP directions dated 20.12.2024 where the DRP directions are in contravention of Circular No. 19/2019 dated 14.08.2019 and thereby, vitiating the entire assessment proceedings; Taxability of repair and maintenance services rendered by the Appellant 4. erred in making an addition of INR 2,42,65,46,501 by treating total income received from repair and maintenance services rendered by the Assessee as Fee for technical services ('FTS') Page 3 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT under the provisions of the Act without appreciating the fact that repair and maintenance services were performed in Canada and do not constitute technical services as per the provisions of the Act as well as India- Canada Double Taxation Avoidance Agreement ('DTAA'). 5. erred in making an addition of INR 2,42,65,46,501 by treating total income received from repair and maintenance services rendered by the Assessee as FTS under the provisions of Article 12 of the India- Canada DTAA without appreciating the fact that repair and maintenance services do not 'make available' any technical knowledge, know-how or skill to the customers in India and hence, not taxable under Article 12 of India- Canada DTAA. 6. erred in alleging that INR 4,90,89,728, representing difference between amount reported by India Flysafe Aviation Limited in response to notice issued under section 133(6) of the Act (i.e., INR 4,92,58,837) and the amount disclosed by the Assessee in Income Tax Return filed for the subject year (i.e., INR 1,69,109) is taxable in the hands of the Assessee as FTS, without providing the transaction wise details to the Appellant during the course of Assessment proceedings. Levy of interest under section 234A of the Act 7. erred in charging the interest under section 234A of INR 14,69,61,360. Levy of interest under section 234B of the Act 8. erred in charging interest under section 234B of the Act of INR 21,51,93,420. Levy of late filing fee under section 234F of the Act

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9. erred in charging late filing fee under section 234F of the Act of INR 10,000. Initiation of penalty proceedings u/s 270A of the Act 10. erred in initiating penalty proceedings under section 270A of the Act against the Appellant. The Appellant submits that each of the above grounds is independent and without prejudice to one another.”

5. Ground Nos. 1 is general in nature and need no adjudication.

Ground Nos. 2 and 3 are not pressed and dismissed as not pressed.

6. Ground Nos. 4 to 6 pertain to repair and maintenance services rendered by the assessee.

Sl. No Nature of income Amount (in INR) Taxability in return of income filed Income from repair and 2,36,18,82,958 maintenance of aircraft engines Sale of Publications in relation 1,38,86,712 to aircraft engines Receipts from engineering 12,86,000 Non-taxable service Support Services in relation to 4,01,103 aircraft engines Total receipts declared in the return of 2,37,74,56,773 income filed

Page 6 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT plan or technical design, the same did not qualify as Fees for Technical Services ('FTS') as per the provisions of India-Canada Double Taxation Avoidance Agreement ('DTAA').

Page 7 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT engines are not to be treated as FTS because the ‘make available’ clause in the India Canada DTAA as well as India Singapore are not satisfied.

The ld. counsel for the assessee relied on decisions of the following: i) Goodrich Corporation (Del) ii) Goodrich Corporation (Del-Tri) iii) Rockwell Collins Southeast Asia Pte Ltd ITA No. 2409/DEL/23 iv) Global Vectra Helicorp Ltd. vs DCIT [2024] 159 taxmann.com 282 (Delhi - Trib.), v) Relx Inc 160 taxmann.com 109(DHC)

15. The ld AR further submitted that the ld AO had followed the assessment orders for AY 2014-15, AY 2016-17 and AY 2020-21. The ld AR stated that the assessment order for AY 2014-15 was quashed by the ITAT on technical ground following the decision of Hon’ble Supreme Court in the case of Rajeev Bansal. The ld AR further submitted that the assessment for AY 2016-17 and AY 2020-21 are pending before the CIT(A). For AY 2015-16 and 2017-18 there was no such addition made.

16. Per contra, the ld DR strongly relied on the orders of the AO and the Ld DRP and did not controvert the status of earlier years as stated by the ld AR.

Page 8 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT Canada DTAA and the India-Singapore DTAA. We find that both the India- Canada DTAA and the India -Singapore DTAA have the “make available” clause to be complied with for the receipts being treated as FTS. Article 12(4)(b) of India-Canada DTTA provides as follows:

Article 12.4. For the purposes of this Article, 'fees for included services' means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or (b) make available technical knowledge, experience, skill, know-how, or processes or consist of the development and transfer of a technical plan or technical design.

Similarly, the India-Singapore DTTA defines FTS similarly as follows:

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Article 12 (4). The term "fees for technical services" as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received ; or (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein ; or (c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein.

“14. In CIT v. De Beers India Minerals P. Ltd.: (2012) 346 ITR 467, the Karnataka High Court had explained the import and meaning of ‘make available’ as used in Article 12(4) of the India- USA DTAA as under: “21. What is the meaning of "make available". The technical or consultancy service rendered should be of such a nature that it "makes available" to the recipient technical knowledge, know-how and the like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the Page 10 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology "making available", the technical knowledge, skills, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered "made available" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. In other words, payment of consideration would be regarded as "fee for technical/included services" only if the twin test of rendering services and making technical knowledge available at the same time is satisfied.”

Page 11 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT v. Bio-Rad Laboratories (Singapore) Pte. Ltd.: (2023) 459 ITR 5 and observed as under: 15. Similarly, in order for that income to fall within the ambit of “fees for included services”, it was imperative for the Department to establish that the assessee was rendering technical or consultancy services and which included making available technical knowledge, experience, skill, know-how or processes. As has been found by the Tribunal, the access to the database did not constitute the rendering of any technical or consultancy services and in any case did not amount to technical knowledge, experience, skill, know-how or processes being made available.

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14.1. Notably, this aspect is adverted to in paras 17 to 23 of the impugned order. For convenience, the relevant paras are extracted hereafter: ‘A perusal of the aforementioned provision shows that in order to qualify as fees for technical services, the services rendered ought to satisfy the “make available” test. Therefore, in our considered opinion, in order to bring the alleged managerial services within the ambit of fees for technical services under the India-USA Double Taxation Avoidance Agreement, the services would have to satisfy the “make available” test and such services should enable the person acquiring the services to apply the technology contained therein agreement is effective from 1-1-2009 and we are in Assessment Years 2018- 2019 and 2019-2020. In our considered opinion, if the assessee had enabled the service recipient to apply the technology on its own, then why would the service recipient require such service year after year every year since 2009? This undisputed fact in itself demolishes the action of the assessing officer/Dispute Resolution Panel. The facts on record show that the recipient of the services is not enabled to provide the same service without recourse to the service provider i.e. the assessee. In our humble opinion, mere incidental advantage to the recipient of services is not enough. The real test is the transfer of technology and on the given facts of the case,

Page 13 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT there is no transfer of technology and what has been appreciated by the assessing officer/learned Commissioner of Income Tax (Appeals) is the incidental benefit to the assessee which has been considered to be of enduring advantage. In our understanding, in order to invoke make available clauses, technical knowledge and skill must remain with the person receiving the services even after the particular contract comes to an end and the technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider.’ (emphasis is ours) 15. We tend to agree with the analysis and conclusion arrived at by the Tribunal.”

19. The co-ordinate bench of ITAT Delhi in Goodrich Corporation order dated 22.08.2024 had held as under:

“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.

Page 14 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT 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 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 available 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

Page 15 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT service transactions are engaged in highly specialized work which can be rendered and availed 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.”

20. The ld. counsel for the assessee also relied on the decision of the co-ordinate bench in the case of Rockwell Collins Southeast Asia Pte dated 14.11.2024 wherein it has followed the Page 16 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT order of the ITAT, Delhi in the case of Goodrich Corporation [supra] and has held as under:

“the revenue earned by the assessee from rendition of repairs and maintenance services of aircraft equipment cannot be construed as FTS both under the Act as well as under the treaty. Accordingly, Ground Nos. 4 and 5 raised by the assessee are allowed.”

21. There is a recent development in the case of the assessee's own customer namely Global Vectra Helicorp Ltd. vs DCIT [2024] 159 taxmann.com 282 (Delhi - Trib.), where the co-ordinate bench has held that repair and maintenance services rendered to Global Vectra are not liable to be taxed either under the provisions of the Act or under the provisions of India-Canada DTAA. In the said case, Global Vectra made payments to certain non-residents including assessee in lieu of repair and maintenance services related to Helicopter parts/engine which was rendered outside India on which tax was not deducted u/s 195 of the Act by Global Vectra reason being the said transactions were not in the nature of FTS and therefore, not taxable in India. In the said case, the ITAT held that the repair services are not liable to be taxed under the provisions of the Act as the entire repair and maintenance of helicopter parts was carried out outside India and nothing was done in India by the non-resident payees.

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“18. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. Undisputedly, in the assessment years under dispute, the assessee had made payments to certain non-residents towards repair and maintenance of helicopter parts. As per the process followed by the assessee for repair and maintenance, it’s engineering department identifies helicopter parts required for or are due for maintenance/overhaul in terms with DGCA guidelines. Once the engineering department identifies the helicopter parts required for maintenance/overhaul, it puts up a request to the Procurement Department. On receipt of request, the Procure Department issues repair orders and sends the parts to be repaired to the respective non-resident entities, who undertake the repairing/overhauling of such parts. On receipt of such repair order and parts, the non-resident entities issue an Page 18 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT estimate/quote of charges for repair and maintenance work. On approval of such estimate/quote by the Procurement Department, the non-resident companies undertake necessary repair and maintenance work of the said parts. After repair/overhaul, the non-resident entities send the repaired parts/item along with invoices for repair and maintenance work carried out. On receipt of the invoices and helicopter parts, the assessee makes the payments after taking necessary declaration and documents from the non- resident entity. It is further evident, to support its contention that there was no requirement for deduction of tax at source as the income of the non-residents are not taxable in India, the assessee had furnished the details of maintenance/repair, sample copies of invoices, sample copies of airway bills evidencing that the parts of the helicopters were sent outside India for carrying out necessary repair and sample copies of Form 15CB and 15CA etc. The Assessing Officer, however, held that the services rendered by the non- residents are technical and consultancy in nature, hence, quantifies as FTS requiring withholding of tax under section 195.

22. In the facts of the present appeal, the Assessing Officer has failed to demonstrate with cogent evidence that the make available condition enshrined in the concerned treaties are satisfied. In fact, learned first appellate authority has recorded a categorical factual

Page 20 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT finding that in course of rendition of service technical knowledge, know-how, skill, etc. has not been made available to the service recipient by the service provider. Thus, in absence of any contrary material brought on record by the Revenue, we concur with the view expressed by learned first appellate authority. Once the payments do not qualify as FTS under the respective treaty provisions, in terms with section 90(2) of the Act, treaty provisions being more beneficial would override the provisions contained in the domestic law. That being the legal position, in our view, the payments made to the residents of USA, UK, Australia, Canada and Singapore, being not chargeable to tax in India, section 195 is not applicable. Accordingly, we hold that the assessee was not required to deduct tax at source while making payment to residents of the aforesaid countries.”

(i) enrolling in a Pay Per Hour (PPH) program/maintenance plans or (2) independent repairs as and when required.

Page 22 of 25 ,666,620 & 626/DEL/2025 Pratt & Whitney Vs. DCIT available” clause as per the India-Canada DTAA and India-Singapore DTAA are not satisfied in the case of the assessee. Since the receipts on account of repair and maintenance received by the assessee during the subject year from other customers are of similar nature as the receipts from Global Vectra discussed above, therefore, the above judgement applies to all the receipts from repair and maintenance received by the assessee. In view of the judicial precedence as discussed above, we have no hesitation to hold that the receipts on account of repair and maintenance services received by the assessee are not liable to be taxed as FTS in the hands of the assessee during the subject year. Ground 4 to 6 are allowed.

[A.Y. 2022-23] [M/s Pratt & Whitney Canada Corp]

Grounds no 1 is general. Ground 2 and 3 are not pressed and dismissed as not pressed. Ground 4 and 5 are allowed. Ground 6 is consequential and ground 7 is premature.

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Grounds no 1 is general in nature. Ground 2 and 3 are not pressed and dismissed as not pressed. Ground 4 to 6 are allowed. Ground 7 and 8 are consequential and ground 9 is premature.

[A.Y. 2022-23] [M/s Pratt & Whitney Canada [Sea] Pte Singapore]

Grounds no 1 is general in nature. Ground 2 and 3 are not pressed and dismissed as not pressed. Ground 4 to 7 are allowed. Ground 8 is consequential and ground 9 is premature.

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The order is pronounced in the open court on 06.10.2025.