INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER (Assessment Year: 2018-19)

Bombardier Inc, Vs. ACIT, 400, Dorval, Cote-Vertu, Circle-1(1)(2), Road West, Quebee Delhi Canada-H4S1Y9 (Appellant) (Respondent)

PAN: AACCB7177J Assessee by : Shri Sriram Seshadri, CAs Shri Varun Jain, CA Shri Mohit Agarwal, CA Ms. Amulya K. CA Revenue by: Shri M. S. Nethrapal, CIT DR Date of Hearing 15/09/2025 Date of pronouncement 10/12/2025

O R D E R

PER M. BALAGANESH, A. M.:

1. The Assessee Bombardier Inc (hereinafter referred to as „assessee) by filing the present appeal sought to set aside the impugned order dated 29.01.2025 passed by the Assessing Officer (AO) under section 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (for short „the Act‟) inconsonance with the order passed by the Dispute Resolution Panel (DRP)-1, New Delhi dated 24.12.2024 u/s 144C(5).

2. The Ground No. 1.1 raised by the Assessee is general in nature and does not require any specific adjudication.

3. The Ground Nos. 1.2. and 1.3 raised by the Assessee are challenging the validity of assumption of jurisdiction for reopening of assessment. No arguments were advanced by the Learned AR in this regard and accordingly the same are hereby dismissed as not pressed.

4. The Ground Nos.1.4 and 1.5 raised by the Assessee are challenging the taxability of receipts from customers as fee for technical services (FTS) / fee for included services (FIS) under the domestic provisions and under the India Canada Double Taxation Avoidance Agreement (DTAA).

5. We have heard the rival submissions and peruse the materials available on record. The Assessee is a non-resident company incorporated under the laws of Canada and is a tax resident of Canada in terms of article 4 of India Canada DTAA. The Assessee is holding a valid Tax Residency Certificate (TRC) issued by the Canadian Government. The Assessee during the year under consideration was a manufacturer of transportation equipment including business and commercial aircraft as well as aircraft components and was provider of related services including aftermarket component repair and overhaul as well as other services to its clients. The Assessee had entered into a „Smart Parts Q400 Agreement‟ (SPQ400 Agreement) dated 7-6-2015 with SpiceJet, an Indian company engaged in the business of commercial flight operations in India for providing maintenance, repair and overhaul services on the basis of per flight hour support in relation to the aircrafts operated by SpiceJet agreement. As per the SPQ-400 agreement, the Assessee received its fee based on the flight hours flown by the aircraft which covers the cost of consumables, replacements etc as well as maintenance. The Assessee in this regard enclosed the sample copies of invoices raised on SpiceJet in pages 66 to 79 of the paper book. It was submitted that SpiceJet undertakes periodic maintenance of components of its aircraft in order to maintain the airworthiness of the said aircrafts and to ensure that the maintenance requirements are complied with. For this purpose, SpiceJet entered into an agreement with the Assessee for pre-payment of cost coverage, mainly for parts and also for maintenance, repair and overhaul services on the basis of per flight hour support in relation to the aircrafts operated by SpiceJet which is akin to an Annual Maintenance Contract (AMC) entered into by the companies in the regular course of business.

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