Company engaged in operations of Aircraft – Non Resident Taxation – International Taxation Case Study
GetSetGo Airways is engaged in operation of aircraft and leased certain aircraft from Goeing UK. During the year, the various payment made by GetSetGo Airways to Goeing UK, were as under : –
| Nature | Amount | Tax on Income | Total Payment (including taxes) |
| Lease Rentals for Aircraft | 10,00,00,000 | 1,00,00,000 | 11,00,00,000 |
| Payment for spares and services in connection with the operation of leased aircraft | 3,00,00,000 | 1,20,00,000 | 4,20,00,000 |
Compute the exemption u/s 10, if any , assuming both the agreement were entered into on 31-3-2007 and approved by the Indian Government?
Company engaged in operations of Aircraft – Non Resident Taxation – Solution:-
Tax paid by an Indian concern, which is engaged in operation of aircraft , for payment of lease charges/rental for an aircraft or engine of aircraft , to foreign Government or foreign enterprise shall be exempt from tax u/s 10(6BB). However, payment for providing spares or services in connection with the operation of leased aircraft or engine of aircraft , to foreign Government or foreign enterprise are not exempt from tax.
In view of this, tax of Rs. 1,00,00,000 for lease Rentals for Aircraft shall be exempt in the hands of Goeing UK, while tax of Rs. 1,20,00,000 on Payment for spares and services in connection with the operation of leased aircraft shall not be exempt in the hands of Goeing UK .
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