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4. In appeal, the CIT (A) also rejected the assessee's contention that the payments made to the various non-residents for carrying out overhaul repairs were not chargeable to tax. She treated the payments made to Lufthansa Technik, a Germany company (hereinafter referred to as Technik), as the model for considering the question of taxability of payments made to all other foreign companies. CIT (A) took the view that such repairs require knowledge of sophisticated technology and trained engineers are employed by the non-residents for carrying out the overhaul repairs. According to her, the repairs per se constituted 'fees for technical services' and therefore tax should have been deducted at source.

9. All the four aircrafts acquired by the assessee were wet-leased out to a foreign company, namely, Lufthansa Cargo AG, Germany (hereinafter referred to as 'LCAG') under an Agreement dated April 28, 1997. "Wet leasing" is a term which in aviation parlance refers to the leasing of an air-craft along with the crew in flying condition to a charterer for a period of time. The responsibility for maintaining the crew and the aircrafts in airworthy condition is that of the lessor. The lessee is free to direct the flight operations by nominating the destinations in advance and load any lawful cargo for carriage. The lessee pays rental on the basis of number of flying hours during the period subject to a minimum guarantee as per the terms of the charter party.

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G.     Provide transportation coordination      Equipment for repair has to be
       for Sahara's Equipment from/to           delivered at Technik's facilities in
       Sahara to/from Sochata.                  Germany. The delivery of the
                                                repaired equipment has to be taken by
                                                LCI at Technik's facilities in
                                                Germany. To and from transportation of
                                                the equipment has to be managed by
                                                LCI at its own cost and risk.

Article 14 Legal Provisions 14.1 "This Agreement shall be subject to, and construed exclusively in accordance with, the existing laws of the Federal republic of Germany. The exclusive place of jurisdiction for any legal actions that should arise out of, or in connection with, this Agreement shall be Hamburg/Germany.

14.3 The place of delivery and redelivery shall be the Lufthansa Technik Base Performing the work.

14.4 Lufthansa Technik reserves its ownership rights on all components, engine accessories, and spares supplied until full payment of all invoices has been made.