Assessee, a public sector undertaking of Govt. of India, which is engaged in the business of design, development, manufacture and maintenance of advanced fighters, piston and jet engine trainers, associated aero engines, aircraft systems, equipment and avionics catering mainly to India’s defence needs. Assessee had engaged a French company (CGTM) for conducting flight testing services in respect of engines against payment of a certain sum in India and assessee claimed payment for same as an expenditure and, did not deduct tax at source.-Assessing Officer made disallowance under section 40(a)(i) on the ground that said the payment was covered by ‘FTS’ as defined under section 9(1)(vii) and, hence, tax ought to have been deducted at source.  Disallowance was affirmed by CIT(A). On appeal, the Tribunal held that fees paid towards services were purely towards testing of engines and subsequent action of the assessee to carry out improvement based on test results given by CGTM could not be considered as a basis for ‘make available’ services rendered by CGTM to assessee. Accordingly, fees paid by the assessee to CGTM were not in nature of fees for technical services and, hence not liable to deduct tax at source. Disallowance was deleted.  (AY. 2009-10)