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2021 (2) TMI 358 - AT - Income TaxIncome accrued in India - PE in India - as per revenue computers installed at the premises of the subscribers constitute a PE of the taxpayer in India in terms of Article 5(1) of India Spain Tax Treaty - case of the Revenue that that computers provided to the travel agent through which sales are constituted amounts to Fixed Place PE of the taxpayer in India under Article 5 (1) of the India-Spain Tax Treaty and likewise held the taxpayer to be dependent agency PE in terms of Para 5(4) of the Indian Spain Tax Treaty - HELD THAT:- AR for the taxpayer fairly conceded that this issue has been decided by Hon’ble High Court against the taxpayer in its own case for AYs 1996-97 to 2006-07 and held that computers installed at the premises of the subscriber constitute a PE of the assessee in India in terms of Article 5 (1) of Indo-Spain Treaty. It is also held that since the Amadeus India is functionally dependent upon the assessee, it also constitute an agency PE in India in terms of Article 5 (iv) of the Indo-Spain Treaty. Aforesaid appeals bearing the identical facts of the taxpayer’s case in which it is held that the assessee constitutes an agency PE - Decided against assessee Attribution of 75% of the income earned in India to the PE after adding development cost, distribution fees, etc. - HELD THAT:- As decided in own case [2020 (11) TMI 206 - ITAT DELHI] we are of the considered view that since there is no change in the business model and facts of the cases at hand and the extent & nature of the activities of the PE in India and abroad, and the assets employed and risk assumed is same as in the earlier years, distribution fee paid in those years @ 33% approximately of the booking fee per segment, no further addition can be made during the year under assessment. Disallowance of expenditure claimed to have incurred by the taxpayer under the head “distribution fee” while computing the income attributed to the taxpayer’s PE in India - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in taxpayer’s own case vide order [2020 ( 11) TMI 206 - ITAT DELHI] we are of the considered view that the AO has erred in treating the “export of processed data/software” as distribution fee and has also erred in disallowing development cost and marketing cost incurred for earning revenue from booking made from India. All these expenditure have been allowed by the coordinate Bench of the Tribunal in earlier years. So, the claim of the taxpayer raised allowed. Characterization of income - Booking fee received by the taxpayer is to be taxed as business income and not under the head ‘royalty’. Ad hoc basis taxed the amount of Euro 50 million as ‘royalty’ in respect of Altea system, inventory management and hosting system development - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in AYs 2007-08 to 2012-13, we are of the considered view that payment received by the taxpayer from British Airways in relation to alleged use of ‘Altea system’ cannot be characterized as ‘royalty’ either under the Act or under the Indo-Spain Treaty because Altea system was installed at the airport and was accessed only by the airlines and not by the Amadeus’s agents viz. Resbird, Amadeus India and that during the year, the said system was available to British Airways for the aforesaid purpose and that too only at the airport counter and the said software was not available outside the Indian airport or to any of the agents of the taxpayer since the agents were booking the tickets only through the CRS of the taxpayer. Levy of interest u/s 234B - HELD THAT:- Provisions contained below section 209(1)(d) of the Act introduced by Finance Act, 2012 w.e.f 01.04.2012 would apply only in a situation where persons responsible for tax has paid or credited such income without deduction of tax. In the instant case, since the income has been received by the taxpayer after deduction of tax at source, the proviso is not applicable as has been held by the coordinate Bench of the Tribunal in BG International Ltd. vs. DCIT [2021 (2) TMI 265 - ITAT DELHI].
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