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2022 (9) TMI 709 - Income Tax
Income deemed to accrue or arise in India - Permanent establishment - Indo-Spain Treaty - computers installed at the premises of the subscribers constitutes a PE of the taxpayer in India in terms of Article 5(1) of India Spain Tax Treaty - HELD THAT:- AR for the taxpayer fairly submitted 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 [2007 (11) TMI 330 - ITAT DELHI-B] 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 constitutes 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 decided in which it is held that ‘the assessee constitutes an agency PE’. By following the consistency, the additions made by the AO/DRP in the present Appeals are hereby confirmed.
Computing the profit attribution to the PE of the assessee in India - By following the orders passed by the coordinate Bench of the Tribunal in earlier years and the Judgment of the jurisdiction High Court [2011 (5) TMI 1114 - DELHI HIGH COURT], 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 approximately of the booking fee per segment, no further addition can be made during the year under assessment.
Disallowance of expenditure under the head of ‘Development fees’ and under the heads of ‘Central Operating cost’ while computing the income attributed to the tax payers PE in India - HELD THAT:- The very same issue has also been decided in favour of the taxpayer by the Tribunal [2020 (11) TMI 206 - ITAT DELHI] for AYs 2007-08 to 2012-13. It is also not in dispute that facts of the present case and business model of the taxpayer and its PE in India are identical to the earlier years. As gone through the history of such expenditure and find that the addition is being made owing to confusion in the description of the services as "export of processed data/software" or "distribution fee" - we hereby allow the claim of distribution expenses.
Royalty receipts - Booking fee received by the assessee held to be taxable in India as royalty both u/s 9 (1)(vi) of the Act and Article 13(3) of the Treaty - HELD THAT:- The Coordinate Bench of the Tribunal in Assessee’s own case for AYs 2007- 08 to 2012-13, which was affirmed by the Hon'ble Delhi High Court [2011 (5) TMI 1114 - DELHI HIGH COURT], held that booking fee received by the taxpayer is taxable as business income and not under the head 'royalty'.
Payments received by the assessee from various airlines in relation to the use of Altea System Taxable in India as royalty both u/s 9(1)(vi) of the Act and Article 13(3) of the Treaty - 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.
Interest u/s 234A - contention of the assessee that the return was filed well within the due date, if that is the fact, the question of levying interest u/s 234A does not arise - HELD THAT:- We deem it fit to restore the said issue to the file of the A.O to verify the date of return and also the due date for filing the income tax return for the year under consideration and decide the matter afresh in accordance with law.
Interest u/s 234B - We are of the considered opinion that since the income has been received by the assessee after deduction of tax at source the proviso is not applicable to the case of the assessee.
Non granting of credit of the TDS claimed by the assessee - On hearing both the sides we deem it fit to restore the said issue to the file of the A.O with a direction to grant credit of the TDS in accordance with law after verifying the materials available on record.