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2023 (5) TMI 227 - SC - Income TaxIncome taxable in India - Income attributable to the operations carried out in India - Assessee is into business of providing electronic global distribution services to Airlines through what is known as “Computerized Reservation System” - In order to market and distribute the CRS services to travel agents in India, the respondents have appointed Indian entities and have entered into distribution agreements with them - Assailing the Judgment of the High Court, as argued learned Additional Solicitor General that the attribution of only 15% of the revenue as income accruing /arising in India within the meaning of Section 9(1)(i) read with Article 7 of the Treaty, was completely wrong. HELD THAT:- Under Explanation 1(a), what is reasonably attributable to the operations carried out in India alone can be taken to be the income of the business deemed to arise or accrue in India. What portion of the income can be reasonably attributed to the operations carried out in India is obviously a question of fact. On this question of fact, the Tribunal has taken into account relevant factors. Additional Solicitor General referred to Article 7 of the ‘Convention between the Government of the United States of America and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income’ which is called in popular parlance as ‘Double Taxation Avoidance Agreement’. The above Article may not really go to the rescue of the Revenue for the reason that in the contracting state, the entire income derived by the respondents, namely, USD/EURO 3 will be taxable. This is why Section 9(1) confines the taxable income to that proportion which is attributable to the operations carried out in India. Therefore, we are of the view that the impugned order(s) of the High Court do not call for interference. Insofar as the second issue, namely, the question of permanent establishment is concerned, we are not going into the same, as we have concurred with the High Court on the first issue.
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