Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 635 - AT - Income TaxAccrual of income in India - PE in India or not? - Agency PE - whether assessee has a business connection in India under Section 9(1) ? - Primary business activity of assessee in India which facilitates the booking of airline reservations for and on behalf of participating airlines and another set of services is relating to Hotel bookings instead of Airlines - case of assessee is that under the participating carrier distribution and service agreement, the assessee earns booking fees from various participating airlines when travel reservations are made using its CRS - as per A0 100 percent of profits from fee earned by the assessee from customers in India are attributable to the alleged PE of assessee in India HELD THAT:- We have no hesitation to hold that having regard to various clauses and recitals of the agreements of the participants in the case of Galileo [2007 (11) TMI 329 - ITAT DELHI-B] as the Tribunal has reached the finding of fixed place PE, the changed model in case of assessee dilutes all those reasons. No more computers of travel agents are found to be installed or configured under any agreement of the assessee with any of its participant global subscribers. Galileo through Interglobe was exercising complete control over the computers installed at the premises of the travel agents which may have been the case of the assessee also prior to 2005 when it was working through intermediary NMD. At presently after 2005 the agent codes access to Sabre CRS is through global subscribers and the agents themselves arrange for the communication link which was also earlier provided in case of Galileo by Interglobe. Thus, we are of the considered view that Ld. Tax Authorities below having failed to examine the Sabre’s Participating Carrier Distribution and Service Agreement or Service Provider Agreement with entities like American Express Travel and thus have fallen in error to follow the earlier years orders in case of assessee which themselves were completely based on the factual matrix examined in case of Galileo. As rightly pointed by the Ld. AR that principles of Res judicata are not applicable in assessment and the burden is all the way is on the Revenue to establish the existence of a PE. In the case in hand the Ld. Tax authorities have utterly failed in discharging the burden. Not even by rebutting the case of assessee on the basis of changed model of business. Rather a very mundane approach was adopted by DRP by holding that gateway is business vehicle. No doubt about it but what is to be seen is if the same is functional by way of some auxiliary purposes of assessee being performed by alleged PE. Agency PE - As we have concluded that the business model post 2005 does not have an intermediary in the form of NMD and as in the case of Galileo International Inc. there was active intermediary, as Interglobe, so there is no question of existence of Agency PE. In case of Galileo International Inc. (supra), the terms of agreement provided that Galileo International had appointed Interglobe as a sole and exclusive distributor of Galileo International CRS Services for the Indian market and in those circumstances, the Tribunal had held that Interglobe was authorized to enter into contract with the subscribers in terms of authority generated under the distribution agreement. This authorization to bind Galileo gave an agent status to Interglobe. In the case in hand, there is no such intermediary. Further, there is no exclusiveness of the entities like American Express who have entered into global subscriber agreements. They are unrelated parties acting in their ordinary course of business with no exclusiveness to each other. Ld. DRP has appreciated this aspect by holding that the travel agents in India are not exclusive to the assessee while considering the question of fixed place PE but that somehow goes against the concept of Agency PE and for that reasons, nothing specific was held with regard to the Agency PE by DRP. This itself was sufficient to conclude that there was no entity which was habitually procuring contracts for the assessee or to bind the assessee for the contracts to be entered by that entity independently. Thus, we are inclined to hold there was no Agency PE, also.
|