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2024 (3) TMI 312 - ITAT DELHIAccrual of income in India - Permanent Establishment in India - HELD THAT:- As per the order of the Hon’ble Supreme Court for A.Y. 2020-21 in assessee’s own case [2023 (8) TMI 165 - SC ORDER], the assessee constitutes a fixed place PE under Article 5(1) of India-Spain Tax Treaty. Attribution of Profits – Since, the assessee constituted PE in India, with regard to the attribution of profits derived from such PE, the ld. AR argued that the income derived from such PE was completely consumed by distribution and other expenses attributable and hence no income survives for taxation. The Hon’ble High Court has held that 15% of the revenue earned by the appellant is taxable in India, hence, the AO is directed to examine the profits earned, determine the available profits and tax the amount after examining the P&L account. Disallowance of Expenses - AO disallowed distribution fee expenses on the ground that as per the invoices raised by AIPL, the description of services is “Export of Processed Data/ software” and not ‘Distribution fee’ and also disallowed development cost and marketing costs incurred for earning revenue from bookings made from India - It may be pertinent to note that similar expenditure has been allowed deduction since inception, i.e., assessment years 1996-97 to 2006-07 and in view of there being no change in facts or law, no disallowance is warranted in the present year, too. The aforesaid position has been upheld by the Tribunal in appellant’s own case for assessment years 2007-08 to 2020-21. This issue has attained finality since revenue has accepted the said aforesaid findings of Tribunal. Respectfully following the earlier orders of the Tribunal, the addition is directed to be deleted. CRS Income-Royalty – This issue is intra-polated on the issue of PE and attribution of profits as dealt above. Payment made to Altea System – The Co-ordinate Bench of Tribunal in assessee’s own case for the assessment years 2007-08 to 2020-21 held that payment received by the appellant from the airlines for the Altea system cannot be characterized as “royalty” either under the Act or under the Treaty. Respectfully following the earlier orders of the Tribunal, the addition is directed to be deleted. Interest u/s 234A – In view of the extension of due date for filing of the return vide Circular No. 01/2022 dated 11.01.2022, no interest u/s 234A is leviable. Interest u/s 234B – This issue stands covered by the orders of the Co-ordinate Bench of Tribunal for assessment years 2007-08 till 2019-20. The AO is directed to follow the same ratio.
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