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2019 (7) TMI 1083 - AT - Income TaxIncome accrued in India - attribution of profit - PE in India - liability to tax in India in respect of fees received from Airlines relating to segments booked from India through the appellant computer reservation system - Indo-Spain DTAA - AO in alternatively holding that the fees received was taxable in India as royalty under the Indian Income Tax Act and Article 12 of the treaty - HELD THAT:- The issues are squarely covered by the decision in assessee‟s own case up to AY 2005-06. There is a continuous seamless process involved, at least part of which is in India and hence, there is a business connection in India. The computers at the subscriber's desk are not dumb or are in the nature of kiosk incapable of performing any function. The computers along with the configuration have been supplied either by the appellant or through its agent AIPL and the connectivity being provided by the appellant enables the subscribers to access the CRS and perform the ticketing and booking functions. Thus there is a direct business connection established in India and hence in terms of s. 9(1)(i) the income in respect of the booking which takes place from the equipment in India can be deemed to accrue or arise in India and hence taxable in India. In view of this respectfully following the decision of the coordinate bench [2010 (10) TMI 1178 - ITAT DELHI] we also hold that assessee has a permanent establishment in India. Attribution of profit where in the current year the CIT(A) has upheld the attribution of the profit @75% whereas, in earlier years the tribunal has upheld the attribution @15% of the revenue as income arising in India. In view of this respectfully following the decision of the coordinate bench in assessee‟s own case for earlier years, we also reverse the order of the ld CIT(A) in upholding the attribution of profit @75% and direct the ld AO to attribute the income @15%. Accordingly, the appeals of the assessee as per Ground Nos. 2 to 5, 6, 11, 12, 13, 14 and 15 of the appeal are partly allowed. Non-granting of credit of TDS - AR submitted that the assessee should be granted the credit of the tax deduction at source - HELD THAT:- DR also agreed to the issue that if the certificates issued to the assessee are proper and in order then same may be granted. Accordingly we direct the learned assessing officer to grant the credit of the tax deduction at source to the assessee if the proper certificates are placed before the assessing officer. The learned AO may verify the same and grant credit for the same if in order. Accordingly ground number 16 of the appeal of the assessee is allowed with above direction. Interest u/s 234B - entire payment received by the assessee from India was subject to TDS - scope of amendment in section 234B - HELD THAT:- As carefully considered the rival contention and perused the orders of the lower authorities the issue squarely covered in favour of the assessee by the decision of the honourable Delhi High Court in case of the DIT vs GE packaged power incorporation [2015 (1) TMI 1168 - DELHI HIGH COURT] - The amendment brought into the act by the finance act 2012 is applicable with effect from the fund for 2012 and is applicable from assessment year 2013 – 14. In view of this we direct the learned assessing officer to not to charge interest u/s 234B for the above reasons. Accordingly ground number 17 of the appeal of the assessee is allowed. Appeal of the assessee is partly allowed.
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