TMI Blog2022 (2) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2012-13 and AY 2014-15, wherein the coordinate bench of ITAT [ 2021 (10) TMI 1004 - ITAT DELHI] Allowed 100% deduction of distribution fees in the hands of the assessee. Allowability of other expenses like apportionment of technology service fees, vendor cost, amortization expenses and finance cost - HELD THAT:- The coordinate bench of ITAT vide its order [ 2021 (10) TMI 1004 - ITAT DELHI] in the case of assessee s predecessor entity, TGDSBV for AY 2007-08 to 2012-13 and AY 2014-15 has allowed 70% deduction of all other expenses in the hands of TGDSBV relying on non-discrimination clause. Allowability of head office expenses under section 44C - assessee submitted that as per section 44C of the Act, a non resident assessee shall be allowed claim of head office expenditure incurred, notwithstanding the provisions of section 28 to section 44C of the Act - Also submitted that the Ld. AO and the Hon ble DRP have suo moto allowed the deduction of head office expenditure in AY 2016-17, however the amount of such expenditure is computed incorrectly - HELD THAT:- In view of the above submissions of the assessee, we remit this issue to the file of the Ld. AO for allowing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India based on the following allegations: - provision of software by Appellant to the Distributor; - access to Galileo CRS by the participating carriers from India; - provision of connectivity by the Appellant through communication lines 5.2. That on the facts and in the circumstances of the case and in law, the Assessing Officer and the DRP have erred in holding that the Distributor is fully dependent on the Appellant. 6. Without prejudice to the above grounds, on the facts and in the circumstances of the case and in law, the Assessing Officer and the DRP has erred in attributing 75% of the India related gross booking fee to the alleged activities of the Appellant in India, which is being excessive and unwarranted, by refusing to take into consideration that the Appellant s operations and activities are conducted outside India. 6.1. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in not placing reliance on the order of the Hon'ble DRP in Appellant's predecessors, (i.e. Travelport Global Distribution System BV) case for the A Y 2012- 13 wherein the Hon'ble Delhi High Court's order dated August ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, the Assessing Officer and the DRP have erred by not appreciating that this expense is incurred by the applicant for the first time in Assessment year 2016-17 and hence, should be considered for deduction. 7.3.2. That on the facts and in the circumstances of the case and in law, the Assessing Officer and the DRP have erred in disallowing the deduction of these expenses by incorrect application of Article 7 of the India-UK Double Taxation Avoidance Agreement. 7.3.3. That on the facts and in the circumstances of the case and in law, the Assessing Officer and the DRP have erred in not accepting the ground of Appellant on the claim of finance cost expenditure for USD 2,051,015. 8. Without prejudice to the above grounds, on the facts and in the circumstances of the case and in law, the Assessing Officer and the DRP have erred in not allowing to Appellant, the correct claim of head office expenses under section 44C of the Act 9. The Appellant denies each allegation and statement made by the Assessing Officer in the impugned order and orders relied upon by him, unless the same is specifically admitted by the Appellant or is otherwise borne out by the record. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee and accordingly the assesee has been assessed in India for the first time in AY 2016-17 as a new entity, Travelport International Operations Limited, UK. 5. Briefly stated, the assessee is a company incorporated under the laws of United Kingdom and hence governed by the provisions of Double Taxation Avoidance Agreement entered into between India and United Kingdom ( India-UK DTAA ) being more beneficial. The assessee is engaged in the business of providing electronics global distribution services to the travel industry, in the rest of the world territory (including the Indian region) through Computerized Reservation System ( CRS ). CRS is an automated system, which processes booking data and other data to provide the functions such as (i) the ability to display flight schedule and seat availability; (ii) the ability to display and / or quote airline fare; (iii) the ability to make airline seat reservation; the ability to issue airline tickets; etc. 6. For the AY 2016-17, the appellant filed its return of income declaring NIL income on 29.9.2016 and thereafter revised return of income on 29.3.2018 declaring NIL income and claiming a refund of ₹ 9,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3034/Del/2016 pertaining to the assessment years 2007-08 to 2012-13 and assessment year 2014-15, a copy of which has been submitted before us. Ld. DR had no objection to the submissions of the Ld. AR. 9. The parties have agreed that the facts of the assessment year under consideration are similar to those assessment years in respect of which coordinate bench of the ITAT has already adjudicated and decided the same issues involved in the present appeal. Respectfully following the ITAT s decisions (supra) we decide the grounds raised by the assessee in this appeal. 10. Ground No. 1 to 3 are general. 11. Ground No. 4 and 5 relate to the presence of BC/ PE of the assessee in India. The Hon ble Delhi ITAT vide its order dated 27.9.2021 in assessee s own case pertaining to the AY 2017-18 held that the assessee has a BC/ PE in India. In arriving at this conclusion, the coordinate bench followed the decisions of Hon ble Delhi High Court and Hon ble Delhi ITAT in case of assessee s predecessor entities i.e. TGDSBV and Galileo International Inc. ( GII ). The relevant para of the Hon ble Delhi ITAT s order dated 27.09.2021 is reproduced below:- 32. Thus, the issue of Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is reproduced below: 15. The issue of attribution in India is covered in favour of Company by the decisions of Hon ble Delhi High Court and Delhi ITAT in Company/it s predecessor s case for AYs. 1995-96 to 2006-07. The Hon ble Delhi High Court and the Delhi ITAT in Company s own / predecessor s case, has held that attribution rate to the alleged India PE is 15% of gross booking fees. 16. For AY 2017-18 in case of Company s successor entity i.e., TIOL, this issue on attribution has been held in favour of TIOL by Delhi ITAT vide order dated 27th September, 2021 (ITA No. 163/Del/2021) by relying on the decisions of Hon ble Delhi High Court and Delhi ITAT in Company/it s predecessor s case for AY 1995-96 to AY 2006-07. 19. Hence, we hereby hold that the correct attribution rate be taken at 15% of the gross booking fee for the years in appeal before us. Accordingly, following the decisions (supra), we decide the issue in favour of the assessee. 13. Ground No. 7.1 relates to allowability of 100% of distribution expenses. This ground is covered in favour of the assessee in the case of assessee s predecessor entity i.e. TGDSBV for AY 2007-08 to 2012-13 and AY 2014- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses incurred by the assessee were allowed. 28. It is also on record that the distribution commission has been made to resident of India and duly offered to tax. Hence, the provisions of Section 40(a)(ia) are not attracted in the instant case. Since, there is no change in the factual matrix and legal proposition, we hereby allow the claim of the assessee. Following the decisions (supra) we hold in favour of the assessee. 14. Ground No. 7.2 and 7.3 relate to allowability of other expenses like apportionment of technology service fees, vendor cost, amortization expenses and finance cost. The coordinate bench of ITAT vide its order dated 13.10.2021 in the case of assessee s predecessor entity, TGDSBV for AY 2007-08 to 2012-13 and AY 2014-15 has allowed 70% deduction of all other expenses in the hands of TGDSBV relying on non-discrimination clause. The relevant para of the Hon ble ITAT s order is reproduced below:- 30. The AO disallowed entire amount (100%) claimed by the assessee on account of other expenses such as royalty, vendor cost, license fee owing to non-deduction of withholding tax. From the above table, the position of the profit/loss of the assessee is eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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