M/s. Galileo Nederland BV, New Delhi V. ADIT, New Delhi

CO 169/DEL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7420 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 11-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMAR DAVE
• Assessee Lawyers: D K GUPTA
• Keywords: Invalid notice; Double taxation relief; Opportunity of being heard; Permanent establishment
• Section: 244A; 5(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1306 TO 1309/DEL/2012 ASSESSMENT YEARS : 2003-04 TO 2006-07 ASSISTANT DIRECTOR OF INCOME TAX, M/S GALLILEO NEDERLA ND CIRCLE- 1 (2), (INTL. TAX), BV, C/O BSR & CO. C. AS., NEW DELHI. V. BLDG. NO.10, 8 TH FLOOR, TOWER-B, DLF CYBER CITY, GURGAON. AND C.O. NO. 169 TO 172/DEL/2012 IN I.T.A. NO. 1306 TO 1309/DEL/2012 ASSESSMENT YEARS: 2003-04 TO 2006-07 M/S GALLILEO NEDERLAND BV, ASSISTANT DIRECTOR OF INCO ME C/O BSR & CO. C.AS. TAX, CIRCLE-1 (2), (INTL. TAX ), BLDG. NO.10, 8 TH FLOOR, NEW DELHI. TOWER-B, CYBER CITY, GURGAON. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AACCG AACCG AACCG AACCG- -- -2258 2258 2258 2258- -- -D DD D APPELLANT BY : SHRI D.K. GUPTA, CIT-DR. RESPONDENT BY : SHRI AMAR DAVE, ADVOCATE. ORDER PER TS KAPOOR, AM: THESE ARE FOUR APPEALS FILED BY THE REVENUE AGAINST TH E ORDER OF LD CIT(A)-XXIV, NEW DELHI DATED 1.12.2011 FOR ASSESSMEN T YEARS 2003- ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 2 2 04, 2004-05, 2005-06 & 2006-07. THE ASSESSEE HAS FILE D CROSS OBJECTIONS TO THESE APPEALS WHICH ARE LISTED AS C.O. NOS. 169 TO 172/DEL/2012. THESE APPEALS AND CROSS OBJECTIONS WERE HE ARD TOGETHER. THEREFORE, FOR THE SAKE OF CONVENIENCE, TH ESE ARE DISPOSED OFF THROUGH A SINGLE CONSOLIDATED ORDER. THE GROUNDS OF APPEAL FOR ALL THE FOUR YEARS ARE COMM ON WHICH ARE REPRODUCED BELOW:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A) HAS ERRED IN RESTRICTING THE ATTRIBUTION OF TH E REVENUE ATTRIBUTABLE TO THE PE IN INDIA TO 15% ONLY AND NOT APPRECIATING THE FINDING OF THE ASSESSING OFFICER THAT MAJOR PART OF THE BUSINESS ACTIVITY OF THE ASSESSEE LEADING TO GENERATION OF PROFITS IS ATTRIBUTABLE TO THE ASSESSEES PE IN INDIA THEREBY ATT RIBUTING 75% OF THE PROFITS TO THE PE OF THE ASSESSEE IN INDIA. 2. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALT ER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. 2. THE ASSESSEE HAS TAKEN 14 GROUNDS OF CROSS OBJECTIONS. T HE GROUNDS OF CROSS OBJECTIONS FILED ARE MORE OR SO SAME IN EACH YEAR. FOR THE SAKE OF CONVENIENCE, THE CROSS OBJECTIONS TAKEN FOR THE ASSESSMENT YEAR 2003-04 ARE REPRODUCED BELOW. INVALID ASSESSMENT: 1.1. AT THE OUTSET, THE RESPONDENT PRAYS THAT THE ASSUM PTION OF JURISDICTION BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, (INTERNATIONAL TAXATION) - CIRCLE 19(1), BANGALORE ('THE LD. ACIT'), ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 3 3 UNDER SECTION 148 THE ACT, WAS ILLEGAL, INVALID, NULL AND VOID, AS THE JURISDICTIONAL CONDITIONS PRECEDENT FOR A VALID A SSUMPTION OF JURISDICTION UNDER SECTION 148 WERE NOT FULFILLED, A ND THE HON'BLE CIT (A) HAS ERRED IN HOLDING THE SAID ORDER TO BE VAL ID. 1.2. THE RESPONDENT PRAYS THAT THE ID. ACIT HAS ERRED , AND THE HON'BLE CIT (A) HAS FURTHER ERRED, IN NOT QUASHING T HE ORDER DATED 28 DECEMBER 2006 PASSED UNDER SECTION 143(3), READ WIT H SECTION 148, OF THE ACT, BY THE ID. ACIT, BEING INVA LID, NULL AND VOID AB INITIO, INTER ALIA, AS IT HAS BEEN PASSED PURSUA NT TO AN INVALID NOTICE UNDER SECTION 143(2) OF THE ACT, WHIC H WAS ISSUED TO THE RESPONDENT WITHOUT SERVICE OF AN INTIMATION UN DER SECTION 143(1) OF THE ACT. 2. TAXABILITY UNDER THE ACT 2.1. THE LD. ACIT AND THE HON'BLE CIT (A) OUGHT T O HAVE HELD THAT THE RESPONDENT DOES NOT HAVE ANY INCOME TAXABLE IN INDIA AS PER THE PROVISIONS OF THE ACT. 2.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, HON'BLE CIT (A) HAS ERRED IN MERELY FOLLOWING T HE ORDER PASSED BY THE DELHI BENCH OF THE INCOME TAX APPELLATE TRIBUNAL ('IT AT') FOR ASSESSMENT YEAR ('A Y') 1995-96 TO 1998-9 9 IN THE CASE OF GALILEO INTERNATIONAL INC ('GII') AND THEREB Y HOLDING THAT THE RESPONDENT HAS A BUSINESS CONNECTION IN INDIA. APPLICATION OF DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND THE NETHERLANDS ('THE DT AA') 3.1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LA W, THE ID. ACIT HAS ERRED AND THE HON'BLE CIT (A) HAS FURTHER ER RED IN APPLYING THE PROVISIONS OF ARTICLE 5 OF THE DT AA BY HOLDING THAT THE RESPONDENT HAS A PERMANENT ESTABLISHMENT ('PE') IN INDIA. 3.2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ACLT HAS ERRED AND THE HON'BLE CIT (A) HAS FURTHE R ERRED IN ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 4 4 HOLDING THAT THE COMPUTERS OF THE TRAVEL AGENTS IN IN DIA CONSTITUTE A FIXED PLACE OF BUSINESS UNDER ARTICLE 5(1) OF THE DTAA, OF THE RESPONDENT IN INDIA. 3.3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ACIT HAS ERRED AND THE HON'BLE CIT (A) HAS FURTH ER ERRED IN HOLDING THAT INTERGLOBE ENTERPRISES PRIVATE LIMITED T HROUGH ITS SUBSIDIARY, GALILEO INDIA PRIVATE LIMITED ('THE DISTRI BUTOR COMPANY' OF THE RESPONDENT IN INDIA), CONSTITUTES A PE OF THE RESPONDENT IN INDIA UNDER ARTICLE 5(5)(A) OF THE DTA A. 3.4. THE ID. ACIT HAS ERRED IN BASING HIS CONCLUSION, AND THE HON'BLE CIT (A) HAS FURTHER ERRED IN UPHOLDING, THAT THE DISTRIBUTOR COMPANY IS A DEPENDENT AGENT OF THE RESPON DENT BY RELYING, INTER ALIA, UPON UNSUBSTANTIATED ALLEGATIONS, FOR INSTANCE: THE RESPONDENT OPERATES IN INDIA THROUGH M/S GALILEO I NDIA (P) LTD; THE SERVICES OF THE RESPONDENT ARE UTILISED IN INDIA BY THE TRAVEL AGENT; THE DISTRIBUTOR OF THE RESPONDENT IN INDIA HAS HABITUA LLY EXERCISED AND IS AUTHORISED TO CONCLUDE CONTRACTS ON BE HALF OF THE RESPONDENT; AND THE DISTRIBUTOR COMPANY OF THE RESPONDENT IN INDIA HA BITUALLY SECURES ORDERS WHOLLY FOR THE RESPONDENT. THE LD. ACIT AND THE HON'BLE CIT (A) OUGHT TO HAVE HELD THAT THE DISTRIBUTOR COMPANY IN INDIA IS NOT AN AGENT OF THE R ESPONDENT. IN VIEW OF THE ABOVE, THE LD. ACIT AND THE HON'BLE CIT (A) OUGHT TO HAVE HELD THAT THE RESPONDENT DID NOT HAVE A PE I N INDIA, AND HENCE WAS NOT SUBJECT TO TAX IN INDIA. 3.5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. ACIT HAS ERRED AND THE HON'BLE CIT (A) HAS FURTHER ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 5 5 ERRED IN HOLDING THAT THE RESPONDENT'S INCOME IS CHAR GEABLE TO TAX IN INDIA UNDER THE PROVISIONS OF DT AA. 3.6. THE HON'BLE CIT(A) HAS ERRED IN HOLDING THAT T HE RESPONDENT HAS A PE IN INDIA FOR THE REASONS STATED IN T HE ORDER OF THE HON' BLE IT AT IN THE CASE OF GALILEO INTERNA TIONAL INC ('GLI') FOR A Y 1995-96 TO 1998-99, AND THE ASSESSMENT ORDER PA SSED IN CASE OF THE RESPONDENT FOR PREVIOUS ASSESSMENT YEARS. 4. TAXABLE INCOME I ATTRIBUTION OF INCOME 4.1. WITHOUT PREJUDICE TO GROUNDS OF CROSS - OBJECTI ONS IN POINT NOS. I, 2 AND 3 ABOVE, ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN LAW, THE HON' BLE CIT (A) HAS ERRED I N PLACING RELIANCE ON THE ORDERS OF HON' BLE IT AT FOR A Y 199 5-96 TO ] 998- 99 IN CASE OF GII AND CONFIRMING THE ATTRIBUTION OF 15% OF THE INDIA RELATED NET BOOKING FEE AS PROFITS ATTRIBUTABLE TO THE RESPONDENT IN RESPECT OF ITS OPERATION IN INDIA. 5. DEDUCTION OF EXPENSES 5.1. WITHOUT PREJUDICE TO GROUNDS OF CROSS - OBJECTIO NS IN POINT NOS I, 2, 3 AND 4 ABOVE, ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE AND IN LAW, THE LD. ACIT HAS ERRED IN NOT AL LOWING, AND THE HON'BLE CIT (A) HAS FURTHER ERRED IN NOT ADJUDIC ATING ON, DEDUCTIONS FOR CERTAIN INDIA RELATED EXPENSES TO THE R ESPONDENT WHILE COMPUTING ITS TAXABLE INCOME IN INDIA. 5.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. ACIT HAS ERRED IN ALLOWING DEDUCTION ON LY FOR EXPENSES AGGREGATING TO USD 21,285,357 IN COMPUTING T HE RESPONDENT'S TAXABLE INCOME IN INDIA AND THE HON' BLE CIT (A) HAS FURTHER ERRED IN NOT ADJUDICATING UPON THE ALLOW ABILITY EXPENSES TO THE RESPONDENT 5.3. THE LD. ACIT AND THE HON'BLE CIT (A) OUGHT TO HAVE ALLOWED DEDUCTION FOR OTHER EXPENSES INCURRED BY THE RESPONDEN T, AND ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 6 6 FOR ANY OTHER AMOUNTS DEDUCTIBLE IN COMPUTING THE RE SPONDENT'S INCOME. 6. APPORTIONMENT OF INCOME 6.1. THE ID. ACIT AND THE HON'BLE CIT (A) HAVE ER RED IN THE INTERPRETATION OF THE PROVISIONS OF THE ACT, INTER A LIA, AS THEY OUGHT TO HAVE HELD THAT IN THE ABSENCE OF ANY OPERAT IONS IN INDIA, THE RESPONDENT IS NOT LIABLE TO TAX IN INDIA. 6.2. THE LD. ACIT AND THE HON'BLE CIT (A) OUGHT TO HAVE HELD THAT NO PART OF THE RESPONDENT'S INCOME IS ATTRIBUTABL E TO THE RESPONDENT'S ALLEGED PE IN INDIA. 6.3. WITHOUT PREJUDICE TO GROUND 6.2 ABOVE, THE ID . ACIT ERRED IN ARBITRARILY IMPUTING 75% OF THE PROFITS GENERATED FROM THE TRANSACTIONS UNDER CONSIDERATION AS ATTRIBUTABLE TO THE RESPONDENT'S ALLEGED PE IN INDIA. THE HON'BLE CIT(A) HAS FURTHER ERRED IN ARBITRARILY IMPUTING 15% OF THE PROFITS GEN ERATED FROM THE TRANSACTIONS UNDER CONSIDERATION AS ATTRIBUTABLE T O THE RESPONDENT'S ALLEGED PE IN INDIA 7. INTERPRETATION OF THE ACT AND THE RELEVANT AGR EEMENT 7.1. THE ID. ACIT AND THE HON'BLE CIT (A) HAVE ER RED IN THEIR INTERPRETATION AND APPLICATION OF THE PROVISIONS OF T HE ACT AND THE DT AA TO THE FACTS OF THE RESPONDENT'S CASE. 7.2. THE LD. ACIT AND HON'BLE CIT (A) HAVE ALSO ERR ED IN THEIR INTERPRETATION OF THE AGREEMENT BETWEEN THE RESPONDE NT AND THE DISTRIBUTOR COMPANY. 8. DENIAL OF ALLEGATIONS 8.1. THE RESPONDENT DENIES EACH AND EVERY ALLEGATIO N AND STATEMENT MADE BY THE ID. ACIT, IN THE ORDER PASSED UN DER SECTION 143(3), READ WITH SECTION 148, OF THE ACT AND UPHELD BY HON' BLE CIT (A) IN ORDER PASSED UNDER SECTION 250 OF THE ACT, ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 7 7 UNLESS THE SAME IS SPECIFICALLY ADMITTED BY THE RESPONDE NT OR IS OTHERWISE BORNE OUT BY THE RECORD. 8.2. WITHOUT PREJUDICE TO THE GENERALITY OF THE AB OVE, THE RESPONDENT DENIES THE FOLLOWING, AMONGST OTHER, INCORR ECT ALLEGATIONS OF THE ID. ACIT AND / OR THE HON'BLE CRT (A): THAT THE RESPONDENT HAS A BRANCH IN INDIA; THAT THE RESPONDENT'S OPERATIONS, IN INDIA, ARE CARRIE D OUT FROM A LARGE COMPUTER FACILITY LOCATED AT DENVER, COLORADO , USA; THAT THE COMPUTER OF THE TRAVEL AGENTS BECOMES AN EXT ENSION OF THE RESPONDENT'S MAIN-FRAME COMPUTER; THAT THE RESPONDENT HAD UNDERTAKEN TO PROVIDE ALL CO MPUTER HARDWARE AND SOFTWARE TO THE TRAVEL AGENTS; THAT THE CONTRACT BETWEEN THE PASSENGER AND THE AIRLI NE IS ENTERED INTO IN INDIA; THAT THE ISSUE OF ALLOWABILITY OF EXPENSES HAS BEEN EXA MINED AT LENGTH IN THE RESPONDENT'S OWN CASE; THAT THE BASIC FACTS OF TAXABILITY HAVE REMAINED THE SAME AND CONTINUED AS EARLIER; THAT THE RESPONDENT HAS A PE IN INDIA IN THE FORM OF FIXED PLACE BUSINESS PE AND AGENCY PE AND THIS FINDING HAS BEEN UPHE LD BY THE HON' BLE DELHI HIGH COURT IN CASE OF THE RESPONDE NT ITSELF; THAT RESPONDENT HAS BUSINESS CONNECTION IN INDIA AND IS RECEIVING INCOME FROM THE SOURCES IN INDIA; THAT COMPUTERS, CONFIGURATION, CONNECTIVITY IS PROVI DED BY RESPONDENT TO THE SUBSCRIBERS AMOUNTS TO OPERATING PART OFCRS IN INDIA, AND THE SAME RESULTS IN A FIXED PLACE PE IN INDIA; 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ID. ACIT HAS ERRED AND THE HON'BLE CIT (A) HAS FU RTHER ERRED IN NOT ALLOWING / ADJUDICATING ON GRANTING OF FULL CRE DIT FOR PREPAID TAXES TO THE RESPONDENT. ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 8 8 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. ACIT HAS ERRED WITHDRAWING INTEREST UNDER SECT ION 244A OF THE ACT AND THE HON'BLE CIT (A) HAS FURTHER ERRED IN NOT ADJUDICATING UPON THE SAME. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. ACIT HAS ERRED IN INITIATING THE PENALTY PRO CEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND HON'BLE CIT (A) HAS FURTHER ERRED IN NOT ADJUDICATING UPON THE SAID PENALTY PROCEEDING S U/S 271 (1)( C). 12. ALL THE ABOVE GROUNDS OF CROSS-OBJECTION ARE INDE PENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER 13. THE RESPONDENT CRAVES LEAVE TO SUPPLEMENT, TO CANC EL, TO AMEND, TO ADD AND/OR OTHERWISE TO ALTER/MODIFY ANY O R ALL THE GROUND(S) OF CROSS OBJECTION STATED HEREIN ABOVE. 14. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ORDER PASSED BY THE ID ACIT IS BAD IN LAW AND IS LI ABLE TO BE QUASHED. 3. THE BRIEF FACTS OF THE CASE ARE THAT M/S GALLILEO INTERNATIONAL INC. IS A U.S. CORPORATION INCORPORATED IN THE BUSINESS OF P ROVIDING ELECTRONIC DISTRIBUTION SERVICES TO THE TRAVEL INDUSTRY THROUGH COMPUTERIZED RESERVATION SYSTEM (CRS). THE CRS IS AN AUTOMATED SYSTEM WHICH PROCESSES BOOKING DATA AND OTHER DATA TO PR OVIDE THE FOLLOWING FUNCTIONS:- 1. THE ABILITY TO DISPLAY FLIGHT SCHEDULES AND SEAT AVA ILABILITY. 2. THE ABILITY TO DISPLAY AND/OR QUOTE AIRLINE FARE. 3. THE ABILITY TO MAKE AIRLINE SEAT RESERVATION. 4. THE ABILITY TO ISSUE AIRLINE TICKETS. ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 9 9 5. THE ABILITY TO PERFORM ANY OR ALL OF THE FUNCTIO NS SIMILAR TO THE ABOVE FUNCTIONS IN RESPECT OF HOTEL, CAR AND OTHER TR AVEL RELATED SERVICES APART FROM AIR SERVICES. 4. FOR THIS PURPOSE, THE APPELLANT MAINTAINED A LARGE COMPUTER FACILITY AT DENVER COLORADO IN THE USA. THE DATA RE GARDING AVAILABILITY OF AIRLINE SEAT, HOTEL ROOMS AND CARS AND THE FARES/TAR IFFS THEREOF IS FED IN TO THIS COMPUTER. TRAVEL AGENTS AND OTHER PERSONS WH O WISH TO MAKE AIRLINE/HOTEL/CAR BOOKINGS COMMUNICATE THEIR REQUIRE MENTS ON LINE TO THE APPELLANTS ABOVE COMPUTER SYSTEM WHICH ON THE BASI S OF DATA CONTAINED THEREIN PROVIDES THEM WITH INFORMATION REG ARDING POSSIBLE ITINERARIES, AVAILABILITY OF SEATS, ROOMS, FARES ETC. AN D ULTIMATELY ENABLES A PERSON TO MAKE A BOOKING. THE APPELLANT HA S AN EXCLUSIVE DISTRIBUTOR IN INDIA; M/S GALILEO INDIA PVT. LTD. (GA LILEO INDIA) NEGOTIATES AND ENTER INTO CONTRACTS WITH VARIOUS INDIA TRAVEL AGENTS WHO WISH TO BE CONNECTED TO THE APPELLANTS COMPUTER RESERVATION SYSTEM (CRS) AND PROVIDES THEM CONNECTIVITY WITH THE SAME. THE APP ELLANT PAYS FEES TO GALILEO INDIA FOR ACTING AS AN DISTRIBUTOR. FOR EA CH COMPLETED BOOKING, THE APPELLANT RECEIVES EURO 3 AND IT PAYS TO THE DISTRIBUTOR EURO 1. 5. FOR ASSESSMENT YEARS 2003-04 TO 2006-07, THE ASSESSEE COMPANY FILED RETURN OF INCOME DECLARING NIL INCOME FOR THE FOLLOWING REASONS:- 1. NO INCOME HAS RECEIVED OR DEEMED TO BE RECEIVED IN I NDIA BY IT UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961 . 2. NO INCOME ACCRUES OR AROSE TO IT IN INDIA NOR COULD A NY SUCH INCOME BE DEEMED TO ACCRUE OR ARISE IN INDIA. ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 10 10 6. WITHOUT PREJUDICE TO ITS NON TAXABILITY UNDER THE ACT, IT WAS CONTENDED THAT IT DID NOT HAVE ANY PERMANENT ESTABLI SHMENT (PE) IN INDIA WITHIN THE MEANING OF ARTICLE 5 OF THE AGREEM ENT FOR AVOIDANCE OF DOUBLE TAXATION BETWEEN INDIA AND USA AND THEREFORE , THE BOOKING FEES RECEIVED BY THE APPELLANT FROM AIRLINE COMPANY OUTSIDE INDIA BEING BUSINESS PROFITS WERE NOT LIABLE TO TAX IN INDIA UNDER ARTICLE 7 (1) OF DTAA. 7. DURING ASSESSMENT PROCEEDINGS, FOR THESE YEARS, THE ASSE SSING OFFICER OBSERVED THAT THE APPELLANT HAD BUSINESS CONNEC TION IN INDIA, BECAUSE OF THE FACT THAT THE COMPUTERS AND COMMUNICA TION EQUIPMENTS OF THE ASSESSEE WERE CONNECTED TO THE COMPUTE R TERMINALS OF THE TRAVEL AGENTS AND BUSINESS IN THE FORM OF BOOKIN GS WAS BEING GENERATED FROM INDIA & THEREFORE HELD THAT APPELLA NT HAD A FIXED PLACE PE IN INDIA UNDER ARTICLE 5 OF DTAA. THE ASSESSING OFF ICER ALSO HELD THAT THE DISTRIBUTOR IN INDIA IS A DEPENDENT AGENT OF THE APPELLANT WITHIN THE MEANING OF ARTICLE 5 (4) (A) AND ARTICLE 5 (4)( C) OF DTAA AS IT USED TO CONCLUDE CONTRACTS ON BEHALF OF THE APPELLANT AND ALSO SECURED ORDERS WHOLLY FOR THE APPELLANT. ON THESE BASIS, THE A SSESSING OFFICER HELD THAT A MAJOR PART OF THE BUSINESS ACTIVITY OF THE APPELLANT IS ATTRIBUTABLE TO ITS PE IN INDIA. ACCORDINGLY, HE H ELD THAT 75% OF PROFITS GENERATED FROM INDIAN OPERATION IS ATTRIBUTABLE TO T HE ALLEGED PE OF THE APPELLANT IN INDIA. WHILE FRAMING ASSESSMENT ORDER FO R THE ASSESSMENT YEAR 2003-04 THE ASSESSING OFFICER TOOK GROSS BOOKING FEE S OF 34414293 $ AND ALLOWED EXPENSES TO THE EXTENT OF 2059 4360 $ AS SUBSCRIBER FEES AND VENDOR COST. FURTHER A DEDUCTION O F 5% WAS ALLOWED U/S 44C OF THE ACT AND OUT OF THE BALANCE 13 128936 $ TAXABLE INCOME HAS BEEN TAKEN AT ` .98,46,702/- (BEING 75% OF ` .13128936). THE SAME BASIS WAS TAKEN FOR CALCULATION OF TAXABLE PRO FITS FOR THE YEARS 2004-05, 2005-06 & 2006-07. ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 11 11 8. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD CIT(A) AND MADE THE FOLLOWING SUBMISSIONS:- 1. THAT IT DOES NOT HAVE ANY BUSINESS CONNECTION IN INDIA AND EVEN ASSUMING WHILE DENYING THAT IT HAS BUSINESS CONNECTION I N INDIA NO INCOME ACCRUES OR AROSE THROUGH OR FROM THE BUSINESS CONNECTION ALLEGED BY THE ASSESSING OFFICER. 2. THAT NO PART OF THE OPERATION OF THE BUSINESS OF THE A PPELLANT IS CARRIED OUT IN INDIA AND THEREFORE NO PART OF INCOM E IS TAXABLE IN INDIA UNDER THE PROVISIONS OF THE ACT. 3. THAT IT DID NOT HAVE A FIXED PLACE IN INDIA UNDER D TAA AS IT DID NOT SATISFY THREE TESTS VIS-A-VIS PLACE OF BUSINESS TEST; RI GHT TO USE AND BUSINESS ACTIVITY TEST) REQUIRED FOR A FIXED PLA CE PE. 4. THAT IT DID NOT HAVE ANY AGENCY PE WITHIN INDIA WIT HIN THE MEANING OF ARTICLE 5(1) OF DTAA AS THE DISTRIBUTOR DI D NOT CARRY OUT ANY OF THE ACTIVITIES SPECIFIED IN CLAUSES (A), (C) OF ARTICLE 5(4) OF DTAA ON BEHALF OF THE APPELLANT. 5. THAT DISTRIBUTOR CARRIED ON ITS OWN BUSINESS IN INDIA AN D WAS NOT DEPENDENT ON THE APPELLANT FOR ITS BUSINESS IN INDIA. 6. THAT ACTIVITIES OF THE ALLEGED PE IF ANY WERE ONLY O F A PREPATORY CHARACTER AND THE APPELLANT DID NOT CARRY ON ANY BU SINESS IN INDIA WHETHER THROUGH THE ALLEGED PE OR OTHERWISE. 7. THAT APPELLANT MERELY PROVIDED INFORMATION FOR FACI LITATING TRANSACTIONS OF BOOKING TICKETS AT THE REQUEST OF PASSENG ERS THROUGH VARIOUS TRAVEL AGENTS. 8. THAT IN THE EVENT OF IT BEING HELD THAT THE INCOME OF THE APPELLANT WAS ATTRIBUTABLE TO THE ALLEGED PE IN INDI A. THE APPELLANT COULD BE TAXED ONLY IN RESPECT OF THE AMOU NT FROM THE ASSETS AND THE ACTIVITIES OF THE ALLEGED PE WHICH WERE IF ANY ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 12 12 NEGLIGIBLE AND IN ANY EVENT EXTINGUISHED BY THE AMOU NT PAID BY IT TO THE DISTRIBUTOR. 9. RELIANCE WAS PLACED AT HON'BLE ITAT ORDER IN ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 1995-96 TO 1998-99 WHEREIN IT W AS HELD BY THE TRIBUNAL THAT ONLY 15% OF THE APPELLANTS REVENU E COULD BE REASONABLY APPORTIONED TO INDIA AND THE ALLEGED INCO ME ATTRIBUTABLE TO THE ALLEGED PE IS EXHAUSTED BY THE ARMS LENGTH PAYMENT MADE BY THE APPELLANT TO ITS DISTRIBUTOR. 10. RELIANCE WAS ALSO PLACED UPON THE ORDER OF HON'BL E DELHI HIGH COURT DATED 25.2.2009 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1995-96 TO 1998-99 WHEREIN THE HON'BLE HIGH COURT H AD DISMISSED THE APPEALS FILED BY DEPARTMENT AGAINST THE ABOVE ORDER OF HON'BLE TRIBUNAL FOR ASSESSMENT YEARS 1995-96 TO 1998-99. 11. THE LD AR ARGUED THAT FACTS PERTAINING TO THE AP PEALS UNDER CONSIDERATION I.E. ASSESSMENT YEARS 2003-04 TO 2006-07 AR E IDENTICAL TO THOSE PERTAINING TO APPEALS FOR ASSESSMENT YEARS 1995- 96 TO 1998- 99, THEREFORE, HE SUBMITTED THAT NO INCOME IS TAXABL E IN INDIA BASED UPON THE ABOVE ORDER OF THE HON'BLE TRIBUNAL AND FU RTHER CONFIRMED BY HON'BLE HIGH COURT. THE LD CIT(A) CONSIDERING THE SUB MISSIONS MADE BY THE LD AR DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF LD CIT(A)S ORDER IS REPRODUCED B ELOW:- I HAVE CAREFULLY CONSIDERED THE APPELLANTS SUBMISSION. THE POINTS RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDE R FOR THE YEARS UNDER CONSIDERATION, JUDICIAL PRONOUNCE MENTS RELIED UPON BY THE APPELLANT AND THE ITAT DELHI ORDER IN T HE APPELLANTS OWN CASE FOR ASSESSMENT YEARS 1995-96 TO 1998-99. ADMITT EDLY ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 13 13 THE FACTS OF THE CASE FOR THE YEARS UNDER CONSIDERAT ION ARE SIMILAR TO THE FACTS FOR THE ASSESSMENT YEARS COVERED IN THE TRIB UNAL ORDER. KEEPING IN VIEW THE ABOVE FACTS, THAT THE DEC ISION OF HON'BLE ITAT DELHI BENCHES IN THE APPELLANTS OWN CASE HAS BEEN UPHELD BY THE HON'BLE DELHI HIGH COURT AND WHICH IS BINDING UPON THE SUBORDINATED JUDICIAL AUTHORITIES INCLUDING THE UNDERSIGNED IT IS HELD AS UNDER:- THE APPELLANT IS HELD TO HAVE BUSINESS CONNECTION IN INDIA AND HENCE INTERMS OF SECTION 9(1)(I) INCOME FROM BOOK ING MADE FROM INDIA AND INCOME FROM SUCH OPERATION HAVE DEEMED TO ACCRUE OR ARISE TO THE APPELLANT IN INDIA. KEEPING IN VIEW THE FACTS OF THE APPELLANTS CASE FOR THE YEARS UNDER CONSIDERATION AND THE FAR ANALYSIS CARRIED OUT IN ITS STUDY BY HON'BLE ITAT FOR ASSESSMENT YEARS 1995-96 TO 1998-99, 15% OF THE REVENUE ACCRUING OR ARISEN TO IT IN INDIA IS HELD AS A REASONABLE ATTRIBUTION AS INCOME AC CRUING OR ARISEN TO THE APPELLANT IN INDIA AND CHARGEABLE U /S 5(2) READ WITH SECTION 9(1)(I) OF THE ACT. HON'BLE ITAT WHILE HOLDING THAT REMUNERATION PAID B Y THE APPELLANT TO GALILEO INDIA FOR THE FUNCTIONS PERFORM ED IN INDIA BEING MORE THAN THE INCOME ATTRIBUTABLE TO TH E APPELLANT EXTINGUISHED ITS LIABILITY TO TAX IN INDIA. THE COMPUTERS THEIR CONFIGURATION AND CONNECTIVITY PROVIDED BY THE APPELLANT TO SUBSCRIBERS IN INDIA EITH ER DIRECTLY OR THROUGH ITS AGENTS AMOUNT TO OPERATING PA RT OF ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 14 14 ITS CRS SYSTEM AND CONSTITUTE THE APPELLANTS FIXED PLA CED PE WITHIN THE MEANING OF APART FROM IT OF ARTICLE 5 OF DTAA. M/S GALILEO INDIA IS A DEPENDENT AGENT OF APPELLANT W HO HAS HABITUALLY EXERCISE THE AUTHORITY TO CONCLUDE CONTRA CTS ON BEHALF OF THE APPELLANT AND THEREFORE CONSTITUTES THE APPELLANT DEPENDENT AGENT PE IN TERMS OF ARTICLE 5(4 ) (A) OF DTAA. 12. AGGRIEVED, THE DEPARTMENT HAS FILED APPEALS BEFOR E THIS TRIBUNAL FOR ALL THE FOUR YEARS AND FOR ALL FOUR YEARS CROSS OBJ ECTIONS HAS BEEN FILED BY THE ASSESSEE. 13. THE LD DR CONTENDED THAT EACH YEAR IS A SEPARATE UNIT OF ASSESSMENT AND DO4ES NOT CONSTITUTE RES JUDICATA FOR OTHE R YEARS. METHODOLOGY ADOPTED BY THE HON'BLE ITAT FOR THE INI TIAL YEARS OF THE ASSESSEE IN INDIA CANNOT BE FOLLOWED THE YEARS UNDER REF ERENCE I.E. ALMOST AFTER 10 YEARS OF ASSESSEES EXISTENCE INCLUDING IN INDIA. HE FURTHER ARGUED THAT ITAT ORDER CANNOT BE READ SO AS TO HOLD THAT THE ABOVE METHODOLOGY SHALL HAVE TO BE FOLLOWED FOR ALL THE TIME TO COME. IF THIS APPROACH OF LOSS MAKING FORMULA IS FOLLOWED IN ALL THE SUBSEQUENT YEARS THEN THE INDIA PE WOULD NEVER MAKE PR OFITS FROM THE OPERATION DONE IN INDIA WHEREAS THE FACT REMAINS THAT ASSESSEE IS CARRYING & SPREADING HIS OPERATIONS IN INDIA. THE LD DR FURTHER ARGUED THAT BY THIS PROPOSITION THE PE IN PERPETUITY WOULD INCUR GUARANTED LOSSES FROM THE INDIAN OPERATIONS WHICH IS CONTRARY TO T HE FACTS OF ACCOUNTS. EVERY ASSESSEE EXPECTS TO MAKE PROFITS AND WOUL D NOT TOLERATE LOSSES BEYOND INITIAL AND REASONABLE PERIOD OF TIME. DEFINITELY NOT WHEN IT IS ASSURED OF THE LOSSES FOR ALL TIMES TO COM E. THE LD DR FURTHER ARGUED THAT HAD THERE BEEN ANY LOSS TO THE ASSE SSEE FROM ITS ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 15 15 INDIA OPERATION IT WOULD NOT HAVE BEEN EXPANDING I TS BUSINESS THROUGH VARIOUS TRAVEL AGENTS IN INDIA. THE LD DR ALSO CONTEND ED THAT WITH INCREASE IN GLOBALIZATION INTERNATIONAL TOURISM PARTI CULARLY IN INDIA HAS INCREASED MANIFOLD AND THIS HAS NECESSITATED MUCH LARGER INVOLVEMENT OF PE IN INDIA WHICH IS PLAYING A SIGNIFICANT ROLE IN REVENUE GENERATION AND THEREFORE HE ARGUED THAT MUCH LARGER PROFITS ARE TO BE ATTRIBUTED TO THE PE AS ITS PERFORMING SIGNIFICANT FUNCTION IN IN DIA. IN SUPPORT OF HIS CLAIM, THE LD DR PUT RELIANCE ON THE HON'BLE ITA T DELHI BENCH DECISION IN THE CASE OF AMADUS GLOBAL TRAVELS DISTRIBUTI ON IN I.T.A. NO.,107 & 108/DEL/2008 DATED 27.4.2009. THE LD DR A RGUED THAT ON SIMILAR FACTS THE HON'BLE ITAT HAD REMITTED THE MATTE R BACK TO THE FILE OF ASSESSEE FOR FRESH CONSIDERATION. THE LD DR BROUGHT TO OUR NOTICE THAT HON'BLE ITAT HAD NOT CONSIDERED THE CONTENTION OF LD AR THAT ITS CASE WAS COVERED BY THE CASE OF GALLIO INT. WHICH WAS D ECIDED VIDE ORDER DATED 21.11.2008 ON WHICH LD AR HAD PUT HIS RE LIANCE DURING APPELLATE PROCEEDINGS. LD DR FURTHER BROUGHT TO OUR NOTICE THAT ON THE ASSESSEES APPEAL AGAINST THIS ORDER OF TRIBUNAL, THE HON 'BLE DELHI HIGH COURT VIDE JUDGMENT IN I.T.A. NO.1040 OF 2009 DATED 24.1.2011 DID NOT INTERFERE, THEREFORE, ORDER OF HON'BLE TRIBUNAL BEC AME FINAL. HE ARGUED THAT SINCE THIS ORDER AND FURTHER CONFIRMATION BY HON 'BLE HIGH COURT HAD COME AFTER THE HON'BLE HIGH COURT JUDGMENT IN A SSESSEES CASE (WHICH WAS ON 25.2.2009) THE LATTER SHOULD BE CONSIDER ED. 14. THE LD AR, ON THE OTHER HAND, ARGUED THAT THE M ATTER STANDS SETTLED AS HON'BLE DELHI HIGH COURT HAD NOT INTERVENE D IN THE ITAT ORDER RELATING TO ASSESSMENT YEARS 1995-96 TO 1998-99 RE LATING TO ASSESSEES OWN CASE AND THE SUBJECT MATTER FOR THE ASSESSMENT YEARS 2003-04 TO 2006-07 ARE SIMILAR TO THE FACTS OF ASSESSMENT YEAR 1995- 96 TO 1998-99. REGARDING CONTENTION OF LD DR THAT THIS METHODOLOGY OF ALLOCATING REVENUE TO PE IN INDIA WOULD INCUR GU ARANTEED LOSSES, THE ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 16 16 LD AR ARGUED THAT THIS POINT HAS ALREADY BEEN CLARIFI ED VIDE MISC. PETITION NO,108/DEL/2008 FILED BY THE INCOME TAX DE PARTMENT IN THE EARLIER YEARS I.E. ASSESSMENT YEARS 1995-96 TO 1998-99. IN THE SAID MISC. APPLICATION THE HON'BLE TRIBUNAL HAD REJECTED THE CONTENTION OF THE INCOME TAX DEPARTMENT AND HAD HELD THAT FOR COM PUTING OF ANY INCOME, THE FIRST POINT IS TO APPORTION THE REVENUE F ROM THE OPERATION CARRIED OUT IN INDIA AND UNLESS THE REVENUE ARE ATTRI BUTED THE INCOME WHICH IS A SECOND STEP CANNOT BE ATTRIBUTED. 15. THE LD AR FURTHER ARGUED THAT INCOME OF ASSESSEE AC CRUES DUE TO WORLDWIDE OPERATION AND NOT BECAUSE OF THE OPERATION CARRIED OUT ONLY IN INDIA./ HOWEVER, IN RESPECT OF TAXABILITY IN IND IA ONLY SUCH PROFITS CAN BE TAXED WHICH ACCRUES OR ARISES IN INDIA. THE LD AR FURTHER ARGUED THAT EVEN IF THE ASSESSEE DO NOT EARN STRICTLY OUT OF O PERATION CARRIED OUT IN INDIA, THE ASSESSEE EARNS INCOME WORLDWIDE FROM I TS GLOBAL OPERATIONS. HE FURTHER ARGUED THAT ITAT ORDER RELATI NG TO ASSESSMENT YEARS 1995-906 TO 1998-99 WAS SUBSEQUENTLY UPHELD BY TH E HON'BLE DELHI HIGH COURT IN THE ASSESSEES OWN CASE AND THEREFORE KEEPING IN VIEW THE FACT THAT FACTS OF THE PRESENT CASES ARE EXACT LY SIMILAR TO THE FACTS RELATING TO ASSESSMENT YEARS 1995-96 TO 1998-99, THE APPEALS OF THE REVENUE BE DISMISSED., 16. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE CITATION RELIED UPON BY THE LD DR RELATES TO THE ASSESSMENT YEAR 2001-0 2 & 2002-03 AND WAS DECIDED ON 27.4.2009 I.E. AFTER THE EARLIER ORDER OF HON'BLE ITAT DATED 21 ST NOVEMBER, 2008. SIMILARLY, THE HON'BLE DELHI HIGH COURT HAD REFUSED TO INTERVENE IN BOTH THE CASES I.E. ONE FILED BY THE REVENUE AND THE OTHER FILED BY THE ASSESSEE. IN THE F IRST CASE RELATING TO ASSESSEE FOR THE ASSESSMENT YEARS 1995-96 TO 1998-99 WHER EIN THE ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 17 17 ITAT HAD ATTRIBUTED 15% AS ATTRIBUTABLE TO OPERATION IN INDIA, THE HIGH COURT HAD HELD AS UNDER:- NOTHING HAS BEEN URGED BEFORE US EITHER ON BEHALF O F THE ASSESSEE APPELLANT OR ON BEHALF OF THE REVENUE-RESPOND ENT TO ASSAIL THE FINDING OF THE TRIBUNAL IN THE SUPPLEMENTAR Y STATEMENT OF CASE. THE QUESTION IS AS TO WHAT PROPORTION OF THE PROFIT OF THE SALE IN CATEGORIES (A), (B) ( C) & (D) AROSE OR ACCRUE D IN BRITISH INDIA IS ESSENTIALLY ONE OF THE FACT DEPENDING UPON TH E CIRCUMSTANCES OF THE CASE. IN THE ABSENCE OF SOME STATUTO RY OR OTHER FIXED FORMULA ANY FINDING ON THE QUESTION OR P ROPORTION INVOLVES SOME ELEMENT OF GUESS WORK. THE ENDEAVOUR CAN ONLY BE A APPROXIMATE AND THERE CANNOT BE IN THE VERY NA TURE OF THINGS BE GREAT PRECISION AND EXACTNESS IN THE MATTER . AS LONG AS THE PROPORTION FIXED BY THE TRIBUNAL IS BASED UPON TH E RELEVANT MATERIAL IT SHOULD NOT BE DISTURBED. WE, THEREFORE, ARE OF OPINION THAT NO QUESTION OF LA W ARISES IN THESE MATTERS WHICH NEEDS ANY FURTHER DETERMINATION BY THIS COURT. 17. IN THE OTHER CASE OF AMADIUS IT GROUP SIMILAR CON TROVERSY HAS ARISEN AND LD AR HAD RELIED UPON THE ITAT ORDER IN T HE CASE OF M/S GALILEO INTERNATIONAL (THE ASSESSEE IN THE PRESENT CASE ) IN I.T.A. NO.,108/DEL/ DATED 21.11.2008. HOWEVER, THE HON' BLE TRIBUNAL HAD REJECTED THE CLAIM OF THE ASSESSEE AND HAD REFERRED BAC K THE MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION. TH E RELEVANT PARAGRAPH OF HON'BLE TRIBUNAL IS REPRODUCED BELOW:- APROPOS THE OTHER ISSUE I.E. ESTIMATE ABOUT THE EXPEND ITURE OF PROFITS OF PE IN INDIA WE ARE UNABLE TO ACCEPT THE C ONTENTIONS OF ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 18 18 LD COUNSELS THAT THE ISSUE IS COVERED IN ITS FAVOUR INASM UCH AS, THE TRIBUNAL GAVE ABOVE DECISION ON THE PECULIAR FAC TS OF THAT YEAR. LOOKING AT GLOBALIZATION THE SHARE OF INDIAN T RAVELLERS IN TERMS OF BOOKING HAS INCREASED CONSIDERABLY. BESIDES THE EXTENT OF ASSESSEES EXPENSES IS NOT KNOWN WHICH HAS BEEN INFORMED THAT SUCH EXPENDITURE CANNOT BE APPORTIONED . IN VI EW THEREOF WE ARE INCLINED TO SET ASIDE THE ISSUE ABOUT THE ESTIMATE O F TAXABILITY OF INDIA PE BACK TO THE FILE OF ASSESSING OFFICER TO CO NSIDER OUR OBSERVATIONS AND ABOVE ITAT AND HIGH COURT JUDGMENT T O DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AND ABOVE OBSER VATIONS AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD . 18. ON ASSESSEES APPEAL TO HIGH COURT, THE HIGH COURT H AD REFUSED TO INTERFERE IN THE ORDER OF ITAT. 19. FROM THE FACTS OF THE CASE AND FROM TWO CITATIONS OF HON'BLE HIGH COURT AND HON'BLE TRIBUNALS ORDER IN ASSESSEES OWN CASE AND IN THE CASE OF AMADEOUS TRAVELS (SUPRA), WE ARE OF THE OPINIO N THAT AN ESTIMATE OF 15% RATIO FIXED 10 YEARS CANNOT BE APPLI ED NOW IN THE NAME OF CONSISTENCY ESPECIALLY KEEPING IN VIEW THE INC REASE IN GLOBALIZATION INCREASE IN INDIAN PASSENGERS ORIGINATIN G FROM INDIA AND THE FACTS THAT ASSESSEE IS NOT IN LOSSES. THE INCOME TAX PR OCEEDINGS ARE APPLICABLE FROM YEAR TO YEAR DEPENDING UPON FAC TS OF EACH YEAR AND PRINCIPLE OF RES JUDICATA DO NOT ORDINARILY APPL Y TO INCOME TAX PROCEEDINGS AND THEREFORE FACTS OF THE CASE WHICH RELA TE TO BACK TO INITIAL FOR YEARS OF SETTING UP OF BUSINESS. ESTIMATE OF 10 BACK YEARS CANNOT SAID TO BE APPLICABLE FOR YEARS TO COME WITHO UT CONSIDERING THE CHANGE IN FACTS AND CIRCUMSTANCES. THE ESTIMATION OF PROFITS ATTRIBUTABLE TO INDIAN OPERATIONS SHOULD IDEALLY BE B ASED UPON NUMBER OF BOOKINGS ORIGINATING FROM INDIA VIZ-A-VIZ TOTAL B OOKINGS IN A ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 19 19 PARTICULAR YEAR AND CONSIDERATION OF GLOBAL ACCOUNTS . THAT COMPARISON CAN EASILY LEAD TO A FAIR ESTIMATION OF PERCENTAGE OF TOTAL BUSINESS ATTRIBUTABLE TO INDIAN OPERATIONS. SIMILARLY EXPENDI TURE ATTRIBUTABLE TO INDIAN OPERATIONS CAN BE CALCULATED ON SOME SOUND COMM ERCIAL BASIS KEEPING IN VIEW THE BOOKINGS FROM INDIA OR IN THE A LTERNATIVE THE ASSESSING OFFICER CAN CALCULATE NET PROFITS ATTRIBUTABL E TO INDIA OPERATIONS BY CALCULATING PROPORTIONATE NET PROFITS O F THE COMPANY WITH RESPECT TO BOOKINGS FROM INDIA VIZ-A-VIZ TOTAL BOOKIN GS. WITH THESE DIRECTIONS, WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION BY ADOPTING A REASONABLE AND C OMMERCIAL TEST FOR ESTIMATION OF BUSINESS ATTRIBUTABLE TO INDIA AND NE T TAXABLE INCOME WHICH COULD HAVE BEEN SAID TO HAVE ACCRUED TO APPELL ANT DUE TO BOOKINGS FROM INDIA. TO DETERMINE THE PROFITS ATTRIBU TABLE TO INDIAN OPERATIONS, ASSESSING OFFICER MAY VERIFY THE GLOBAL ACCO UNTS OF THE ASSESSEE. 20. IN THE RESULT, THE APPEALS FILED BY REVENUE ARE A LLOWED FOR STATISTICAL PURPOSES. 21. NOW COMING TO THE CROSS OBJECTIONS FILED BY ASSESSEE I N ALL THESE FOUR YEARS. THE LD AR DID NOT ARGUE THE CROSS OBJECTI ONS AND THEREFORE THESE CROSS OBJECTIONS ARE TREATED AS NOT PRESSED. THEREFO RE, THE ASSESSEES CROSS OBJECTIONS IN ALL THE FOUR YEARS ARE DISMISSE D. 22. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29TH DAY OF JUNE, 2012. SD/- SD/- (R.P. TOLANI) (T.S. KAPO OR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. .6.2012. HMS ITA NO1306 TO 1309/DEL/12 & CO 169 TO172/DEL/12 20 20 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 17.5.2012 DATE OF DICTATION 4.6.2012 DATE OF TYPING 5.6.2012 DATE OF ORDER SIGNED BY 29.6.2006 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 29.6.2012 & SENT TO THE BENCH CONCERNED.