INTERNATIONAL AIR TRANSPORT ASSOCIATION,MUMBAI (FOR SENDING NOTICES) V. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) - CIRCLE 2(2)(1), MUMBAI

ITA 3330/MUM/2023

AI Insights

The case involves the International Air Transport Association (IATA, Canada) appealing against the income tax assessment made by the Deputy Commissioner of Income-tax, which included various income streams as taxable in India for the Assessment Year 2020-21. The main issues revolved around whether IATA's income from distance learning courses, sale of physical publications, provision of advertising space, and provision of database access facility constituted taxable income in India. The Tribunal examined the nature of these income streams in the context of the India-Canada tax treaty and previous judicial decisions, ultimately deciding in favor of the assessee, IATA, Canada.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312134 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2020-2021
• Other Referred Cases: Engineering Analysis Centre of Excellence Pvt. Ltd. vs. IATA Canada, Delmas France S.A Vs. ACIT (International taxation), Motorola Inc. Vs. Dy. CIT, Ishikawajima Harima Heavy Industries Co. Ltd. Vs. DIT, Hughes Escort Communication Ltd. vs. Dy. CIT, Yahoo India (P) Ltd. Vs. DCIT, Pinstorm Technologies Pvt. Ltd. Vs. ITO, Right Florists Pvt. Ltd. Vs. ITO, IATA Canada vs. DCIT (IT)
• Laws Referred To: Income-tax Act, 1961, India-Canada Double Taxation Avoidance Agreement
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: PORUS KAKA; DIVESH
• Keywords: Set aside; Business income; Opportunity of being heard; Additional evidence; Revised return; Question of law; Advance ruling; Initiation of penalty proceedings; Double taxation relief; Permanent establishment
• Section: 143(3); 234B

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 3330/MUM/2023 (निर्धारण वर्ा / Assessment Year :2020-21) International Air Transport Association C/o ERNST & Young LLP 14th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra-400028 v/s. बिधम DCIT (IT), Circle 2(2)(1), Mumbai Room No. 1722, 17th Floor, Air India Building, Nariman Point, Mumbai, Maharashtra-400021 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AACCI4695N Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी निर्ााररती की ओर से /Assessee by: Shri Porus Kaka and Shri Divesh Chawla रधजस्व की ओर से /Revenue by: Shri Krishna Kumar सुिवधई की िधरीख / Date of Hearing 20.02.2025 घोर्णध की िधरीख/Date of Pronouncement 29.04.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Deputy Commissioner of Income-tax Int. Tax Circle 2(2)(1), Mumbai [hereinafter referred to as “AO”] dated 27.07.2023 passed u/s. s 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2020-21. P a g e | 2 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association 2. The assessee has raised the following grounds of appeal: “Ground No. 1-General ground Erred in determining the total taxable income of the Appellant at Rs 46,39,92,180 and computing tax and interest payable thereon at Rs 17,45,76,430. Ground No. 2 - Provision of distance learning courses a. Erred in treating the Authorized Training Centers ('ATCs') to be the dependent agent Permanent Establishment ('PE') of the Appellant in India under Article 5(4) of the India -Canada Double Taxation Avoidance Agreement ('tax treaty) and accordingly, taxing the revenues of Rs. 5,90,20,920 received by the Appellant on account of provision of distance learning courses as being in the nature of business profits' under Article 7 of the India-Canada tax treaty b. Erred in not following the order of the Hon'ble Tribunal in Appellant's own case for AY 2012-13, wherein, it has been held that the ATCs do not constitute a DAPE of the Appellant in India and the income from provision of distance learning courses is not taxable as per the provisions of the India-Canada tax treaty. c. Without prejudice to the above, even assuming (without admitting) that the Appellant has a dependent agent PE in India, erred in: i. attributing 40% of the gross receipts of the Appellant from the ATCs, on account of provision of distance learning courses, as income attributable to the alleged dependent agent PE in India, and ii. estimating the profits at 100% of the gross receipts attributed to the dependent agent PE of the Appellant on account of provision of distance learning courses. Ground No. 3-Supply of physical publications a. Erred in taxing the receipts from sale of physical publications as 'royalty' income under Article 12 of the India Canada tax treaty, as being in the nature of information concerning any industrial, commercial or scientific experience: b. Erred in not following the order of the Hon'ble Tribunal in Appellant's own case for AY 2012-13, wherein, it has been held that income from supply of physical publications is not taxable as 'royalty as per Article 12(3) of the India-Canada tax treaty. Ground No. 4-Provision of advertising space a. Erred in taxing the receipts from provision of advertising space as 'royalty' income under the Act and Article 12 of the India - Canada tax treaty on the ground that the customers use the logo, brand and goodwill of the Appellant by advertising on the Appellant's website and publications. b. Erred in not following the order of the Hon'ble Tribunal in Appellant's own case for AY 2012-13, wherein, it has been held that income from P a g e | 3 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association provision of advertising space is not taxable as 'royalty' as per Article 12(3) of the India- Canada tax treaty. Ground No. 5-Database access facility/charges Erred in taxing the receipts from provision of database access facility/ charges as 'royalty income under Article 12 of the India - Canada tax treaty, on the ground that such receipts are towards 'use of copyright of literary, artistic, or scientific work' and for 'information concerning industrial, commercial or scientific experience'. Ground No. 6-Joining and annual fees, Provision of IATA Clearing House ('ICH') facility and Provision of e-services - Data Processing Charges a. Erred in taxing the joining and annual fees collected from airlines, agents and strategic partners as 'business profits' under Article 7 of the India Canada tax treaty, by attributing such receipts to IATA India branch (the alleged PE) of the Appellant in India. without accepting the contention of the Appellant that such fees do not relate to the activities undertaken by IATA India branch. b. Erred in taxing the receipts from provision of ICH facility as 'business profits' under Article 7 of the India - Canada tax treaty, by attributing such receipts to IATA India branch of the Appellant in India, without accepting the contention of the Appellant that the ICH services are provided by the Appellant outside India and are independent and separate from the activities provided by IATA India branch. c. Erred in taxing the receipts from e-services data processing charges as 'business profits' under Article 7 of the India - Canada tax treaty, by attributing such receipts to IATA India branch of the Appellant in India, without accepting the contention of the Appellant that such activities/services are not provided by IATA India branch. d. Without prejudice to the grounds 'a' to 'c' above, even assuming (without admitting) that income and profit should be attributed to the IATA India branch, erred in not accepting the contention of the Appellant that as the IATA India branch qualifies as a mutual association, which has also been accepted by the Hon'ble DRP, the 'joining and annual fees received from airlines, agents and strategic partners', fees from the provision of ICH facility and e-services data processing charges would not be taxable in India having regard to the principles of mutuality under the Act. Without prejudice to the above grounds: e. Erred in arbitrarily attributing 100 percent of the gross receipts from joining and annual fees collected from airlines, agents and strategic partners', provision of ICH facility and e-services- data processing charges as 'income\", and f Erred in estimating 90 percent of such attributed gross receipts as 'profits attributable to the IATA India branch in India. Ground No. 7-Classroom training courses P a g e | 4 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association Erred in not considering credit notes amounting to Rs. 1,01,83,478 issued by the Appellant in subsequent years against the income from classroom training courses inadvertently offered to tax during the subject AY, as fees for included services under Article 12 of the India- Canada tax treaty. Ground No. 8-Erroneous computation of interest under Section 234A and Section 234B of the Act Erred in computing interest under Section 234A and Section 2348 of the Act. Ground No. 9-Initiation of penalty proceedings Erred in initiating penalty proceedings under Section 274 r.w.s. 270A of the Act, on the basis that the Appellant has furnished inaccurate particulars of income leading to under-reporting/misreporting of income.” 3. Brief facts of the case are that the assessee, International Air Transport Association (IATA, Canada), is a statutory corporation incorporated under the special Act in Canada. It is a non-profit association with the objective of serving the airline industry and ensuring the safety and cooperation between different airline agents, etc., engaged in international transport activity worldwide. The assessee has a licence from the Reserve Bank of India (RBI) to do certain activities through a branch in India on a non-commercial basis. While the return for the branch activity is being filed separately, the present return relates to the activities undertaken by the IATA directly in India (and not through the branch) for which a separate return is filed. The return declaring income of Rs. 12,55,83,950/- has been filed on 15.02.2021. A revised return was subsequently filed on 25.05.2021 declaring total income of Rs. 11,99,57,430/-. The case was selected for scrutiny, and assessment was completed vide order u/s 143(3) r.w.s. 144C(13) dated 27.07.2023 at an income of Rs. 56,14,48,568/- after making P a g e | 5 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association various additions based on the directions received from the Ld. Dispute Resolution Panel (DRP). The assessee has raised several grounds of appeal, which are discussed below: 4. Ground No. 1 – Provisions of distance learning course (addition of Rs. 5,90,20,920/-). 4.1 At the outset, Ld. AR has submitted that the issue is coverd in favour of the assessee by earlier decisions of the coordinate benches. However, the same has not been followed by the Ld. AO. Brief facts in this regard are summarised in the submissions made by Ld. AR as under: “IATA Canada allows students to avail of various distance learning courses such as IATA Proprietary Training Programs, the International Aviation Training Program, the International Cargo Agent Training Program, the International Travel and Tourism Training Program, etc. These courses are available to students who aspire to have a career in the aviation industry. The details of such distance learning courses can be obtained from the website of IATA Canada. The students who are interested in undertaking any of the distance learning courses can register/ enrol directly with IATA Canada or with an authorized Training Centre ('ATC'). For the provision of the distance learning courses, IATA Canada receives enrolment fees from students/ATCs. Such fees have been paid for course material/ training kit fees, shipping fees, exam fees which is conducted by a third party in India, fees for issuance of certificates on successful completion of the courses. The course material is dispatched by IATA Canada directly to the students/ ATCs from outside India and the ownership of such course material is also transferred outside India. The various activities in relation to the distance learning courses (except conduct of examination), i.e., supply of course material, verification of the examination papers of students and issuance of the certificates on successful passing of the courses is also undertaken by IATA Canada outside India, and the consideration for the same is also received by IATA Canada in a bank account outside India. The ATCs are independent third-party organizations that offer courses which inter- alia includes self-designed courses, courses designed by other third parties (other than IATA Canada), as well as courses designed by the IATA Canada. P a g e | 6 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association The arrangement between IATA Canada and ATCs is on a principal-to-principal basis. Thus, there is no element of agency between the ATCs and IATA Canada. The transaction between the ATCs and the students was on an independent basis and IATA Canada was not a privy to the said arrangement. The Dispute Resolution Panel (DRP) in IATA Canada's own case in AYs 2011-12 (Para 6.2.4 on Page 14 of the DRP Directions), 2016-17 (Para 5.2.4 on Page 13 of the DRP Directions) and 2020-21 (Para 5.2.4 on Page 15 of the DRP Directions) have directed the learned AO to not tax the receipts directly received from students. The Hon'ble Tribunal in IATA Canada's own case for AY 2012-13 has held that the ATCs do not constitute S a DAPE of IATA Canada in India and the revenue from the provision of distance learning courses is not taxable under the provisions of the India- Canada Tax Treaty” 4.2 Ld. DR has not controverted the claim of the Ld. AR that the issue is a recurring one and is covered by the orders of the coordinate benches in earlier years. He has, however, strongly relied on the order of Ld. DRP and submitted that the addition made by the Ld. AR deserves to be upheld. 4.3 We have heard the rival submissions and perused the material placed before us. We have also gone through the decisions of the coordinate benches, and in particular, the order for AY 2012-13 wherein it has been held that the ATCs are independent entities and not dependent agents of the assessee. Relevant portion of the order of coordinate bench in ITA No. 587 & 964/Mum/2016, wherein the issue has been examined in detail, is reproduced below: 9. We have heard at length the authorised representatives for both the parties in context of the issue pertaining to treating of the ATCs as the DAPE of the assessee, and attribution of 40% of the revenue generated from sale of the distance learning courses as the business income of the assessee liable to be taxed in India as per Article 7 of the India-Canada tax treaty. Also, we have perused the orders of the lower authorities as well as the material available on record, and also the judicial pronouncements pressed into service by the respective parties. Before proceeding any further, we may herein observe, that though the A.O vide his draft assessment order passed u/s 143(3) r.w.s 144C(1), dated 27.03.2015 had attributed the entire revenue of USD 2,390,825/- i.e Rs.12,12,38,736/- from provision of distance learning courses P a g e | 7 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association as the income of the ATCs, but the DRP had scaled down the attribution of such Income to 40% of the revenue so generated. For a fair appreciation of the issue under consideration we shall briefly cull out the fact pattern as regards the provision of the distance education courses of the assessee by the ATCs in India. As is discernible from the records, we find that the assessee viz. IATA, Canada allowed students to avail various distance learning courses pertaining to aviation sector, viz. IATA Proprietary Training Programs, International Aviation Training Program, International Cargo Agent Training Program, International Travel and Tourism Training Program etc., for which the interested students could either directly register/enrol on the website of the assessee or approach an ATC. The assessee during the year under consideration had 59 ATCs in India. On a perusal of the records, we find that the ATCs for carrying out training and being able to provide the assesse's courses in their syllabus had to register themselves with the assessee and pay one- time ATC fees viz. ATC network access fee, ATC annual authorization fee, and branch fee. Insofar such ATC fees is concerned, the same had undisputedly been offered to tax by the assessee as 'royalty'. For the provision of the distance learning courses the assessee would receive enrolment fees from the students/ATCs, which would be paid for the course material/training kit fees, shipping fees, exam fees (conducted by a third party in India), and fees for issuance of certificates on successful completion of the courses. In a case where the student would approach the ATC for the distance learning courses of the assessee, the concerned ATC would procure the study material for the said course from the assessee and provide the same to the student who would thereafter make the payment for the Parme to the ATC. The aforesaid transaction between the ATCs and the students was on an independent basis and the assessee was not a privy to the said arrangement. Also, we find that the ATC would procure the course material as per the number of the students registered with them, and hence, did not maintain a stock of the Course material on behalf of the assessee at any time. 10. We have perused the records to which our attention was drawn by the Id. A.R in the course of the hearing of the appeal, and find, that the ATCs were independent third party organisations that provided training of their various self-designed courses, courses designed by other third parties, and also the courses designed by the assessee viz. IATA Canada to its students. In fact, the Id. A.R in order to drive home his claim that the ATCs were not exclusively into providing of courses designed by the assessee and were providing a host of other self-designed/third party courses, had taken us through Page 65-67 of the APB, which revealed the multiple educational programs offered by one of the ATC viz. Srinivassa Sinai Dempo College of Commerce and Economics. On a perusal of the aforesaid sample screenshots, we find that Srinivassa Sinai Dempo College of Commerce and Economics was providing multiple courses, viz. Bachelor of Commerce, Bachelor of Business Administration, Master of Commerce, M.A (Tourism and Heritage) Management, PGDBA-Event Management, Accounting for Small Businesses, Certificate Course in Tour Management, IATA Course etc. Similar is the position in the case of another ATC, viz. Kuoni Academy, which as can be gathered from the screen shots, Page 69-70, of 'APB', was also providing multiple courses, viz. International Master in Business Administration & Tourism Management, Kuoni Certified Advanced Course in Travel Management, Kuoni Certified Advanced Course in Travel & Tourism Management, Kuoni Certified Abacus Operator-Level-1, Kuoni Certified Program in Tour Guiding Skills, IATA Foundation, Kuoni Certified Program in Travel Agency Operations-IOTAA, IATA P a g e | 8 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association Consultant, Kuoni Certified Galileo Operator-Level-1, Kuoni Certified Galileo Specialist-Level 1 & 2, Kuoni Certified Abacus Specialist-Level 1 & 2, Kuoni Certified Tour Manager Program, Kuoni Certified Air Ticketing Specialist, Kuoni Certified Program in Airport Customer Services, Kuoni Certified Program in Visa Facilitation etc. Also, our attention was drawn towards the financial statements of another ATC viz. Thomas Cook India Pvt. Ltd, as available in the public domain. On a perusal of the financial statements of Thomas Cook India Pvt. Ltd., we find that the primary source of revenue of the said party was by way of commission received from traveller's cheque, margin on foreign exchange, and net commission earned on travel management. Insofar the revenue generation from conducting training programs is concerned, we find that the same was a miniscule amount of Rs. 0.39 crores as against the total revenue of Rs. 377.12 crores generated by the said entity during the year under consideration. Insofar the courses provided by Thomas Cook are concerned, we find that the same as per the screen shot, Page 68 of APB were classified under three heads i.e (i). Under Graduate Courses, viz. Certificate Course in Domestic Tour Management; (ii). Post Graduate Courses, viz. MBA Tourism (Pondichery University), Travel Professional Program A Post Graduation Diploma in Travel & Tourism Management with MBA-Tourism (Pondichery University), Travel Professional Program A Post Graduate Diploma in Travel & Tourism Management, Certificate Course in World Tour Management, PGDM in International Tourism Far Business-equivalent to MBA (IITTM); and (iii). IATA Courses, viz. NITRA Foundation Course, IATA Consultant Course, Corporate Training and Tourism Board Training. Accordingly, in the backdrop of our aforesaid observations it can safely be concluded that the aforesaid ATCs could not be held to be exclusively into providing of courses designed by the assessee, but were also providing a host of other self-designed/third party courses. On being confronted with the aforesaid factual matrix the Id. D.R failed to dislodge the claim of the counsel for the assessee that the ATCs were independent third party organisations providing training of their various self-designed courses, courses designed by other third parties, and also the courses designed by the assessee viz. IATA Canada, and were not exclusively into providing of courses designed by the assessee viz. IATA, Canada. In fact, no observation to the said effect is also discernible from the orders of the lower authorities. On the contrary, the DRP at Page 53 Para 5.3.2(i), had observed, that the ATCs were independent organisations doing their business of providing training to the students to enable them to work in aviation, travel and tourism industry. But then, after so observing, the DRP was of the view that as the ATCs for rendering the training courses were entirely dependant on the various manuals and study material provided by the assessee, and the distance learning courses of the assessee constituted the backbone of such training and the overall operations of the ATCs, they were thus rightly held by the A.O as DAPE of the assessee. Apart from that, the DRP in order to fortify his aforesaid conviction had drawn support from the fact that the ATCs were recognised and approved by the assessee, and for providing training to the students were mandatorily required to be registered with the assessee. Also, it was observed by the DRP that the training could be provided by the ATCs to the students only after they had purchased the necessary study material from the assessee, i.e either directly by online payment or indirectly through sales by ATCs. In the backdrop of its aforesaid observations, the DRP was of the view that the projection of the relationship of the assessee and the ATCs as that of principal to principal basis was a farce. For so concluding, the DRP was of the view that though the students enrolled by the ATCs P a g e | 9 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association were apparently the customers of the ATCs on their own account and for their own benefit, but the moment the student enrolled for the training, the subscription of the assessee for the training material was secured and the charges were ensured. As such, the DRP was of the view that the payment of charges by the ATCs (as an agent) to the assessee was disguised in the form of sale of materials. On a perusal of the observations of the DRP, we find, that except for its generalised observation that the distance learning courses of the assessee constituted the backbone of such training and the overall operations of the ATCs, there is no whisper or reference to any such material or facts which could irrefutably prove that the activities of the ATCs were devoted wholly or almost wholly on behalf of the assessee viz. IATA, Canada. Rather, the facts brought to our notice as regards the multiple educational programs offered by the ATCs viz. Srinivassa Sinai Dempo College of Commerce and Economics, Kuoni Academy and Thomas Cook, gives a clear picture that the said ATCs were not exclusively into providing of courses designed by the assessee, but were providing a host of other self-designed/third party courses. Further, the factum as regards the miniscule revenue generated by the aforesaid ATC viz. Thomas Cook India Pvt. Ltd. from conducting training programs, as in comparison to its other streams of revenue generation clearly militates against the observation of the DRP that distance learning courses of the assessee constituted the backbone of the overall operations of the ATCs. 11. It is in the backdrop of our aforesaid observations that we shall now deliberate on the aspect as to whether or not the ATCs could be held to be the DAPE of the assessee viz. IATA, Canada. At the outset, we may herein observe that in order to treat the ATCS as a DAPE of the assessee the provisions of Article 5(5) of the India-Canada tax treaty needs to be satisfied prior to evaluating the provisions of Article 5(4) of the said treaty. As per Article 5(5) of the India-Canada tax treaty, an enterprise of a contracting state shall not be deemed to have a PE in the other Contracting state merely because it carries on business in that other state through a broker, general commission agent, or any other agent of an independent status, subject to the condition that such person is acting in the ordinary course of its business. But then, as per the rider provided in Article 5(5) of the tax treaty, the agent would be divested of its independent status, if it cumulatively satisfied the dual conditions therein provided viz. (i). its activities are devoted wholly or almost wholly on behalf of that enterprise; AND (ii). the transactions inter se the agent and the enterprise are not made under arm's length conditions. For the sake of clarity, we herein reproduce Article 5(5) of the India-Canada tax treat, which reads as under: \"5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and the transactions between the agent and the enterprise are not made under arm's length conditions, he shall not be considered an agent of independent status within the meaning of this paragraph.\" Aş such an enterprise carrying on business in the other contracting state through a broker, general commission agent or any other agent of an independent status, or merely maintaining in that other State a stock of goods with an agent of an P a g e | 10 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association independent status from which deliveries are made by that agent, shall not be deemed to have a PE in the other Contracting state, subject to the condition that such agent of an independent status is acting in the ordinary course of its business. But then, if the activities of such agent are devoted wholly or almost wholly on behalf of that enterprise, AND the transactions between the agent and the enterprise are not made under arm's length conditions, it shall not be considered an agent of an independent status within the meaning of Article 5(5) of the India-Canada tax treaty. Now, in the case before us, as observed at length hereinabove, the activities of the ATCs in India cannot be held to be devoted wholly or almost wholly on behalf of the assessee viz. IATA, Canada. Independent of that, it is not even the case of the revenue that the transactions between the assessee viz. IATA, Canada and ATCsATCs are not made under arm's length conditions. As observed by us hereinabove, as per Article 5(5) of the India-Canada tax treaty an enterprise carrying on business in the other contracting state through a broker, general commission agent or any other agent of an independent status, or merely maintaining in that other State a stock of goods with an agent of an independent status from which deliveries are made by that agent, shall not be deemed to have a PE in the other Contracting state, subject to the condition that such agent of an independent status is acting in the ordinary course of its business. As regards the rider therein provided in Article 5(5) of the India-Canada tax treaty, the same as observed by us hereinabove would require cumulative satisfaction of for the purpose of divesting the agent of its status as that of of being an independent agent viz. (i). the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise; AND (ii). the transactions between the agent and the enterprise are not made under arm's length conditions. In the case before us the DRP itself had observed that ATCs are independent organisations doing their business of providing training to the students to enable them to work in aviation, travel and tourism industry. As such, the fact that the ATCs are independent agents, acting in the ordinary course of their business had been admitted by the DRP, and the said observation has not been assailed by the revenue before us. Without prejudice to the fact that the activities of the ATCs were not devoted wholly or almost wholly on behalf of the assessee, viz. IATA, Canada, in the absence of any observation by the lower authorities that the transactions between the assessee and the ATCs were not made under arm's length conditions, would therein result to an absence of a cumulative satisfaction of the aforesaid two fold conditions prescribed in Article 5(5) of the tax treaty for divesting the ATCs of their status as that of an independent agent. In sum and substance, as the assessee viz. IATA, Canada, was carrying on its business in India through ATCs which were independent organizations doing their business of providing training to students to enable them to work in aviation, travel and tourism industry, therefore, the assessee de hors any such observation recorded by the lower authorities that the transactions between the assessee and the ATCs were not made under arm's length conditions, cannot be held to have a PE in India Within the meaning of Article 5(5) of the India-Canada tax treaty. Our aforesaid view that in the absence of any observation that the transactions between the assessee i.e IATA, Canada and the ATCs were not made der arm's length conditions, the ATCs which are independent organizations acting in the ordinary course of its business cannot be divested of their status as that of an independent agent under Article 5(5) of the India- Canada tax treaty is supported by the order of the ITAT, Mumbai in the case of Delmas France S.A Vs. ACIT (International taxation) (2013) 141 ITD 67 (Mum). In P a g e | 11 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association the said case the Tribunal on the basis of a conjoint reading of Article 5(5) and Article 5(6) of India-France tax treaty, had observed as under: \"9. Let us now deal with the scope of dependent agent permanent establishment (DAPE) as set out in Article 5(5) and Article 5(6) of the Indo French DTAA. Article 5(5) provides the situations in which business being carried on through a dependent agent results in creation of PE in the source state. The provisions of Article 5(6) are, however, slightly at variance with standard tax treaty provisions, and need to be analysed in some detail. The significant feature of Article 5(6) of Indo French DTAA, which is somewhat unique in the sense that this provision is in clear deviation from the standard UN and OECD Model conventions, is that even when an agent is wholly or almost wholly dependent on the foreign enterprise, he will still be treated as an independent agent unless additional condition of the transactions being not an arm's length conditions is fulfilled. It is so for the reason that Article 5(6) provides that even when an agent is wholly or almost wholly dependent on the principal, I.e. foreign enterprise, \"he will not be considered an agent of an independent status within the meaning of this paragraph if it is shown that the transactions between the agent and the enterprise were not made under at arms length conditions\" (emphasis by underlining supplied by us). In other words, as long as it is not shown that the transactions between the agent and the principal are not made under arm's length conditions, the agent is treated to be an independent agent. The implication of the agent being treated as an independent agent is that the provisions of dependent agent PE, as set out in Article 5(5), can never come into play in the cases in which the business is carried out by the foreign enterprise through an independent agent, because Article 5(5), which overrides the provisions of Article 5(1) and 5(2), specifically provides that \"where a person other than an agent of an independent status to whom paragraph 6 applies ( emphasis by underlining supplied by us) is acting in one of the Contracting States on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State\" subject to fulfillment of certain other conditions which are admittedly fulfilled in the present case. Therefore, as long as the agent is of independent status, the provisions of Article 5(5) cannot be invoked. It is also important to bear in mind that since provisions of Article 5(5) override the provisions of Article 5(1) and 5(2), no permanent establishment under article 5(1) and (2). can be said to come into existence, so far agency situations are concerned, until the conditions of Article 5(5) are also satisfied. Learned Departmental Representative fairly does not dispute, and rightly so, that the permanent establishment in the present case will be governed by Article 5(5) read with Article 5(6). Learned Departmental Representative's only objection is that since an important aspect, es aspect relating to the transactions having been done in arm's length conditions, has not been examined by the Assessing Officer, the matter should be restored to the file of the Assessing Officer for specific adjudication on the transactions between principal and agent having been done in arm's length cantitions. We are unable to see any merits in this plea. As held by a coordinate bench of this Tribunal, in the case of Airlines Rotables Ltd Vs DDIT8, \"It is a settled position of law, as noted by the Special Bench of this Tribunal in the case of Motorola Inc., that the onus is on the P a g e | 12 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association Revenue to demonstrate that a PE of the foreign enterprise exists in India\". In the present case, i.e. in the case of DAPE in accordance with provisions of Indo French DTAA, the onus is even greater inasmuch the very foundation of DAPE rests on a negative finding with respect to the wholly dependent or almost wholly dependent agent i.e. \"if it is shown that the transactions between the agent and the enterprise were not made under at arm's length conditions\". Unless this negative finding is on record, it cannot be inferred that the agent is not of an independent status. No such finding was given by the Assessing Officer, or even by the Dispute Resolution Panel. Even in the proceedings before us, no material has been brought on record which at least prima facie demonstrates, or even indicates, that the transactions between the principal and agent are not under arm's length conditions. Once this onus is not discharged by the revenue authorities at any of these stages, and in accordance with the law laid down by Special Bench decision in the case of Motorola Inc, we have to hold that the assessee did not have any PE in India. We are not inclined to grant a fresh inning to the Assessing Officer for making roving and fishing enquiries on the aspect of transactions not having been done in arm's length conditions particularly as there is nothing on record to even remotely suggest a prima facie case in this regard. A negative finding in this regard is a sine qua non for making out a case for existence of DAPE in the context of Indo French DTAA, and this finding being absent, we have to hold that the stand of the Assessing Officer, with regard to existence of PE, is not sustainable in law. As regards reference to Hon'ble Visakhapatnam Port Trust's case, the observations made therein do not apply in this context as it was not dealing with Dependent Agency Permanent Establishment (DAPE) which is now the case before us. As we have seen earlier, the provisions of DAPE override the provisions regarding fixed place PE, and, therefore, any observations made in the context of fixed place PE do not apply to the DAPE situations. As regards the reference to the OECD Model Convention commentaries or other standard literature in the context of DAPE, it cannot be of any help in interpretation of DAPE provisions in Indo French DTAA because of a somewhat peculiar provision in Article 5(5) read with Article 5(6), which is not part of OECD or UN Model Convention, and which provides that \"However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an Independent status within the meaning of this paragraph if it is shown that the transactions between the agent and the enterprise were not made under at arm's length conditions.\". We have also noted that the DRP has held that there is a PE on the short ground that assessee's claim for applicability of Article 9 presupposes existence of a PE, but it is difficult to comprehend as to how existence of a PE can be inferred merely because the assessee has made a particular claim, which is rejected anyway. The onus of establishing that there is a PE, as we have noted earlier in the discussions, is on the revenue authorities and there is no room for inferences being drawn up in this respect merely because the assessee has made a particular claim. Similarly, reference to agent's authority to conclude contracts, as has been made by the DRP, is not decisive test either because even when agent has the authority to conclude contracts, it is still to be established that the agent is not an independent agent. That exercise is not even conducted in this Rent The Assessing Officer's P a g e | 13 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association reliance on OECD Commentary, therefore, is of no avall either. In view of these discussions, as also bearing in mind entirety of the case, we set aside and vacate the Assessing Officer's findings with regard to epistence of arcoccoals PE in India. We may, at the ast of repetition, clarify the these conclusions are arrived at in the light of the factual position that there are no findings by the Assessing Officer, or the Dispute Resolution Panel, to the effect that the transactions between the agent and the assessee are not at an arm's length price, and that, in view of the provisions of Article 5(6) of Indo French DTAA, such a finding by the revenue is a sine qua non for existence of DAPE. Το this extent, our decision is confined to the facts of this case for the particular assessment year before us\". 10. In the absence of any distinguishing feature brought on record by the Revenue, we respectfully following the order of the Tribunal in assessee's own case (supra) hold that the assessee has no PE in India and, hence, not liable to tax and accordingly the grounds taken by the assessee are allowed.\" On further appeal by the revenue, the Hon'ble High Court of Bombay in its order passed in the case of DIT(International Taxation) Vs. Delmas France (2015) 232 Taxman 401 (Bom) had affirmed the order of the Tribunal and dismissed the appeal of the revenue, observing as under: \"9) There is substance in the contention of Mr. Irani that the departmental representative appeared before the Tribunal and fairly stated that the matter should be examined in the light of applicability of Article 5(5) read with Article 5(6). The combined effect of this fair suggestion and concession is that firstly notwithstanding anything contained in Article 5(1) and (2) whether a person other than the agent of Indian State to whom paragraph 6 of Article 5 applies is acting in one of the Contracting States on behalf of an enterprise of other Contracting State, that enterprise shall deemed to have been a permanent establishment in the first mentioned Contracting State. That is also provided he exercises habitually an authority to conclude contracts on behalf of the enterprise. and his activities are not relevant to purchase of goods or merchandise for the enterprise. He may also be having no such authority, but if he maintains habitually in the first mentioned Contracting State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise, then, the business of an enterprise is wholly or partly carried out within the meaning of Article 5(5) and the said enterprise has a permanent establishment in India. Insofar as Article 5(5) and para 6 is concerned, there is a deeming fiction, and by virtue of that, the enterprise of one of the Contracting States is deemed not to have permanent establishment in other Contracting State merely because it carries on business in that other Contracting State through broker, general commission agent or any other agent of an independent status, provided that such persons are acting in ordinary course of their business. Then comes the provision, whether activities of an agent who may be an agent of independent status but devoted wholly or almost wholly to that enterprise, but he will not be considered an agent of an Independent status within the meaning of this paragraph if it is shown that the transactions between the agent and the enterprise were not made under at arm's length conditions. P a g e | 14 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association 10) In the present case, what was essentially brought to the notice of the Tribunal was that this is an important aspect relating to the transactions, but they have not been examined in the manner Indicated by us above by the Assessing Officer, therefore the matter should be restored to file of the Assessing Officer for specific adjudication o the transactions between the assessee and the agent. The Tribunal did not accept this. Not because of any broad legal principle, but there being no finding of this nature on record at all. If the assessing officer or the DRP failed to render the finding and which would indicate the applicability of the Article and as pressed by the departmental representative, then, to our mind, the Tribunal was under no obligation to remand the matter back to the Assessing Officer The Tribunal has rightly observed that even during the course of the proceedings before it, no material was placed on record, which would prima facie demonstrate or even indicate that the transactions between the principal namely the Assessee and the agent are not under at arm's length conditions. Once this onus is not discharged by the Revenue and the Tribunal has confined its observations and conclusions to the facts and circumstances peculiar to the Assessee's case and for the particular assessment year, then, we agree with Mr. Irani that this Appeal does not raise any substantial question of law. However, we do not find any basis for the submission made by Mr. Singh that the Tribunal should have examined the matter in the light of applicability of Article 5(1)(2) of the DTAA. The departmental representative has given up that because there was no finding rendered by the Assessing Officer. The Tribunal as rightly held was not obliged to go into the same. Even on this ground, the Tribunal's order cannot be faulted.\" At this stage, we may herein observe that as in the present case before us, in the case of Delmas France (supra) also there was no principal and agent were done in arm's length conditions. Under such circumstances, the Tribunal relying on the order of the 'Special bench' of the Tribunal in the case of Motorola Inc. Vs. Dy. CIT (2005) 95 ITD 269 (Del)(SB), had held, that the onus was on the Revenue to demonstrate that a PE of the foreign enterprise exists in India. In its aforesaid order it was observed by the Tribunal, that in the case before them, the onus was even greater inasmuch the very foundation of DAPE did rest on a negative finding with respect to the wholly dependent or almost wholly dependent agent i.e. \"if it is shown that the transactions between the agent and the enterprise were not made under arm's length conditions\". As such, in the absence of any such negative finding being available on record, it was observed by the Tribunal that it could not be inferred that the agent was not of an independent status. Further, noticing that neither any such finding was given by the A.O or by the Dispute Resolution Panel, nor in the course of the proceedings before the Tribunal any material was brought on record which could at least prima facie demonstrate, or even indicate, that the transactions between the principal and agent were not under arm's length conditions, the Tribunal concluded that it was to be held that the assessee did not have any PE in India. We may herein observe, that the Tribunal taking cognizance of the fact that there was nothing on record to even remotely suggest a prima facie case that the transactions between the foreign enterprise and the agent were not at arm's length, had thus, declined to remand the P a g e | 15 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association matter and allow a fresh inning to the A.O for making roving and fishing enquiries on the aspect of transactions not having been done in arm's length conditions. On further appeal, the Hon'ble High Court approved the view taken by the Tribunal. In the case before us also neither the lower authorities had established that the transactions between the assessee viz. IATA, Canada and the ATCs were not done under arm's length condition, nor any material was placed on our record by the Id. D.R to demonstrate any such fact. Accordingly, in the absence of any finding by the lower authorities that the transactions between the assessee and the ATCs were not at arm's length, we thus on a similar footing conclude that as per a conjoint reading of Article 5(4) and Article 5(5) of the India-Canada tax treaty, the ATCs being an independent agent within the meaning of Article 5(5) of the India-Canada tax treaty could not have been held to be the DAPE of the assessee in India. 12. As we have concluded hereinabove that the ATCs are the agent's of an independent status of the assessee viz. IATA, Canada, within the meaning of Article 5(5) of the India-Canada tax treaty, therefore, there remains no occasion for us to deal with the contentions advanced by the Id. A.R that the ATCs do not satisfy the conditions laid down for dependant agent PE under Article 5(4) of the tax treaty, which aspect is thus left open. 13. In the backdrop of our aforesaid observations, we herein conclude that the ATCs are the agents of independent status of the assessee viz. IATA, Canada, within the meaning of Article 5(5) of the India-Canada tax treaty. Accordingly, without adverting to the other contentions advanced by the Id. A.R in order to impress upon us that the ATCs cannot be held to be the DAPE of the assessee viz. IATA, Canada, we vacate the view taken by the A.O/DRP holding to the contrary. As we have held that the ATCs are not the DAPE of the assessee, therefore, the addition of Rs. 4,84,95,494/- i.e 40% of the revenue generated from sale of distance learning material, attributed to them in their status as that of DAPE of the assessee corporation, viz. IATA, Canada, and assessed as the business income of the assessee in India under Article 7 of the India-Canada tax treaty cannot be sustained and is therefore vacated. 14. We shall now deal with the claim of the assessee that the DRP had erred in concluding that the income received by the assessee on sale of distance learning courses is alternatively taxable as royalty, both under the Act and the India-Canada tax treaty. On a perusal of the DRP order, we find, that it was therein observed that as the assessee by providing training material to the students was providing knowledge, information and training about the aviation travel and tourism industry in general, which was in nature of proprietary commercial knowledge, information and skill acquired from experience provided to the students on enrolment in ATCs, the receipts were thus taxable as royalty both under the Act and the India-Canada tax treaty. We have deliberated at length on the issue consideration and are unable to persuade ourselves to subscribe to the view taken by the DRP. Before proceeding P a g e | 16 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association any further, it would be relevant to cull out the definition of royalty as contemplated in Article 12(3) of the India-Canada tax treaty, which reads as under: \"12(3). The term \"royalties\" as used in this Article means: (a) payment of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, Including cinematograph films or work on film paper or other means or reproduction for use in connection with radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof; and (b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 or Article 8 from activities described in paragraph 3(c) or 4 of Article 8.\" As observed by us hereinabove, the assessee pursuant to the request from the student's/ATCs despatches the course material i.e the learning kit in the form of books or CD's directly to the students or ATCs. Although, the course material providing knowledge, information and training about the aviation and travel and tourism industry in general is sold to the students/ATCs, but no 'use' or 'right to use' any copyright in relation to such study material is granted to them. In fact, the student's/ATCs do not have any right to reproduce/sell the contents of the study material in any form or media. As the course material providing knowledge, information and training about the aviation and tourism industry in general is merely a sale of book/CD, which does not involve transfer of intellectual property, and also does not contain any undivulged technical information which is not available in the public domain and/or know-how, therefore, it falls outside the scope of the term ‘information concerning technical, industrial, commercial or scientific experience’ under Article 12(3) of the India-Canada tax treaty. In sum and substance, as the consideration received by the assessee is towards a simplicitor sale of training material/books, thus, the same cannot be brought within the definition of ‘royalty’ under Article 12(3) of the India-Canada tax treaty. Our aforesaid view that the consideration received for providing the study material to the students in distance learning course cannot be held as ‘royalty’ is fortified by the order of the ITAT, Delhi in the case of Hughes Escort Communication Ltd. vs. Dy. CIT( (2012) 31 CCH 128 (Del), wherein it was observed as under: 8.12.On a careful perusal of the above it is seen that the nature ofpayment made to eCormell is not 'royalty' as the payment is not for theuse or the right to use any copy right or literary work The fact that it is not for artistic, scientific work, work on film, tape, radio, television, broadcasting etc. does not arise. It is also not for use or right to use patent, trade mark, design, plan, secret formula or process etc. It is purely and simply a case of pooling of P a g e | 17 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association resources by way of an Affiliate Agreement wherein the respective roles and responsibilities have been assigned and the arrangement being of the nature of pooling of resources where fee sharing of the two parties have been set out this is not a case where any payment is being made to eCornell by the assessee for any kind of service as it is purely a case of apportioning of fees attributable to eCornell as per the Affiliate Agreement being remitted to eCornell and the portion of the fees collected for providing enrollment infrastructure in order to access the study material by the students is retained by the assessee as its share. As such on facts the present case does not partake the nature of royalty as contemplated under Clause 3(a) of Article 12 of the Indo-US DTAA. Accordingly, not finding favour with the alternative observation of the DRP that the consideration received by the assessee for providing course material to the students/ATCs was liable to be assessed as royalty, we vacate the same. The Ground of appeal No. 2 raised by the assessee. is allowed in terms of our aforesaid. observations. As we have held that the ATCs are not the DAPE of the assessee, therefore, the Ground of appeal No. 1 raised by the revenue, wherein it had challenged the scaling down of the quantum of revenue attributed by the A.O pursuant to the directions of the DRP is dismissed as having been rendered as infructuous.” 4.4. Thus, the above decision of the coordinate bench has thoroughly examined all aspects of the issue before allowing the appeal on this issue. For AYs 2011-12, 2014-15 and 2016-17 also, the coordinate benches had held that the income of the assessee from the provision of distance learning courses is not taxable in India, after placing reliance on the decision of the Hon’ble Apex Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. (2021) 125 taxmann.com 42 (SC). 4.5 Respectfully following the above decisions of the coordinate benches, after noting that there is no change in the facts and circumstances in this year, we hold that the addition made by the Ld. AO, on the direction of Ld. DRP, on account of the provision of distance learning courses is not justified and is, therefore, deleted. P a g e | 18 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association 4.6 The assessee’s appeal on this ground is, accordingly, allowed. 5. Ground No. 3: Sale of physical publications (Rs. 5,90,20,920/- ) 5.1 Brief facts relating to the issue as explained by Ld. AR are as under: “IATA Canada has developed annual physical publications/ manuals for e.g. 'Dangerous Goods Regulations' ('DGR') publications/ manuals that provides information inter-alia pertaining to handling of shipment of dangerous goods. These publications/ manuals could be purchased online by the airlines or any other customer who is involved in the business of transportation of cargo. The DGR publications/ manuals published by IATA Canada is based on the Instruction on Dangerous good developed by International Civil Aviation Organization ('ICAO'), a United Nations agency for international air transport. The DGR publications/ manuals deal with the transportation of dangerous goods by air, provided comprehensively to assist customers in handling and transportation of dangerous goods. These publications/ manuals contain information pertaining to classification, packaging, marking, labelling, and documenting shipments of dangerous goods. Thus, the DGR publications/ manuals are essentially a user-friendly reference publication/manual in relation to shipping and transport of the dangerous goods around the world by air, based on the Instruction developed by the ICAO. The customers place the order for purchase of the DGR publications/ manuals on the website of IATA. These publications/ manuals are then dispatched directly to customers, and the ownership of such publications passes to the customers outside India. The Hon'ble Mumbai Tribunal in IATA Canada's own case for AY 2012-13 held that income from supply of physical publications/ manuals is not taxable as 'royalty' as per Article 12(3) of the India-Canada Tax Treaty.” 5.2 Ld. DR has not controverted the submissions of the Ld. AR that the issue is a recurring one and is covered by the orders of the coordinate benches in earlier years. He has however strongly relied on the order of Ld. DRP and submitted that the addition made by the Ld. AR deserves to be upheld. 5.3 We have heard the rival claim and perused the material placed before us. We find that this issue also stands covered in favour of the assessee vide the P a g e | 19 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association order of the coordinate bench for AY 2012-13. Relevant portion of the order is reproduced below: “15. We shall now deal with the claim of the assessee that the A.O/DRP had erred in taxing the income from sale of physical publications (i.e DGR manuals) as royalty income under Article 12(3) of the India-Canada tax treaty. On a perusal of the orders of the lower authorities, we find, that the assessee had came up with annual physical publications known as \"Dangerous Goods Regulations Manual\" ('DGR' manuals), which provided information inter-alia pertaining to handling of shipment of dangerous goods. These publications could be purchased online by the airlines or any other customer who was involved in the business of transportation of cargo. The DGR manuals published by the assessee was based on the \"Technical Instructions for the Safe Transport of Dangerous Goods by Air\", as were developed by the International Civil Aviation Organization (hereinafter referred to as \"ICAO\"), a United Nations agency for international air transport. The aforesaid fact is substantiated on a perusal of the Page 1-10 of the 'additional evidence' filed by the assessee before us. As observed by us hereinabove, the assessee had filed by way of additional evidence viz. (i). the relevant extracts of DGR manual sold by the assessee to its customers; and (ii). the relevant extracts of the technical instructions published by International Civil Aviation Organisation, which instructions are available in the public domain. On a perusal of Page 2 of the additional evidence which is an extract of the DGR manual published by the assessee, we find, that \"Instruction No. 5.0.1.7 headed as “portable tanks” therein deals with carrying of certain dangerous goods on cargo aircraft in portable tanks. We find that the aforesaid instruction is a copy of “Note 6” headed as “portable tanks” as published by ICAO in its “Technical Instructions for the Safe Transport of Dangerous Goods by Air”, Page 8 of additional evidence. As such, the DGR manuals published by the assessee dealt with the instructions for transportation of dangerous goods by air, with a purpose to assist the customers in handling the transportation of dangerous goods. The DGR manuals contained information pertaining to classification, packaging, marking, labelling and documenting shipping of dangerous goods. As such, the DGR manuals were essentially instructive and user friendly reference manual in order to facilitate safe shipping and transport of dangerous goods around the world by air, based on the instructions on dangerous goods developed by ICAO. The DGR manuals were purchased by the customers by placing orders on the website of the assessee. The assessee after receiving the orders would despatch the manual directly to the customers. At this stage, we may herein observe that the assessee had also inadvertently classified the application fees received by it for DGR manuals/publications, as \"Collection of royalties from Accredited Training Schools\", and had offered the same to tax as royalty. However, on learning about its said mistake, the assessee had in the course of the assessment proceedings sought refund of the taxes paid on the aforesaid amount which was wrongly projected by it as royalty. In order to buttress his aforesaid claim the Id. A.R in the course of hearing of the appeal had drawn our attention to a reconciliation statement that was filed by the assessee in respect of the amounts which were wrongly treated by it as royalty received from the ATCs, Page 82-84 of APB'. Being of the view that the DGR manual was a proprietary material sold by the assessee viz. P a g e | 20 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association IATA, Canada, which falls in the category of \"Information concerning industrial, commercial or scientific experience\" the A.O/DRP held the receipts from sale of the DGR manuals as 'royalty' within the meaning of Article 12(3) of the India-Canada tax treaty. 16. Aggrieved, the assessee has assailed the treating of the sale consideration of DGR manuals/publications as 'royalty' by the A.O/DRP. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. As observed by us hereinabove, the DGR manuals published by the assessee were a compilation of the Instructions on Dangerous Goods developed by ICAO, which in a comprehensive manner provided a user friendly compilation of instructions for safe transport of goods as laid down by ICAO. In the backdrop of the aforesaid facts, we find substance in the claim of the Id. A.R that the sale of DGR manuals was a simplicitor sale of a manual/book and did not involve any transfer of intellectual property. As the DGR manuals were a comprehensive and a user friendly compilation of instructions for safe transport of dangerous goods as laid down by ICAO, which did not contain any such undivulged technical information that was not available in the public domain, and/or know-how, therefore, the same in our considered view cannot be stamped as \"information concerning technical, industrial, commercial or scientific experience\" as provided in Article 12(3) of the India-Canada tax treaty. Our aforesaid view is fortified on a perusal of the contents of the DGR manual in the backdrop of the \"Technical Instructions for the Safe Transport of Dangerous Goods by Air\" published by ICAO. On a perusal of the definition of ‘Royalty' as provided in Article 12(3) of the India-Canada tax treaty, we find that the same comprises of consideration received for the 'use' of the 'right to use' the following: • plan, secret formula or process; or • Information concerning industrial, commercial or scientific experience; or • Any industrial, commercial, or scientific equipment. We find substance in the claim of the assessee that the consideration received on sale of DGR manuals could not be characterised as 'royalty' within the meaning of Article 12(3) of the India-Canada tax treaty, for the following reasons: • The publications were outright sales to the customers, and no 'use' or 'right to use' any copyright in relation to the publication was granted to the customer; • The customers did not get vested with any right to reproduce/sell the content of the publication in any form or media; • The customers also did not get any right to use the patent, trademark, design or model, plan, secret formula or process of IATA Canada on supply of such physical publications; • The information provided in the publications was merely a user- friendly and comprehensive compilation of data available in the public domain and hence, the same cannot tantamount to imparting of any P a g e | 21 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association information concerning the technical, industrial, commercial or scientific experience; • The assessee by compiling the instructions for safe transport of dangerous goods as laid down by ICAO did not share its experience, techniques or methodology employed in developing the publication with the subscribers nor did it impart any information relating to the formation of the publication; • The information or data transmitted through the publication was already available in the public domain and it was not something which was exclusively available with the assessee. In fact, the assessee merely compiled and presented information in a proper form by applying its own methodology; • Further, the information concerning any industrial, commercial or scientific experience (i.e., know-how) generally implies undivulged technical information in the areas of industry, commerce or science, which however, was not so insofar the information published in the DGR manuals was concerned. Accordingly, on the basis of our aforesaid observations, we are of a strong conviction that the consideration received by the assessee on sale of DGR manuals cannot be brought within the realm of the definition of 'royalty' as provided in Article 12(3) of the India-Canada tax treaty. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Madhya Pradesh in the case of CIT Vs. HEG Ltd. (2003) 263 ITR 230 (MP). In the said case, it was observed by the Hon'ble High Court that it is not any information concerning the industrial or commercial venture that could earn the status as that of royalty, as some expertise or skill in providing of such information would be required. In this regard, it was observed by the High Court, as under: That apart we have already indicated that every information would not have in the status of royalty. There are various kinds of categories of Information. Solely because an entry of the commercial nature would not make it a royalty. That cannot be the exclusive base or foundation. Some sort of expertise of skill Is required. The aforesaid factor would be the requisite one. We are not Inclined to accept the submission of Mr. Arya that every information If it concerns the industries or commercial venture would be a royalty. That would tantamount to state the law quite broadly. That does not seem to be the purpose of the statute or that of the treaty.\" Also, as the sale of the DGR manuals tantamount to a simplicitor sale of a copyrighted article with no vesting of any copyright of the same with the customer, the consideration therein received by the assessee cannot be attributed to the 'use' or the 'right to use' the copyright itself, and thus, on the said count also cannot be brought within the realm of the definition of 'royalty' as provided in Article 12(3) of the India- Canada tax treaty. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Delhi in the case of DIT Vs. Infrasoft Ltd. (2014) 220 Taxman 273 (Del). In the backdrop of our aforesaid observations, we vacate the view taken by the lower authorities that the consideration received by the assessee from the sale of DGR P a g e | 22 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association manuals was to be treated as 'royalty' and brought to tax in its hands. The Ground of Appeal No. 3 is allowed in terms of our aforesaid observations.” 5.4 Respectfully following the above decision of coordinate bench, after noting that there is no change in facts and circumstances during the year, we hold that the addition made by the Ld. AO on account of the sale of physical publications is not justified and is, therefore, deleted. 5.5 This ground of appeal is, accordingly, allowed. 6. Ground No. 4: Provision of advertising space (Rs. 1,20,962/-) 6.1 With regard to this issue, Ld. AR has made the following submissions: IATA Canada has provided advertising space to its customers either on its website that was located outside India, or in its publications/manuals that were published by it outside India. The customer does not get any rights in the publication or the website, it merely provides the advertisement. The provision of the advertisement space in both the website and the publications was managed by IATA Canada from outside India and the consideration for rendering such services was also received directly in a bank account outside India. The Hon'ble Mumbai Tribunal in IATA Canada's own case for AY 2012-13 held that revenue received from provision of advertising space is not taxable as 'royalty' as per Article 12(3) of the India Canada 6.2 Ld. DR while placing strong reliance on the order of Ld. AO, has not controverted the claim of the Ld. AR that the issue is a recurring one and is covered by the orders of the coordinate benches in earlier years. 6.3 We have heard the rival submissions and perused the material placed before us. We find that this issue also stands covered in favour of the assessee P a g e | 23 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association vide the order of the coordinate bench for AY 2012-13. Relevant portion of the order is reproduced below: “18. We shall now advert to the claim of the assessee that the A.O/DRP had erred in taxing the receipts from provision of advertising space by the assessee on its website and publications as 'royalty' income within the meaning of Article 12(3) of the India- Canada tax treaty, for the reason, that by so advertising the customers use the logo, brand and goodwill of the assessee. Briefly stated, the assessee viz. IATA, Canada provided advertising space to its customers either on its website that was located outside India, or in its publications/manuals that were published by it outside India. The provision of the advertisement space in both the website and the publications was managed by the assessee from outside India, and the consideration for rendering such services was also received directly in a bank account outside India. In order to buttress the aforesaid factual position the Ld. AR had drawn out attention to Page 12 & 13 of the additional evidence that has been Filed before us. Being of the view, that by advertising on the assessee's website and publications/manuals the customers were using the logo, brand and goodwill of the assessee, the A.O/DRP concluded that the consideration therein received was liable to be taxed as 'royalty' in its hands. 19. Assailing the aforesaid view so taken by the lower authorities, the assessee has carried the matter in appeal before us. We have heard at length the authorised representatives for both the parties in context of the issue under consideration, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them to drive home their respective contentions. In our considered view, the providing of advertising space by the assessee to its customers, either on its website or publications/manuals, did not result to vesting of any right to use, display, exploit or modification of the assessee's brand or logo, in any manner. As such, the consideration received by the assessee from provision of advertisement space in its publications /manuals or website would not fall within the realm of the definition of 'royalty' as provided in Article 12(3) of the India-Canada tax treaty. In sum and substance, as no 'use' or 'right to use' any copyright, patent, trademark, design or model, plan was granted to the customers by the assessee in the course of providing of advertising space to them in its publications/manuals or website, the consideration received in lieu thereof cannot be brought within the meaning of the definition of the term 'royalty' as provided in Article 12(3) of the India-Canada tax treaty. Viewed from another angle, as the customers by obtaining an advertising space in the website or publications/manuals of the assessee in no way get vested with any right to commercially exploit the brand or logo of the assessee, therefore, the consideration therein received by the assessee for providing such advertising space would fall beyond the meaning of the term 'royalty' as defined in Article 12(3) of the India-Canada tax treaty. Our aforesaid view that consideration received by an assessee for providing advertising space cannot be held as 'royalty' in its hands is fortified by the order of the ITAT, Mumbai in the case of Yahoo India (P) Ltd. Vs. DCIT (2011) 140 TTJ 195 (Mum). In the said case, it was observed by the Tribunal that the payment made by the assessee to a foreign company for the services rendered by it for uploading and display of the banner P a g e | 24 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association advertisement on its portal was in the nature of business profit and not royalty. It was held by the Tribunal as under: 8. As already noted by us, the payment made by assessee in the present case to Yahoo Holdings (Hong Kong) Ltd. was for services rendered for uploading and display of the banner advertisement of the Department of Tourism of India on its portal. The banner advertisement hosting services did not involve use or right to use by the assessee any industrial, commercial or scientific equipment and no such use was actually granted by Yahoo Holdings (Hong Kong) Ltd, to assessee company. Uploading and display of banner advertisement on its portal was entirely the responsibility of Yahoo Holdings (Hong Kong) Ltd. and assessee company was only required to provide the banner Ad to Yahoo Holdings (Hong Kong) Ltd. for uploading the same on its portal. Assessee thus had no right to access the portal of Yahoo Holdings (Hong Kong) Ltd. and there is nothing to show any positive act of utilization or employment of the portal of Yahoo Holdings (Hong Kong) Ltd. by the assessee company. Having regard to all these facts of the case and keeping in view the decision of the Authority of Advance Rulings in the case of ISRO Satellite Centre (supra) and Dell International Services India (P) Ltd. (supra), we are of the view that the payment made by assessee to Yahoo Holdings (Hong Kong) Ltd. for the services rendered for uploading and display of the banner advertisement of the Department of Tourism of India on its portal was not in the nature of royalty but the same was in the nature of business profit and in the absence of any PE of Yahoo Holdings (Hong Kong) Ltd. in India, it was not chargeable to tax in India.\" As observed by us hereinabove, in the case of the present assessee before us also the consideration received by the assessee from the customers was for providing advertisement space in its publications/manuals or or websites, without vesting of any right to use, display, exploit or modify the assessee's brand or logo in any manner. As such, we are of the considered view that the consideration received by the assessee for a simplicitor providing of advertisement space to the customers in its publications/manuals or website cannot be held as 'royalty'. Our aforesaid view is supported by the order of the ITAT, Kolkata in the case of ITO Vs. Right Florists Pvt. Ltd. (2013) 143 ITD 445 (Kol). In the said case, it was observed by the Tribunal that payment made by assessee for online advertisement to Yahoo and Google was not in the nature of 'royalty'. A similar view had also been arrived at by the ITAT, Mumbai in the case of Pinstorm Technologies Pvt. Ltd. Vs. ITO (2013) 154 TTJ 0173 (Mum). In the said case, it was observed by the tribunal that the amount paid by the assessee to M/s. Google Ireland Ltd. for the services rendered for uploading and display of banner advertisement on its portal was in the nature of business profit on which no tax was deductible at source since the same was not chargeable to tax in India in the absence of any PE. Accordingly, on the basis of our aforesaid observations we are unable to persuade ourselves to subscribe to the characterisation of the consideration received by the assessee for providing advertising space to its customers, as royalty, by the A.O/DRP. As such, the view taken by the lower authorities wherein they had taxed the ve receipts from provision of advertising space as 'royalty' income in the P a g e | 25 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association hands of the assessee is vacated. The Ground of appeal No. 5 is allowed in terms of our aforesaid observations.” 6.4 In view of the above decisions and after noting that there is no change in facts and circumstances during the year, we hold that the addition made by the Ld. AO on account of the provision of advertising space is not justified and, is therefore deleted. 6.5 This ground is also allowed. 7. Ground No. 5: Database access facility – (Rs. 3,59,20,556/-) 7.1 Ld. AR has submitted the relevant facts pertaining to this issue as under: “IATA Canada provides database access facility to various customers including airlines/ strategic partners in India. These databases comprise of publicly available data for e.g.: IATA Rates of Exchange (IROE)/ passenger tariffs etc. which is collated, stored and displayed in an organized manner by IATA Canada. For your ready reference, IROE provides monthly updates of currency rates of exchange used by the industry for fare/ rate construction. They are based on the average of the five banking days ending on the 10th of each month. For accessing the databases, a request is placed by an Indian customer by logging on IATA Canada's website. Pursuant thereto, the customer is required to submit an online form and the necessary subscription fee by credit card/ bank transfer. These databases are maintained by IATA Canada outside India. Further, the subscription fee for accessing these databases is also received by IATA Canada in its bank account outside India.” 7.2 Ld. DR has fairly stated that the claim of the Ld. AR that this issue is also covered by the orders of the coordinate benches in earlier years. 7.3 We have heard the rival submissions and perused the material placed before us. We find that this issue also stands covered in favour of the assessee vide the common order for AY 2011-12, 2014-16 and 2016-17 of the coordinate bench in ITA Nos. 7072/Mum/2019 & others, Relevant portion of the order is reproduced below: P a g e | 26 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association “15. Facts pertaining to the issue are that the assessee provides database access facility to various customers including airlines/ strategic partners in India. These databases comprise of publicly available data for e.g.: IATA Rates of Exchange (IROE)/ passenger tariffs etc. which is collated, stored and displayed in an organized manner by Assessee. For accessing the databases, a request is placed by an Indian customer by logging on Assessee's website. Pursuant thereto, the customer is required to submit an online form and the necessary subscription fec by credit card/ bank transfer. These databases are maintained by Assessee outside India. Further, the subscription fee for accessing these databases is also received by Assessee in its bank account outside India. However the AO/DRP held that the information shared by the assessee are copyrighted information and therefore the amount received towards data base access facility should be treated as Royalty to be taxed in India. 16. The Id AR submitted that the assessee through data base access is facilitating the access to otherwise publicly available information in one place to the Airlines, customers etc. The Id AR further submitted that by providing the data access the assessee is not imparting any information concerning the technical, industrial, commercial or scientific experience or \"use\" or the \"right to use\" the copy right of literary, artistic or scientific work and therefore does not fall within the definition of Royalty as provided in Article 12(3). The Id AR also submitted that the data base as is similar to the sale DGR manual/publications and therefore the decision of the coordinate bench with regard to sale of publications is equally applicable to the data base access also. 17. The ld DR on the other hand relied on the orders of the lower authorities. 18. We heard the parties and perused the material on record. From the perusal of facts, we notice that the data base of the assessee comprises of details like rate of exchange, passenger tariffs, airport obstacles etc., and it is submitted that the said data is compiled using algorithms owned by the assessee. We also notice these data are available otherwise in public domains, and that the assessee to facilitate availability of information in one place, is collecting these data and has given the access to the airlines, customer etc. In view of these facts, we see merit in the argument of the Id AR that the data base access is similar to the DGR manual which is again a compilation of DGR rules which is sold to the customers. Further by making these information to be accessed by the customers, the assessee allowing only the use of copyrighted information and not the copyright itself. Accordingly we are of the view that the decision of Hon'ble Supreme Court in the case of Engineering Analysis (supra) is applicable to the issue under consideration also. Accordingly following the judicial precedence we hold that the income received by the assessee towards facilitating the access to various database which are otherwise available in public domain, cannot be held as Royalty. The AO is directed to delete the addition made in this regard.” 7.4 Respectfully following the above decisions of the coordinate bench and after noting that there is no change in facts and circumstances during the year, P a g e | 27 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association we hold that the addition made by the Ld. AO on account of the data base access facility is not justified and, is therefore deleted. 7.5 The assessee’s appeal on this is, accordingly, allowed. 8. Ground No. 6.1: IATA Clearing House Facility (ICH facility) & Joining and annual fees (membership fees) – (98,96,256/- & 17,94,86,578/-) 8.1 For the issue ICH Facility, Ld. AR has submitted the submissions as under: “The ICH facility enables the world's airlines and industry suppliers to settle their passenger, cargo and miscellaneous/ non-transportation billings ICH facility provided by IATA Canada involves facilitation for raising of the invoices, netting-off of payables and receivables, providing transaction details report to the airlines and industry suppliers The said ICH facility enables the airlines and SPs to settle their billings/ dues securely and efficiently, thereby, reducing their exposure to losses arising on account of foreign currency fluctuation The said services are provided by IATA Canada directly outside India and the fees in respect of the said services are also received by IATA Canada directly outside India.” 8.2 For the issue of membership fees Ld. AR submitted the submissions as under: “IATA Canada is a corporation incorporated under the Special Act of the Parliament of Canada. It is a non-profit organisation whose purpose, objects and aims are to promote safe, regular and economical air transport for the benefits of the people of the world. Further, to provide means for collaboration among the air transport enterprises engaged directly or indirectly in international air transport services. IATA Canada has been established to serve the needs of its members, as also, to lead and represent the industry in which such members operate. In the event of dissolution of IATA Canada, the Articles of Association (Article XXIV) provide that its net remaining assets would be disbursed to a similar organization as IATA i.e., the United Nations. For the purposes of becoming a member of IATA Canada, airlines pay the necessary joining fees and subsequent annual membership fees. Further, IATA Canada also P a g e | 28 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association receives joining and annual membership fees from various Strategic Partners who form strategic partnership with IATA Canada. Pursuant to obtaining such membership from IATA Canada, the following benefits are inter-alia available to the members: IATA operational safety audit; Security and facilitation; Product distribution; Physical publications; Training activities; Attending Annual General Meeting and World Air Transport Summit, etc In case an airline/ accredited travel agent/ SP wants to avail any specific services, a separate fee is required to be paid by them, depending upon the type of service desired to be availed by the members. Collection of membership fees is undertaken by IATA Canada completely outside India and the fees are received by IATA Canada in a bank account outside India The Hon'ble Mumbai Tribunal in IATA Canada's own case for AY 2012-13 has held that the amount that would be attributable to the PE would be on the basis of the extent appropriate to the role played by the PE in those transactions. Based on the facts of the present case, it is evident that IATA India branch does not have any role/ involvement in collection from joining and annual fees and ICH facility provided by IATA Canada directly from outside India. Accordingly, the income received by IATA Canada from collection from joining and annual fees and provision of ICH facility cannot be attributable to the PE i.e., IATA India branch in India and hence, not taxable as business profits in the hands of IATA Canada. Separately, IATA India branch files its return of income in India disclosing the surplus/ deficit which is not taxed in India based on principle of mutuality. The Hon'ble DRP for AY 2014-15 and learned AO in its assessment order for AY 2012-13 in the case of IATA India branch (alleged PE) has held that IATA India branch qualifies as a mutual concern.” Ld. DR has fairly conceded that these issues are covered by the orders of the coordinate benches in earlier years. 8.3 We have heard the rival submissions and perused the material placed before us. We find that these issues also stand covered in favour of the assessee vide the order (supra) for AY 2012-13 of the coordinate bench. Relevant portion of the order is reproduced below: “(ii). We have given a thoughtful consideration to the contentions advanced by the authorised representatives for both the parties in context of the aforesaid issue under consideration, and have perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements that have been pressed into service by them. As is discernible from the orders of the lower authorities, the P a g e | 29 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association assessee was given permission by the RBI to open a branch office in India, vide its order dated 25.11.1995, under Sec. 29 of the Foreign Exchange Regulation Act, 1973, for conducting non-commercial activities on no profit basis. We find that though it was the claim of the assessee that as per the approval of the RBI the IATA-India branch was not permitted to undertake any activity apart from the BSP services, but the DRP taking cognizance of the financial statements of the IATA-India branch, and also observing that RBI had never conducted any enquiry into the affairs of the assessee, declined to accept the said claim of the assessee. As regards the claim of the assessee that though IATA-India branch constituted a PE of the assessee in India as per Article 5(2)(b) of the India-Canada tax treaty, but then, as the ICH services were provided directly outside India, and the fees in respect of the said services was also received by the assessee in its bank account maintained outside India, therefore, the revenue pertaining to the said ICH services could not have been attributed to the IATA-India branch, the same we find was rejected by the DRP, for the reason, that the assessee had not demonstrated that the ICH services were being provided by the assessee, viz. IATA, Canada directly from outside India We have given a thoughtful consideration and are in agreement with the claim of the assessee, that the amount of profit that would be attributable to a PE would be on the basis of the extent appropriate to the role played by the PE in those transactions. In a case where the transactions had taken place outside India, the same cannot be attributed to the PE, because the PE had no role to play in such transactions. As such, only the portion of profits which are attributable to the PE in India are taxable in India, and the revenues from functions/activities carried outside India cannot be taxed in India. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Co. Ltd. Vs. DIT (2007) 288 ITR 408 (SC). In the said case the Hon'ble Apex Court had observed, that as the PE of the assessee company had nothing to do with the offshore services rendered by the assessee company, a resident of Japan, in connection with a turnkey project executed in India, therefore, consideration received by the assessee company for rendition of such services could not be brought to tax in India. Referring to Article 7 of the DTAA, it was observed by the Hon'ble Apex Court that the same limits the tax on business profits to that arising from the operations of the PE. It was observed by the Hon'ble Court, that as in the case before them the entire services were rendered outside India, and had nothing to do with the PE, therefore, nothing could be attributed to the PE and thus brought to tax in India. Apart from that, it was observed by the Hon'ble Apex Court that in case of composite transactions which have some operations in one territory and some in others, the principle of apportionment has to be essentially applied in order to determine the taxability of various operations. In the backdrop of the aforesaid NISTRY OF Settled position of law, the amount of profit that would be attributable to a PE would be on the basis of the extent appropriate -o the role played by the PE in the transaction from which revenue as been generated. We are unable to subscribe to the manner in which the A.O/DRP had summarily rejected the claim of the assessee that as the ICH services were provided by the assessee, viz. IATA, Canada directly outside India, and the fees in respect of the said services was also received by the assessee in its bank account maintained outside India, therefore, the revenue pertaining to the said ICH services could not have been attributed to the IATA-India branch. In our considered view, the matter in all fairness requires to be restored to the file of the A.O. The A.O shall in the course of the 'set aside' proceedings verify the veracity of the claim of the assessee that the ICH services were provided by assessee, P a g e | 30 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association viz. IATA, Canada directly outside India. In case, the claim of the assessee is found to be in order, then the addition of fees received from providing ICH services made in its hands would stand vacated. Needless to say, the assessee shall be afforded a reasonable opportunity of being heard during the course of the 'set aside' proceedings and shall remain at a liberty to substantiate its aforesaid claim on the basis of fresh documentary evidence. Accordingly, the matter is restored to the file of the A.O for fresh adjudication in terms of our aforesaid observations. The Grounds of appeal Nos. 6(f) to 6(h) are allowed for statistical purposes.” 8.4 Respectfully following the above decision of the coordinate bench after noting that there is no change in facts and circumstances during the year, we set aside the issues to Ld. Ao to verify the claim of the assessee on similar lines as directed in AY 2012-13. 9. The assessee’s appeal on this ground is allowed for statistical purposes. 10. Ground No. 6.2: Data processing charges – (Rs. 1,80,27,269/-) 10.1 Brief facts of the issue submitted by Ld. AR are as under: “IATA Canada provides data processing services to airlines and agents using iiNET and Weblink respectively. The iiNET and Weblink facility enables the airlines and agents to enter travel related data into the system which is connected to the BSPLink system (which handles the billing and settlement between airlines and agents). A brief description of the iiNet and Weblink facility is given below: iiNet: This facility provides a direct communication link between the billing and settlement system of IATA Canada and the airline's own internal systems. Weblink: This facility enables the travel agents to book sales directly on the airline's website and remit the funds through the Billing and Settlement Program ('BSP') system. Thus, the Weblink facility provides the mechanism by which the ticket booking is made by the agent and allows the agent to pay on the BSP system. Thus, these facilities act as a communicating link between the systems of the airlines, agents and the billing and settlement system which undertakes the settlement activities between airlines and agents. The consideration in respect of such services is received directly outside India. Separately, IATA India branch files its return of income in India disclosing the surplus/ deficit which is not taxed in India based on principle of mutuality. The Hon'ble DRP for AY 2014-15 and learned AO in its assessment order for AY 2012-13 in case of IATA India branch (alleged PE) has held that IATA India branch qualifies as a mutual concern.” P a g e | 31 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association 10.2 Ld. DR has fairly conceded that the issue is a recurring one and is covered by the orders of the coordinate benches in earlier years. He has however strongly relied on the order of Ld. DRP and submitted that the addition made by the Ld. AR deserves to be upheld as the department has not accepted the order of the coordinate bench. 10.3 We have heard the rival submissions and perused the material placed before us. We find that this issue also stands covered in favour of the assessee vide the common order (supra) for AY 2011-12, 2014-16 and 2016-17 of the coordinate bench, Relevant portion of the order is reproduced below: “28. We heard the parties and perused the material on record. We notice that addition is made on the similar grounds that the principle of mutuality is not applicable for the charges for provision of Data Processing. We further notice that the AO/DRP have relied on their own order of AY 2012-13 in this regard. On perusal of nature of charges, we are of the view that Data Processing charges are received towards services to airlines and agents using iiNet and weblink and therefore are similar to ICH facility fees. We have already held that the ICH facility fees is not taxable in India for the reason that the principle of mutuality is applicable as has been held by the Co- ordinate Bench in assessee's own case for AY 2012-13. Therefore, applying the same ratio, we hold that the data processing charges which are similar in nature cannot also be taxed as income in India as attributable to Indian branches.” 10.4 In view of the above decisions and after noting that there is no change in facts and circumstances during the year, we hold that the addition made by the Ld. AO on account of the joining and annual fees (membership fees) is not justified and is therefore deleted. 11. Ground No. 7: Classroom training courses. 11.1 With regard to this issue, Ld. AR has submitted the following facts: P a g e | 32 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association “IATA Canada suo-moto offers income from classroom training courses to tax as FIS under Article 12 of the India-Canada Tax Treaty.On perusal of the records for subsequent year (i.e., AY 2021-22), IATA Canada noticed that there were certain credit notes issued to one of its customers 'Bird Education Society of Travel' (BEST) amounting to USD 1,36,325 in AY 2021-22 against the invoice was raised in AY 2020- 21 with respect to certain classroom training courses offered by IATA Canada. IATA Canada had inadvertently considered and offered the entire amount of USD 1,36,325 (against which credit note was issued in subsequent year) while computing the tax liability for the AY 2020-21. In this regard, IATA Canada had filed an application for admission of additional evidence before the Hon'ble DRP on 8 April 2023 wherein IATA Canada had submitted list of credit notes issued to its customer in subsequent year alongwith the copy of original invoices and corresponding credit notes. Copy of the additional evidence was also submitted with the learned AO. Pursuant to above, the remand report dated 27 April 2023 issued by the learned AO forwarded to IATA Canada by the Hon'ble DRP vide notice dated 2 May 2023 wherein the application for additional evidence made by IATA Canada was not accepted on the basis that IATA Canada did not furnish third party confirmation w.r.t credit notes accepted and also IATA Canada has not furnished the relevant documents regarding how the transaction related to credit notes have been incorporated in the books of accounts of the customer. Pursuant to above, IATA Canada filed a rejoinder to the remand report issued by the learned AO on 8 May 2023 and a sample email communication dated 27 April 2020 regarding a request from BEST to cancel an invoice as the training was rescheduled in light of the Covid-19 situation.” 11.2 Accordingly, Ld. AR has submitted that the income from class room training course was suo moto offered to tax in AY 2020-21 amounting to USD 1,36,325 (INR 1,01,83,478) should be reduced in AY 2020-21 to the extent of credit note issued by IATA Canada in subsequent years i.e. in AY 2021-22. Ld. DR has not objected to the above-mentioned proposition. 11.3 We have heard the rival submissions and perused the material placed before us. The issue is restored to Ld. AO for the limited purpose of verification of assessee’s claim and allowing consequential relief. 12. Ground No. 8: Wrong levy on the interest u/s 234A and 234B of the Act. P a g e | 33 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association For this issue, Ld. AR has requested that directions be given to the Ld. AO for recomputing the interest u/s 234A and 234B after giving effect to the order of the Tribunal. Ld. DR has no objection to the proposition. Accordingly, we direct to recompute the interest u/s 234A & 234B as per the provision at the time of giving appeal effect to this order. 13. Ground No. 9: Initiating of penalty proceedings u/s 274 r.w.s. 270A of the Act. 13.1 For this issue, Ld. AR has submitted that Ld. AO has proposed to initiate penalty proceedings against the assessee under Section 274 r.w.s. 270A of the Act with respect to the additions/ variations made. He requested that the penalty proceedings should be dropped. Since this ground is premature, therefore, it does not require any adjudication at this stage. 14. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 29.04.2025. Sd/- Sd/- BEENA PILLAI RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 29.04.2025 P a g e | 34 ITA No. 3330/Mum/2023 A.Y. 2020-21 International Air Transport Association अननक ेत स ुंह र जपूत/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "