Galileo Nederland BV, Gurgaon V. DCIT (International Taxation), New Delhi

ITA 3034/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3506 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Residential status; Rectification of order; Double taxation relief; Permanent establishment; Question of law; Tax effect; TDS
• Section: 5(2); 40(a)(ia); 205; 251; 254(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. KUL BHARAT, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 5601/DEL/2010 : ASSTT. YEAR : 2007-08 TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) BSR & CO., DLF BUILDING NO. 10, 8 TH FLOOR, TOWER-B, DLF CYBER CITY, PHASE-II, GURGAON-122002 VS ASSTT. DIRECTOR OF INCOME TAX, CIRCLE-1(2), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA CCG2258D ITA NO. 426/DEL/2012 : ASSTT. YEAR : 2008-09 TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, P.O. BOX 3064-2130, KB HOOFDDORP, NEDERLAND VS ASSTT. DIRECTOR OF INCOME TAX, RANGE-1, INTL. TAXATION NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D ITA NO. 357/DEL/2013 : ASSTT. YEAR : 2009-10 TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, P.O. BOX 3064-2130, KB HOOFDDORP, NEDERLAND VS DY. DIRECTOR OF INCOME TAX, CIRCLE-1(2), INTL. TAXATION NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D 2 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV ITA NO. 746/DEL/2014 : ASSTT. YEAR : 2010-11 TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, P.O. BOX 3064-2130, KB HOOFDDORP, NEDERLAND VS DY. DIRECTOR OF INCOME TAX, CIRCLE-1(2), INTL. TAXATION NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D ITA NO. 2101/DEL/2015 : ASSTT. YEAR : 2011-12 TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, P.O. BOX 3064-2130, KB HOOFDDORP, NEDERLAND VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), INTL. TAXATION NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D ITA NO. 6162/DEL/2015 : ASSTT. YEAR : 2012-13 DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), INTL. TAXATION NEW DELHI VS TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, NEDERLANDS C/O KPMG OFFICER, BUILDING NO. 10, TOWER-B, 8 TH FLOOR, CYBER CITY, GURGAON (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D 3 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV CO NO. 01/DEL/2021 : ASSTT. YEAR : 2012-13 DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), INTL. TAXATION NEW DELHI VS TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, NEDERLANDS C/O BSR & CO. LLP, BUILDING NO. 10, TOWER-B, 8 TH FLOOR, CYBER CITY, GURGAON (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D ITA NO. 3032/DEL/2016 : ASSTT. YEAR : 2008-09 ITA NO. 3033/DEL/2016 : ASSTT. YEAR : 2009-10 ITA NO. 3034/DEL/2016 : ASSTT. YEAR : 2010-11 TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, P.O. BOX 3064-2130, KB HOOFDDORP, NEDERLAND C/O BSR & CO. LLP, BUILDING NO. 10, TOWER-B, 8 TH FLOOR, CYBER CITY, GURGAON VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), INTL. TAXATION NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D ITA NO. 6515/DEL/2017 : ASSTT. YEAR : 2014-15 TRAVELPORT G L OBAL DISTRIBUTION SYSTEM BV (EARLIER KNOWN AS GALILEO NEDERLAND BV) TAURUSAVENUE 33A-2132, LS HOOFDDORP, P.O. BOX 3064-2130, KB HOOFDDORP, NEDERLAND VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), INTL. TAXATION NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AACCG2258D 4 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV ASSESSEE BY : SH. AJIT JAIN, CA & SH. SIDDESH CHAUGULE, ADV. REVENUE BY : SH. BHUVNESH KULSHRESTHA, CIT DR DATE OF HEARING: 28 . 09 .20 21 DATE OF PRONOUNCEMENT: 1 3 .10 .20 21 ORDER PER BENCH: THE COMPOSITE ORDER DEALS WITH THE FOLLOWING APPEA LS FILED BY THE REVENUE AS WELL AS THE ASSESSEE. AY APPEAL NO. (AGAINST FINAL ORDER) APPEAL NO. (AGAINST RECTIFIED ORDER) 2007-08 5601/DEL/2010 - 2008-09 426/DEL/2012 3032/DEL/2016 2009-10 357/DEL/2013 3033/DEL/2016 2010-11 746/DEL/2014 3034/DEL/2016 2011-12 2101/DEL/201 - 2012-13 6162/DEL/2015 CO 1/DEL/2021 - 2014-15 6515/DEL/2017 - 2. THE ASSESSEE IS A COMPANY INCORPORATED IN THE UNITED K INGDOM. THE ASSESSEE PROVIDES ELECTRONIC GLOBAL DISTRIBUTION SERVICES IN T HE 'REST OF THE WORLD' TERRITORY (INCLUDING THE INDIAN REGION) FOR T HE TRAVEL INDUSTRY, BY UTILIZING A COMPUTER RESERVATION SYSTEM ('CRS'), WHI CH IS AN AUTOMATED SYSTEM WHICH PROCESSES BOOKING DATA. 5 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 3. THE CRS IS AN AUTOMATED SYSTEM, WHICH PROCESS BOOKING DATA AND OTHER DATA TO PROVIDE THE FOLLOWING FUNCTIONS: A) THE ABILITY TO DISPLAY FLIGHT SCHEDULE AND SEAT AVAILA BILITY B) THE ABILITY TO DISPLAY AND/OR QUOTE AIRLINE FARE C) THE ABILITY TO MAKE AIRLINE SEAT RESERVATION D) THE ABILITY TO ISSUE AIRLINE TICKETS, ETC. 4. THE ASSESSEE APPOINTS DISTRIBUTORS FOR MARKETING ITS CR S SERVICES. IN INDIA, THE AUTHORIZED DISTRIBUTOR IS INTERGLOBE TECHN OLOGIES QUOTIENT INDIA PRIVATE LIMITED (ITQPL/ 'THE DISTRIBUTOR'). ITQPL I S ENTITLED TO RECEIVE DISTRIBUTION FEES FROM THE ASSESSEE FOR EACH SEGMENT BOOKED IN THE INDIAN TERRITORY. THE DISTRIBUTOR/ ITQPL INDEPENDENTLY SIGNS AN AGREEMENT WITH THE TRAVEL AGENT'S, TO PROVIDE BOOKING SERVICES. 5. THE MASTER COMPUTER SYSTEM (MCS) STATIONED IN USA IS C ONNECTED TO TRAVEL AGENTS IN INDIA THROUGH A COMMUNICATION NETWOR K OWNED BY SITA (THIRD PARTY SERVICE PROVIDER). SITA DOES NOT OWN LOCAL COMMUNICATION LINES WITHIN INDIA AND THE SAME FORMS THE RESPONSIBILITY OF T HE DISTRIBUTOR. 6. THE CRS IS CONNECTED TO THE AIRLINE SERVERS TO WHICH DATA REGARDING SEAT REQUESTS, RESERVATIONS, ETC. IS CONSTANTLY SENT AND UPDA TED ON A REAL- TIME BASIS. WHEN A CUSTOMER APPROACHES A TRAVEL AGENT W HO IS USING THE CRS TO BOOK A TICKET OR SEEKING INFORMATION LIKE THE FLIGHT SCHEDULE, FLIGHT AVAILABILITY, SEAT AVAILABILITY, FARE ETC., CUSTOMERS' REQUIREMENTS ARE TRANSMITTED BY THE TRAVEL AGENTS TO TRAVELPORT'S MAINF RAME MASTER COMPUTER SERVER ('MCS'). 6 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 7. THE MCS, IN TURN, CHECKS THE AVAILABILITY, ETC. FR OM THE AIRLINE SERVER AND COMMUNICATES AVAILABILITY BACK TO THE TRAVEL AGENTS . THE TRAVEL AGENT, ON THE BASIS OF SUCH COMMUNICATION, FINALIZES THE BOOKING REQUIREMENTS, WHICH ARE SENT BACK TO THE CRS BY THE TRAVEL AGENT, TH ROUGH THE COMMUNICATION NETWORK. 8. IF, AT THE POINT OF TIME SUCH FINALIZED BOOKING RE QUIREMENTS REACH THE AIRLINE SERVER THROUGH THE TRAVELPORT'S MCS IN THE U SA, SUCH SEATS ARE STILL AVAILABLE, THE AIRLINE SERVER ACCEPTS THE TRAVEL AGENT 'S REQUEST. IT IS ONLY UPON SUCH ACCEPTANCE THAT THE BOOKING IS COMPLETED AND TH E ASSESSEE EARNS ITS BOOKING FEE FROM THE AIRLINE. THE MCS THEN DISPLA YS THE ACCEPTANCE OF THE OFFER BY THE AIRLINE SERVER, WHICH IS COMMUNICATED TO THE TRAVEL AGENT'S COMPUTER SCREEN. HISTORY OF ASSESSEE AND ITS PREDECESSOR ENTITIES I. E. GII AND TGDSBV 9. THE CRS WAS EARLIER OWNED AND MANAGED BY GALILEO INTERNATIONAL INC. (GII), WHICH OPERATED WORLDWIDE. THEREAFTER, IN YEAR 2002, THE TERRITORY OF OPERATIONS OF GII WAS SPLIT INTO TWO PART: T-1 (USA AN D CANADA) AND T-2 (REST OF THE WORLD). THE RESPONSIBILITY OF CARRYING OU T BUSINESS IN T-2 TERRITORY WAS GIVEN TO THE TGDSBV. TGDSBV WAS A NETHE RLAND BASED ENTITY AND CARRIED ON SUCH CRS BUSINESS TILL 31 DECEMBER 2015. 7 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 10. WITH REGARDS TO THE GROUNDS TAKEN UP, THE PROFITA BILITY STATEMENT OF THE ASSESSEE IS AS UNDER: INDIA SPECIFIC PROFITABILITY STATEMENT FOR AY 2007- 08 TO AY 2012-13 AND AY 2014-15 (AMOUNTS IN USD) DESCRIPTION 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2014-15 BOOKING FEES (A) 55,029,465 70,035,529 66,511,669 75,676,788 79,826,594 77,519,539 67,339,472 LESS: SUBSCRIBER / DISTRIBUTION FEES OR COMMISSION 37,136,627 47,658,043 45,981,980 51,036,204 58,011,833 56,922,872 49,691,247 LESS: IBM SERVICE FEE 1,845,674 2,908,608 3,180,261 2,801,139 2,871,024 7,745,314 1 6,311,271 INDIA SPECIFIC PROFITABILITY STATEMENT FOR AY 2007-08 TO AY 2012-13 AND AY 2014-15 (AMOUNTS IN USD) DESCRIPTION A.Y. 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2014-15 LESS: CORE LICENCE 3,249,999 2,906,229 2,591,673 2,919,311 3,122,012 LESS: ROYALTY FEES 12,030,725 14,818,090 19,810,463 20,061,605 21,579,830 15,593,965 14,965,612 LESS : VENDOR COSTS 618,260 41 1,486 117,901 112,575 86,719 119,71.8 145,258 TOTAL EXPENSES (B) 54,881,285 68,702,456 71,682,279 76,930,834 85,671,418 80,381,869 71,113,388 (LOSS) (A) - (B) 148,180 1,333,073 (5,170,610) (1,254,046) (5,844,824) (2,862,330) (3,773,916) 11. EFFECTIVELY, THE GROUNDS INVOLVED IN ALL THESE APP EALS ARE AS UNDER: 1. RELATED TO BUSINESS CONNECTION (BC) AND PERMANENT ESTABL ISHMENT (PE) IN INDIA. 2. RELATED TO EXCESSIVE ATTRIBUTION TO ALLEGED PE OF THE COMPANY IN INDIA. 3. RELATED TO ALLOWABILITY OF DISTRIBUTION EXPENSES. 4. RELATED TO ALLOWABILITY OF OTHER EXPENSES. 8 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV ADJUDICATION ON THE ISSUE OF BUSINESS CONNECTION AND PERMANENT ESTABL ISHMENT: 12. THE ISSUE OF COMPANYS BC/PE IN INDIA IS COVERED AGA INST THE ASSESSEE BY THE DECISIONS OF HON'BLE DELHI HIGH COURT AND DELHI I TAT IN COMPANY/ITS PREDECESSOR'S CASE FOR THE EARLIER AYS. 1995-96 TO 2006-07 . FOR AY 2017-18 IN CASE OF COMPANYS SUCCESSOR ENTITY I.E., TRAVELPORT INTE RNATIONAL OPERATIONS LIMITED, THE ISSUE ON BC/PE HAS BEEN HELD A GAINST THE TIOL BY HONBLE DELHI ITAT VIDE ORDER DATED 27 SEPTEMBER 202 1 (ITA NO. 163/DEL/2021) BY RELYING ON THE DECISIONS OF HON'BLE D ELHI HIGH COURT AND HON'BLE DELHI ITAT IN COMPANY/ITS PREDECESSOR'S CASE FOR A Y 1995-96 TO AY 2006-07. 13. THE ADJUDICATION OF THIS ISSUE TAKEN FROM ITA NO. 163/DEL/2021 DATED 27.09.20201 IN THE ASSESSEES OWN CASE WHICH IS AS UNDER: GROUND NO. 4 AND 5 ARE RELATED TO ASSESSEE'S BUSIN ESS CONNECTION PBO AND PERMANENT ESTABLISHMENT (PE) IN INDIA 22. GROUND NO.4 AND 5 ARE COVERED AGAINST THE APPELLANT BY THE DECISIONS OF HON'BLE DELHI ITAT AND HON'BLE DELHI HIGH CO URT IN CASE OF APPELLANT'S PREDECESSOR ENTITY I.E. GII AND TGDSBV. 23. IN THE FIRST BATCH OF 4 YEARS I.E. FROM AY 1995- 96 TO 1998-99 IN CASE OF GII, THE HON'BLE DELHI ITAT VIDE ITS DATED 30 NOV. 2007 (19 SOT 257 (DELHI) HELD THAT GII HAS A FIXED PLACE PE AND AGENCY P E IN FORM OF THE INTERGLOBE IN INDIA. (PAGE 194 TO 251 OF PAPERBOOK PART 1.) THE RELEVANT EXTRACTS FROM THIS ORDER ARE RE-PRODUCED AS UNDER: 9 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV '17.1 IN THE PRESENT CASE IT IS SEEN THAT THE CRS, WHIC H IS THE SOURCE OF REVENUE IS PARTIALLY EXISTENT IN THE MACHINES NAMELY VA RIOUS COMPUTERS INSTALLED AT THE PREMISES OF THE SUBSCRIBERS. IN SOME CASES, THE APPELLANT ITSELF HAS PLACED THOSE COMPUTERS AND IN ALL THE CASES THE CO NNECTIVITY IN THE FORM OF NODES LEASED FROM SITA ARE INSTALLED BY T HE APPELLANT THROUGH ITS AGENT. THE COMPUTERS SO CONNECTED AND CONFIGUR ED WHICH CAN PERFORM THE FUNCTION OF RESERVATION AND TICKETING IS A PART AND PARCEL OF THE ENTIRE CRS. THE COMPUTERS SO INSTALLED REQUIRE FUR THER APPROVAL FROM APPELLANT/INTERGLOBE WHO ALLOWS THE USE OF SUCH COMPUTER S FOR RESERVATION AND TICKETING. WITHOUT THE AUTHORITY OF A PPELLANT SUCH COMPUTERS ARE NOT CAPABLE OF PERFORMING THE RESERVATION AND TICKETING PART OF THE CRS SYSTEM. THE COMPUTER SO INSTALLED CANNO T BE SHIFTED FROM ONE PLACE TO ANOTHER EVEN WITHIN THE PREMISES OF THE SU BSCRIBER, LEAVE APART THE SHIFTING OF SUCH COMPUTER FROM ONE PERSON TO A NOTHER. THUS, THE APPELLANT EXERCISES COMPLETE CONTROL OVER THE COMPUTE RS INSTALLED AT THE PREMISES OF THE SUBSCRIBERS. IN VIEW OF OUR DISCUSSION I N THE IMMEDIATELY PRECEDING PARAGRAPH, THIS AMOUNTS TO A FIX ED PLACE OF BUSINESS FOR CARRYING ON THE BUSINESS OF THE ENTERPRISE IN INDIA. BUT FOR THE SUPPLY OF COMPUTERS, THE CONFIGURATION OF COMPUTERS AND CONNECTIVITY WHICH ARE PROVIDED BY THE APPELLANT EITHER DIRECTLY O R THROUGH ITS AGENT INTERGLOBE WILL AMOUNT TO OPERATING PART OF ITS CRS SYSTEM THROUGH SUCH SUBSCRIBERS IN INDIA AND ACCORDINGLY PE IN THE NATURE OF A FIXED PLACE OF BUSINESS IN INDIA. THUS THE APPELLANT CAN BE SAID TO HAV E ESTABLISHED A PE WITHIN THE MEANING OF PARAGRAPH 1 OF ARTICLE 5 O F INDO-SPAIN TREATY.' '17.4 ..THE DEPENDENT AGENT IS NOT TO BE CONSID ERED AS PE UNLESS HE HAS AUTHORITY TO CONCLUDE CONTRACT ON BEHALF OF SUCH ENTERPRISE. 10 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV THE AUTHORITY TO CONCLUDE CONTRACTS MUST BE IN RESPECT OF CONTRACTS RELATING TO OPERATIONS, WHICH CONSTITUTE THE BUSINESS PRO PER OF THE ENTERPRISE. THE APPELLANT IN THE PRESENT CASE IN ORDER TO ENHANCE ITS BUSINESS OPERATIONS HAS APPOINTED INTERGLOBE AS ITS AGEN T WHO PROMOTE THE 'GALILEO SYSTEM' IN INDIA. INTERGLOBE IN ITS TUR N HAS APPOINTED VARIOUS SUBSCRIBERS FOR USE OF 'GALILEO SYSTEM'. THOUGH THE REVEN UE FLOWS ONLY FROM PARTICIPANTS WHO HAVE ENTERED INTO PGA WITH THE APPELLANT, YET THE REVENUE COULD NOT HAVE BEEN GENERATED BUT FOR THE SUB SCRIBERS USING THE 'GALILEO SYSTEM'. IN A WAY THE REVENUE IS GENERATED F ROM THE PARTICIPANTS BUT ONLY ON THE BASIS OF USE OF CRS BY THE SUBSCRIBERS. B UT FOR SUCH USE NO REVENUE WOULD ACCRUE TO THE APPELLANT. THUS THE AG REEMENTS ENTERED INTO BY THE INTERGLOBE WITH THE SUBSCRIBERS UNDER AN AU THORITY GRANTED TO IT, ARE CONTRACTS RELATING TO OPERATIONS WHICH CONSTIT UTE BUSINESS PROPER AND NOT MERELY IN THE NATURE OF INTERNAL OPERATIONS . SUCH CONTRACTS ARE HABITUALLY EXERCISED AND THERE IS NOTHING ON RECORD TO SUGGEST THAT SUCH AUTHORITY WAS CANCELLED AT ANY POINT OF TIME. WE, THE REFORE, HOLD THAT INTERGLOBE IS DEPENDENT AGENT OF THE APPELLANT WHO HAS HABITUALLY EXERCISED THE AUTHORITY TO CONCLUDE CONTRACTS ON BEHALF OF THE APPELLANT. TO THAT EXTENT THE APPELLANT HAS A PE IN INDIA. SINCE WE HAVE HELD THAT INTERGLOBE IS A DEPENDENT AGENT OF APPELLANT IN INDI A, WE NEED NOT DISCUSS PARA (5) OF ARTICLE 5 OF THE TREATY REGARDING IN DEPENDENT AGENT FORM OF PE.' 24. THE HON'BLE DELHI HIGH COURT VIDE ITS ORDER DATE D 25 FEB 2009 (ITA NO. 1048 TO 1055/2008 AND ITA NOS. 17408/2008, 17437 /2008, 17409/2008, 17438/2008, 17473-74/2008, 17469-70/200 8, 17410/2008, 17439/2008 AND 17471/2008 ) IN CASE OF GII FOR SUCH FIR ST BATCH OF 4 YEARS 11 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV FROM AY 1995-96 TO AY 1998-99 HELD THE ISSUE OF PE/BC AS ACADEMIC AS OVERALL TAXABILITY OF GII WAS HELD TO BE NIL. THE RE LEVANT EXTRACTS FROM THIS ORDER ARE RE-PRODUCED AS UNDER: 'THESE APPEALS WERE LISTED ALONG WITH THE APPEALS FILED BY REVENUE AGAINST THE SAME JUDGMENT. THE APPEALS FILED BY REVEN UE HAVE BEEN DISMISSED BY US VIDE OUR ORDERS PASSED IN TODAY'S DATE IN W P(C) NO. 851/2008. IN VIEW OF THIS DISMISSAL OF THOSE APPEALS OF THE REVENUE , LEARNED COUNSEL FOR APPELLANT SUBMITS THAT THE QUESTION RAISED IN THESE APPEALS HAVE BECOME ACADEMIC AND ARE THEREFORE, DISMISSED.' 25. AGAINST THE HON'BLE DELHI HIGH COURT ORDER FOR AY 1995-96 TO AY 1998-99, BOTH THE INCOME-TAX DEPARTMENT AND APPELLAN T'S PREDECESSOR ENTITY I.E. GII FILED AN APPEAL BEFORE HON'BLE SUPRE ME COURT OF INDIA VIDE SLP NO. 6511 TO 6518/2010. THE HON'BLE SUPREME COURT VIDE ITS ORDER DATED 22 NOVEMBER 2019 DISMISSED (AS WITHDRAWN) SLP NOS. 6512 TO 6515/2010 AND 6517 TO 6518/2010 PERTAINING TO AY 1995-96, 199 6-97 AND AY 1998-99 ON ACCOUNT OF LOW TAX EFFECT, IN CONSONANCE WITH CIRCULAR NO. 17 OF 2019, LEAVING THE QUESTION OF LAWS OPEN. FOR REMAINING SLPS , THE MATTER IS PENDING FOR ADJUDICATION BEFORE THE HON'BLE SUPREME COURT. 26. IN THE SECOND BATCH OF 4 YEARS I.E. FROM AY 1999-0 0 TO 2002-03 IN CASE OF GII, THE HON'BLE DELHI ITAT VIDE ITS ORDER DATE D 17 TH MARCH 2011 (ITA NO.2971-2974 /DEL/2010) (PAGE 281 TO 284 OF PAPERBO OK PART 1), HELD AS UNDER : 12 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV '4. REGARDING VARIOUS GROUNDS RAISED BY THE ASSESSEE IN TH E CROSS OBJECTIONS RELATING TO EXISTENCE OF BUSINESS CONNECTIONS IN I NDIA AND ACCRUAL AND ARISING OF INCOME IN INDIA AND THE DEEMED ACCRUAL AND DEEMED ARISING OF INCOME IN INDIA AND EXISTENCE OF PE I N INDIA ETC., IT WAS SUBMITTED THAT THESE ISSUES WERE DECIDED BY THE TRIBUN AL AGAINST THE ASSESSEE IN ASSESSMENT YEAR 1995-96 TO 1998-99. HE SUBMITTED A COPY OF TRIBUNAL DECISION IN ASSESSEE'S OWN CASE FOR THESE ASSESSMEN T YEARS 1995-96 TO 1998-99 IN ITA NOS. 1733/D/2001, 2473-247 5/D/2000 AND 820-823/D/2005 AND CO. NO. 47 TO 54/D/2006 DATED 30 .11.2007. IT IS ALSO SUBMITTED THAT AGAINST THIS TRIBUNAL ORDER; BOTH THE ASSESSEE AND REVENUE WERE IN APPEAL BEFORE THE HON'BLE HIGH COURT OF DELHI. IT IS SUBMITTED THAT REVENUE'S APPEAL WERE DISMISSED BY THE HON 'BLE HIGH COURT OF DELHI IN ITS JUDGMENT DATED 25.02.2009 IN I TA NO. 851 TO 860/2008 AND IT WAS HELD BY HON'BLE DELHI HIGH COURT T HAT NO QUESTIONS OF LAW ARISES IN THIS MATTER WHICH NEEDS FURTHER DETERMI NATION BY THIS COURT. IT IS ALSO SUBMITTED THAT IN THE ASSESSEE'S APPEAL, IT WAS HELD BY THE HON'BLE DELHI HIGH COURT THAT IN VIEW OF THE DISM ISSAL OF APPEALS OF THE REVENUE, THE QUESTION RAISED BY ASSESSEE IN THESE APPE ALS HAVE BECOME ACADEMIC AND ARE THEREFORE DISMISSED. IT IS SUBMITTE D THAT THIS JUDGEMENT OF HON'BLE HIGH COURT OF DELHI IN RESPECT OF ASSESSEE'S APPEAL IS ALSO DATED 25.02.2009 IN ITA NOS 17408, 17409, 1743 7, 17438, 17473-74, 17469-70, 17410, 17439 AND 17471- 72/2008 . HE SUBMITTED A COPY OF BOTH THESE JUDGEMENTS OF HON'BLE DELHI HIGH C OURT RENDERED IN THE ASSESSEE'S APPEALS AS WELL AS REVENUE'S APPEALS. LD. DR A LSO AGREED THAT THESE ISSUES ARE COVERED AS PER THESE JUDGEMENTS.' 13 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 27. HON'BLE DELHI HIGH COURT IN ITS ORDER DATED 25 TH SEPTEMBER 2012 (ITA NO. 1148 TO 1151/2011 AND ITA NO. 466 TO 472/2012) IN CASE OF GII FOR SUCH SECOND BATCH OF 4 YEARS FROM AY 1999-00 TO AY 2002- 03 RELIED ON THE DECISIONS OF HON'BLE DELHI ITAT AND HON'BLE DELHI HIGH COURT IN CASE OF GII FOR FIRST BATCH OF 4 YEARS AND HELD THAT SINCE FACTUAL MA TRIX IS SAME, THE EARLIER DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF 25.02.2009 IS SQUARELY APPLICABLE I.E. ISSUE OF PE/BC IS ACADEMIC. 28. AGAINST THE HON'BLE DELHI HIGH COURT ORDER FOR A Y 1999-00 TO 2002- 03, BOTH THE INCOME-TAX DEPARTMENT AND APPELLANT'S PR EDECESSOR ENTITY I.E. GII FILED AN APPEAL BEFORE HON'BLE SUPREME COURT OF INDIA VIDE SLP NOS. 2956 OF 2014, 2242 OF 2013, 7222 OF 2013, 2241 OF 2 013. THESE SLPS ARE PENDING ADJUDICATION BY HON'BLE SUPREME COURT. 29. IN THE THIRD BATCH OF 4 YEARS I.E. FROM AY 2003- 04 TO AY 2006-07 IN CASE GALILEO NETHERLAND BV (GNBV) (NOW KNOWN AS TRAVEL PORT GLOBAL DISTRIBUTION SYSTEM BV) (TGDSBV) (PREDECESSOR OF THE APP ELLANT AND SUCCESSOR OF GII), THE DELHI ITAT VIDE ITS ORDER DATED 29 TH JUNE 2012 (ITA NO. 1306 TO 1309/DEL/2012), DISMISSED THE CROSS OBJECTIONS RAISED BY GNBV ON PE/BC GROUND. IT WAS HELD THAT: '21. NOW COMING TO THE CROSS OBJECTIONS FILED BY THE ASSESSE E IN ALL THESE YEARS FOUR YEARS. THE LD. AR DID NOT ARGUE THE CROSS OBJ ECTIONS AND THEREFORE THESE CROSS OBJECTIONS ARE TREATED AS NOT PRESSED . THEREFORE, THE ASSESSEE'S CROSS OBJECTIONS IN ALL FOUR YEARS ARE DISMISSED' 30. THE HON'BLE DELHI HIGH COURT IN ITS ORDER DATED 2 5 TH AUGUST 2014 (ITA NO. 654/2012 656/2012, 659/2012 & 661/2012) IN CASE O F GALILEO 14 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV NETHERLANDS B.V (GNBV) (SUCCESSOR OF GII AND PREDECESSOR OF THE APPELLANT) FOR THIRD BATCH OF YEARS I.E. AY 2003-04 TO AY 2006-0 7 REFRAINED FROM FORMING ANY OPINION ON GNBV'S PE/BC IN INDIA. RELEVA NT EXTRACT OF THIS ORDER IS REPRODUCED AS UNDER: (PLEASE REFER PARA 2 ON PAGE 313 OF PAPERBOOK PART 1 ) '2. WE BEGIN WITH A CAVEAT THAT A LIMITED ISSUE AND Q UESTION ARISES FOR CONSIDERATION IN THESE APPEALS AND WE ARE NOT REQUIRED ARE NOT PRONOUNCING ANY OPINION AND FINDING ON WHETHER THE A PPELLANT-ASSESSEE HAD A PERMANENT ESTABLISHMENT (PE) IN INDIA AND OTHER RELATED ISSUES. THE ONLY QUESTION AND ISSUE RAISED IN THESE APPEALS RELA TES TO PROFIT ATTRIBUTION TO INDIAN OPERATIONS ON THE ASSUMPTION THA T THE APPELLANT- ASSESSEE HAD A PE IN INDIA.' 31. AGAINST THE HON'BLE DELHI HIGH COURT ORDER FOR AY 2003-04 TO AY 2006-07, BOTH THE INCOME-TAX DEPARTMENT AND APPELLAN T'S PREDECESSOR ENTITY I.E. GNBV/TGDSBV FILED AN APPEAL BEFORE HON'B LE SUPREME COURT OF INDIA VIDE SLP NOS. 391 OF 2015, 3780 OF 2015, 3779 OF 2015 AND 1297 OF 2015. THESE SLPS ARE PENDING ADJUDICATION BY HON'BLE SU PREME COURT. 32. THUS, THE ISSUE OF APPELLANT'S PE/BC IN INDIA IS COVERED AGAINST IT BY THE ABOVE DECISIONS OF HON'BLE DELHI HIGH COURT AND HON'BLE DELHI ITAT IN APPELLANT'S PREDECESSOR'S CAS E. 14. HENCE, RESPECTFULLY FOLLOWING THE ESTABLISHED JUDICIA L PRONOUNCEMENT, WE HEREBY HOLD THAT THE ASSESSEE HAS BUSINESS CONNECTION AND PERMANENT ESTABLISHMENT (PE) IN INDIA. 15 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV ON THE ISSUE OF ATTRIBUTION TO THE PE IN INDIA: 15. THE ISSUE OF ATTRIBUTION IN INDIA IS COVERED IN FAV OUR OF COMPANY BY THE DECISIONS OF HON'BLE DELHI HIGH COURT AND DELHI ITA T IN COMPANY/ITS PREDECESSOR'S CASE FOR AYS. 1995-96 TO 2006-07. THE HON'BLE DELHI HIGH COURT AND THE DELHI ITAT IN COMPANYS OWN/ PREDECESSOR' S CASE, HAS HELD THAT ATTRIBUTION RATE TO THE ALLEGED INDIA PE IS 15 % OF GROSS BOOKING FEES. 16. FOR AY 2017-18 IN CASE OF COMPANYS SUCCESSOR ENTITY I. E., TIOL, THIS ISSUE ON ATTRIBUTION HAS BEEN HELD IN FAVOUR OF TIOL B Y DELHI ITAT VIDE ORDER DATED 27 SEPTEMBER 2021 (ITA NO. 163/DEL/2021) BY R ELYING ON THE DECISIONS OF HON'BLE DELHI HIGH COURT AND DELHI ITAT IN COMPANY/ITS PREDECESSOR'S CASE FOR AY 1995-96 TO AY 2006-07. 17. IN PARA 38 OF THE SAID ORDER READS AS UNDER: '38. AY 2017-18, PE ATTRIBUTION AT 15% OF GROSS REV ENUE LESS THE EXPENSES (AS ALREADY ALLOWED BY THE LD. AO AND LD. DRP), AS PER THE DECISION OF THE HON'BLE DELHI ITAT BENCHES AND HON'BLE DELHI HIGH COURT, REDU CES THE TAXABLE INCOME TO NIL AND THUS, NO INCOME IS TAXABLE IN INDIA. 18. THE ADJUDICATION OF THIS ISSUE TAKEN FROM ITA NO. 163/DEL/2021 DATED 27.09.20201 IN THE ASSESSEES OWN CASE WHICH IS AS UNDER: GROUND NO.6 IS COVERED IN FAVOUR OF THE APPELLANT BY VIRTUE OF THE APPLICATION OF THE DECISIONS OF HON'BLE DELHI ITAT AND HO N'BLE DELHI HIGH COURT IN CASE OF APPELLANT AND ITS PREDECESSOR ENTITIES I. E. GII AND TGDSBV. THE HON'BLE DELHI HIGH COURT AND HON'BLE DELHI ITAT IN APPELLANT'S OWN/ PREDECESSOR'S CASE I.E. GII AND GNBV, HAVE HELD THAT ATT RIBUTION RATE TO THE ALLEGED INDIA PE IS 15% OF GROSS BOOKING FEES AND SINCE INDIAN RELATED 16 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV EXPENSES ARE MORE THAN ATTRIBUTED GROSS BOOKING FEES TO THE PE IN INDIA, IT WOULD EXTINGUISH THE ASSESSMENT AS NO FURTHER INCOME IS TA XABLE IN INDIA. 34. THE ITAT IN THE CASE OF GALILEO INTERNATIONAL IN C (GII) (PREDECESSOR OF THE APPELLANT) IN THE FIRST BATCH OF 4 YEARS- AY 1995- 96 TO 1998-99 VIDE ITS ORDER DATED 30 NOV. 2007 (19 SOT 257 (DELHI) ON THE BASIS A FUNCTION, ASSETS AND RISK (FAR) ANALYSIS, HELD THAT ONLY 15% OF TH E REVENUE COULD BE ATTRIBUTED TO INDIA WHICH GOT COMPLETELY EXHAUSTED BY THE COMMISSION PAID TO THE INDIAN DISTRIBUTOR/ ITQPL, RESULTING IN NO INCO ME REMAINING TO BE TAXED IN INDIA. IT WAS HELD AS UNDER: '9. .....IN THE PRESENT CASE, WE FIND THAT ONLY PART OF CRS SYSTEM OPERATES OR FUNCTIONS IN INDIA. THE EXTENT OF WOR K IN INDIA IS ONLY TO THE EXTENT OF GENERATING REQUEST AND RECEIVING END -RESULT OF THE PROCESS IN INDIA. THE MAJOR FUNCTIONS LIKE COLLECTING THE DATABASE OF VARIOUS AIRLINES AND HOTELS, WHICH HAVE ENTERED INTO PCA WITH THE APPELLANT TAKES PLACE OUTSIDE INDIA. THE COMPUTER AT DE NVER IN USA PROCESSES VARIOUS DATA LIKE SCHEDULE OF FLIGHTS, TIMINGS, PRICING, THE AVAILABILITY, CONNECTION, MEAL PREFERENCE, SPECIAL FACIL ITY, ETC. AND THAT TOO ON THE BASIS OF NEUTRAL DISPLAY REAL TIME ON LINE TAKES PLACE OUTSIDE INDIA. THE COMPUTERS AT THE DESK OF TRAVEL AGENT IN IN DIA ARE MERELY CONNECTED OR CONFIGURED TO THE EXTENT THAT IT CAN PERFO RM A BOOKING FUNCTION BUT ARE NOT CAPABLE OF PROCESSING THE DATA OF ALL THE AIRLINES TOGETHER AT ONE PLACE. SUCH FUNCTION REQUIRES HUGE INV ESTMENT AND HUGE CAPACITY, WHICH IS NOT AVAILABLE TO THE COMPUTERS INSTALLE D AT THE DESK OF SUBSCRIBER IN INDIA.THE MAJOR PART OF THE WORK OR TO SA Y A LION'S SHARE OF SUCH ACTIVITY, ARE PROCESSED AT THE HOST COMPUTER IN DENVE R IN USA. THE 17 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV ACTIVITIES IN INDIA ARE ONLY MINUSCULE PORTION. THE APP ELLANT'S COMPUTER IN GERMANY IS ALSO RESPONSIBLE FOR ALL OTHER FUNCTIONS LIKE KEEPING DATA OF THE BOOKING MADE WORLDWIDE AND ALSO KEEPING TRACK OF ALL THE AIRLINES/HOTELS WORLDWIDE THAT HAVE ENTERED INTO PCA . THOUGH NO GUIDELINES ARE AVAILABLE AS TO HOW MUCH SHOULD BE INCOM E REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA, THE SAME HAS TO BE DETERMINED ON THE FACTUAL SITUATION PREVAILING IN EACH CASE. HOWEVER, BROADLY TO DETERMINE SUCH ATTRIBUTION ONE HAS TO LOOK INTO THE FACTORS LIKE FUNCTIONS PERFORMED, ASSETS USED AND RISK UNDERTAKEN. ON THE BASIS OF SUCH ANALYSIS OF FUNCTIONS PERFORMED, ASSETS USED AND RISK SHARED IN TWO DIFFERENT COUNTRIES, THE INCOME CAN BE ATTRIBUTED. IN THE PRESENT CASE, WE HAVE FOUND THAT MAJORITY OF THE FUNCTIONS ARE PERFORM ED OUTSIDE INDIA. EVEN THE MAJORITY OF THE ASSETS, I.E., HOST COMPUTER WH ICH IS HAVING VERY LARGE CAPACITY WHICH PROCESSES INFORMATION OF ALL THE PART ICIPANTS IS SITUATED OUTSIDE INDIA. THE CRS AS A WHOLE IS DEVELOPED AND MAINTAINED OUTSIDE INDIA. THE RISK IN THIS REGARD ENTIRELY RESTS WI TH THE APPELLANT AND THAT IS IN USA, OUTSIDE INDIA. HOWEVER, IT IS EQUALLY I MPORTANT TO NOTE THAT BUT FOR THE PRESENCE OF THE ASSESSEE IN INDIA AND T HE CONFIGURATION AND CONNECTIVITY BEING PROVIDED IN INDIA, THE INCOME W OULD NOT HAVE GENERATED. THUS THE INITIAL CAUSE OF GENERATION OF INCO ME IS IN INDIA ALSO. ON THE BASIS OF ABOVE FACTS WE CAN REASONABLY ATTRIBUTE 15 PER CENT OF THE REVENUE ACCRUING TO THE ASSESSEE IN RESPECT OF BOOKING S MADE IN INDIA AS INCOME ACCRUING OR ARISING IN INDIA AND CHARGEA BLE UNDER SECTION 5(2) READ WITH SECTION 9(1)(I) OF THE ACT.' (PARA 10 ON PAGE 224 OF PAPERBOOK PART 1) 18 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV '10. NEXT QUESTION TO BE DECIDED IS IF IT IS FOUND THAT THE INCOME ACCRUING IN INDIA IS CONSUMED BY THE PAYMENT MADE T O THE AGENTS IN INDIA, WHETHER ANY INCOME STILL IS LEFT TO BE TA XED IN INDIA. THE ACTIVITIES OF THE APPELLANT IN INDIA ARE ENTIRELY ROU TED THROUGH THE EFFORTS OF NMC NAMELY INTERGLOBE INDIA (P.) LTD. (INTERGLOB E). INTERGLOBE IS RESPONSIBLE FOR MONITORING THE ACTIVITIES OF THE SUBSCRIB ERS ENROLLED IN INDIA. THE REQUEST ORIGINATED FROM THE COMPUTERS AT TH E DESK OF TRAVEL AGENT IS ONCE AGAIN ROUTED THROUGH THE FACILITY OF PRO CESSING SUCH INFORMATION AT INTERGLOBE. IF INTERGLOBE FINDS THAT THE SUBSCRIBER ACCESSING THE CRS IS AUTHORIZED TO DO SO, THE REQUEST IS FU RTHER FORWARDED. INTERGLOBE IS ALSO RESPONSIBLE FOR ESTABLISH ING CONNECTIVITY OF THE COMPUTERS OF THE SUBSCRIBERS AND MAINTAINING THEM. IN TERGLOBE IS ALSO RESPONSIBLE FOR TRAINING OF THE SUBSCRIBERS IN RESPE CT OF USE OF CRS. FOR ALL THESE SERVICES RENDERED BY INTERGLOBE TO THE AP PELLANT, IT IS BEING PAID REMUNERATION IN TERMS OF DISTRIBUTION AGREEMENT. BROADLY THE ASSESSEE RECEIVES THREE 'EUROS' AS FEES PER 'NET BOOKING', I .E., GROSS BOOKING MINUS CANCELLATION. THE ASSESSEE PASSED ONE DOLLAR TO INTERGLOBE FOR EACH NET BOOKING PROCESSED THROUGH GALILEO SYSTEM BY SUBSCRIBER. THUS, IN RESPECT OF THE ACTIVITIES CARRIED OUT IN INDIA AND CONSIDERING THE INCOME ACCRUING IN INDIA, REMUNERATION PAID TO THE IND IAN AGENTS CONSUMES THE ENTIRE INCOME ACCRUING OR ARISING IN INDIA .' (PARA 18 ON PAGE 251 OF PAPERBOOK PART 1) '18WHILE DEALING WITH THE QUESTION AS TO WH AT IS SUCH PART OF INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OP ERATIONS CARRIED OUT IN INDIA, WE HAVE HELD THAT ONLY 15 PER CENT OF THE REVENUE GENERATED 19 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV FROM THE BOOKINGS MADE WITHIN INDIA IS TAXABLE IN I NDIA. THE SAME PROPORTION HAS TO BE ADOPTED HERE WHILE COMPUTING PRO FIT ATTRIBUTABLE TO THE PE. WE HAVE ALSO HELD THAT SINCE THE PAYMENT TO T HE AGENT IN INDIA IS MORE THAN WHAT IS THE INCOME ATTRIBUTABLE TO THE PE I N INDIA, IT EXTINGUISH THE ASSESSMENT AS NO FURTHER INCOME IS TAXABLE IN INDIA. IT IS TO BE NOTED THAT EVEN IN THE FIRST ASSESSMENT FRAMED B Y THE ASSESSING OFFICER, THE ENTIRE EXPENSES IN THE FORM OF REMUNERATI ON PAID TO INTERGLOBE WAS HELD AS ALLOWABLE DEDUCTION AND WAS REDU CED WHILE COMPUTING THE INCOME OF APPELLANT. IF THAT BE THE CAS E, THE INCOME ATTRIBUTABLE TO PE IN INDIA BEING LESS THAN THE REMUN ERATION PAID TO THE DEPENDENT AGENT, IT EXTINGUISHES THE ASSESSMENT AND REQU IRES NO FURTHER EXERCISE FOR COMPUTATION OF INCOME. WE ACCORDINGLY HOLD SO AND IN VIEW OF THE SAME THE INCOME OF THE APPELLANT WILL BE NIL. ' 35. THE REVENUE AUTHORITIES THEREAFTER FILED, (PARA 5 ON PAGE 260 OF PAPERBOOK PART 1) A MISCELLANEOUS APPLICATION (MA) BEFORE THE ITAT TO REVISE THE EARLIER ORDER ON THE GROUND THAT, EVEN AFTER HOLDING THAT THE APPELLANT'S PREDECESSOR I.E. GI I HAS A PE IN INDIA THE HON'BLE ITAT ERRED IN HOLDING THAT NO INCOME WAS ATTRI BUTED TO THE SAID PE. THE QUESTIONS POSED ALSO INCLUDED MANNER OF ATTRIBUTI ON I.E. WHETHER ATTRIBUTION IS ON SALES OR THE NET PROFITS. THE REVENUE AUTHORITIES CONTENDED THAT THE ATTRIBUTION SHOULD BE ON THE NET PROFITS AND NOT SALES - THIS CONTENTION OF THE REVENUE AUTHORITIES WAS REJECTED BY T HE HON'BLE ITAT VIDE ITS MA ORDER DATED 21 NOVEMBER 2008 (MA NO. 108/DEL/ 2008, 311 TO 318/DEL/2008 AND 220 TO 223/DEL/2008), IN CASE OF GII IN THE FIRST BATCH OF 4 YEARS- AY 1995-96 TO 1998-99, WHEREIN IT WAS HELD THAT FOR COMPUTATION OF INCOME OF AN INDIAN PE, FIRST STEP IS TO ATTRIBUTE THE REVENUES TO INDIA AND 20 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV THEN ALLOW DEDUCTION OF INDIA RELATED EXPENSES FROM SU CH ATTRIBUTED REVENUE. THE RELEVANT EXTRACT OF ORDER IS RE-PRODUCED AS UNDER: '5. THE NEXT CONTENTION OF APPLICANT IS THAT INSTEAD O F ESTIMATING OR APPORTIONING INCOME OR PROFITS THE TRIBUNAL HAS ATTRIB UTED THE REVENUE. IN OUR OPINION THIS IS NOT A MISTAKE APPARENT FROM RECORD. FOR COMPUTATION OF ANY INCOME, THE FIRST POINT IS TO APPORTION THE RE VENUE FROM THE OPERATIONS CARRIED OUT IN INDIA. UNLESS THE REVENUES AR E ATTRIBUTED, THE INCOME WHICH IS A SECOND STEP CANNOT BE ATTRIBUTED. HOWEV ER, AFTER APPORTIONING REVENUE, SINCE IT WAS FOUND THAT OUT OF T HE APPORTIONED REVENUE, THE REMUNERATION PAYABLE TO THE AGENT IN I NDIA EXCEEDS SUCH APPORTIONED REVENUE, NO FURTHER INCOME IS TAXABLE IN INDIA' '9. WE FIND THAT ALL ISSUES ARISING IN THE APPEAL HAVE BEENANSWERED. NEITHER ANY ARGUMENT NOR ANY GROUND IS LEFT OUT. IN VIEW OF OVERALL SITUATION IF THE TRIBUNAL HAS CONSCIOUSLY COM E TO THE CONCLUSION THAT NO INCOME ACCRUES IN INDIA AND IN RESPECT OF WHICH ELABORATE REASONS ARE GIVEN, IF THE APPLICANT DO NOT AGREE WITH THE REASONING, IT CANNOT BE SAID THAT ANY MISTAKE HAS CREPT IN THE ORDER OF THE TRIBUNAL WHICH IS RECTIFIABLE UNDER SECTION 254(2) OF THE ACT. WE THEREFORE DECLINE TO INTERFERE'. 36. THE HON'BLE DELHI HIGH COURT IN CASE OF GALILEO IN TERNATIONAL INC (GII) (PREDECESSOR OF THE APPELLANT) IN THE FIRST BATCH OF 4 Y EARS- AY 1995- 96 TO 1998-99 UPHELD THE DECISION OF HON'BLE DELHI ITAT FOR THESE YEARS, VIDE ITS ORDER DATED 25TH FEB 2009 (ITA NO. 851 TO 856 OF 20 08, 859 TO 860 OF 2008), IT WAS HELD AS UNDER: 21 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 'THE TRIBUNAL THEREAFTER DISCUSSED THE PRINCIPLE WHICH IS TO BE FOLLOWED IN APPORTIONING THE INCOME-TAX ACCRUING IN INDIA AND THE INCOME ACCRUING OUTSIDE INDIA. THE TRIBUNAL FOUND THAT ONLY A PART O F CRS ORDER OPERATES AND FUNCTIONS IN INDIA. THE EXTENT OF WORKING IN IN DIA IS ONLY TO THE EXTENT OF CHANNELIZING THE REQUEST AND RECEIVING THE RESULT OF THE PROCESS IN INDIA AND THE MAJOR FUNCTIONING AND COLLECTING THE DATA BASE OF VARIOUS AIRLINES AND HOSTELS WHICH HAVE ENTERED INTO PCA WITH THE RESPO NDENT TAKES PLACE OUTSIDE THE INDIA. THE TRIBUNAL ALSO TOOK INTO CONSIDER ATION THE FACT THAT THE COMPUTER OF DENVER AT USA PROCESSES VARIOUS DATA LIKE SCHEDULE OF FLIGHTS, TIMINGS, PRICING, THE AVAILABILITY, CONNECTIO N, MEAL PREFERENCE, SPECIAL FACILITY, ETC. AND THAT TOO ON THE BASIS OF NEU TRAL DISPLAY REAL TIME ON LINE TAKES PLACE OUTSIDE INDIA. INSOFAR AS THE ROLE PLAYED IN INDIA IS CONCERNED, THAT IS LIMITED TO THE COMPUTERS AT THE DESK W HICH ARE MERELY CONNECTED OR CONFIGURED TO THE EXTENT THAT IT CAN PERFO RM A BOOKING FUNCTION BUT ARE NOT CAPABLE OF PROCESSING THE DATA OF A LL THE AIRLINES TOGETHER AT ONE PLACE. THE TRIBUNAL WAS ALSO INFLUENCE D BY ANOTHER IMPORTANT FACT VIZ., SUCH FUNCTIONING REQUIRES HUGE INVE STMENT AND HUGE CAPACITY WHICH IS NOT AVAILABLE IN THE COMPUTERS INSTALLED AT THE DESK OF THE SUBSCRIBER IN INDIA. ON THIS BASIS, THE TRIBUNAL F ORMED THE OPINION THAT MAJOR PART OF THE WORK ARE PROCESSED AT THE HOST COMPUT ER IN DENVER IN USA AND THE ACTIVITIES IN INDIA ARE ONLY MINUSCULE POR TION. TAKING INTO CONSIDERATION ALL THESE FACTORS THE TRIBUNAL WAS OF THE O PINION THAT ONE COULD REASONABLY ATTRIBUTE 15 PER CENT OF THE 'REVENUE ' ACCRUING TO THE RESPONDENT IN RESPECT OF BOOKINGS MADE IN INDIA AS MAJ OR EXPENSES IN THAT BEHALF IS INCURRED IN ACTIVITIES CARRIED OUT IN US .' (PLEASE REFER PARA ON PAGE 272 OF PAPERBOOK PART 1) 22 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 'THUS, THE APPROACH ADOPTED BY THE TRIBUNAL WAS TO FI RST ARRIVE AT THE FIGURE RELATING TO THE REVENUE GENERATED IN INDIA A ND ABROAD. IT CONCLUDED THAT OUT OF THE REVENUE ACCRUED TO THE RESPONDENT IN RESPECT OF THESE BOOKINGS 15 PER CENT THEREOF SHOULD BE ATTRIBUTED TO INDIA, KEEPING IN VIEW A VERY MINOR PORTION OF THE ACTIVITY BEING CARRI ED OUT HERE' (PLEASE REFER PARA ON PAGE 273 OF PAPERBOOK PART 1) 'AFTER FORMULATING THE AFORESAID QUESTION, THE TRIBUN AL ANSWERED THE SAME HOLDING THAT SINCE THE REVENUE ATTRIBUTABLE IN RESPE CT OF THE BOOKING MADE IN INDIA IS ONLY 0.45 EURO (15 PER CENT OF EURO 3) A ND COMMISSION PAID TO INTERGLOBE WAS EURO 1, THERE WAS NO INCOME WHICH WAS TA XABLE IN INDIA.' 'THE TRIBUNAL IN THIS BEHALF HAS NOTED THAT THE ENTIR E PAYMENT MADE BY THE RESPONDENT TO THE INTERGLOBE HAS BEEN ALLOWED A S EXPENSES WHILE COMPUTING TOTAL INCOME OF THE RESPONDENT. AFTER ARRI VING AT THESE FINDINGS OF FACTS, THE TRIBUNAL REFERRED TO CIRCULAR NO. 23 OF 23-7-1969 WHICH PRESCRIBES THAT NO INCOME CAN BE FURTHER CHARGED TO TAX I N INDIA. TO SAME EFFECT IS THE JUDGMENT OF THE SUPREME COURT IN MORGAN STANLEY & CO. INC.'S CASE (SUPRA)' (PLEASE REFER LAST PARA ON PAGE 276 OF PAPERBOOK PART 1) 'WE, THEREFORE, ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES IN THESE MATTERS WHICH NEEDS ANY FURTHER DETERMINATION BY THIS C OURT. THESE APPEALS ARE ACCORDINGLY DISMISSED IN LIMINE.' 37. AGAINST THE HON'BLE DELHI HIGH COURT ORDER FOR AY 1995-96 TO AY 1998-99, BOTH THE INCOME-TAX DEPARTMENT AND APPELLAN T'S PREDECESSOR ENTITY I.E. GII FILED AN APPEAL BEFORE HON'BLE SUPRE ME COURT OF INDIA VIDE 23 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV SLP NO. 6511 TO 6518/2010. THE HON'BLE SUPREME COURT VIDE ITS ORDER DATED 22 NOVEMBER 2019 DISMISSED (AS WITHDRAWN) SLP NOS. 6512 TO 6515/2010 AND 6517 TO 6518/2010 PERTAINING TO AY 1995-96, 199 6-97 AND AY 1998-99 ON ACCOUNT OF LOW TAX EFFECT, IN CONSONANCE WITH CIRCULAR NO. 17 OF 2019, LEAVING THE QUESTION OF LAWS OPEN. 38. AY 2017-18, PE ATTRIBUTION AT 15% OF GROSS REVEN UE LESS THE EXPENSES (AS ALREADY ALLOWED BY THE LD. AO AND LD. DRP), AS PE R THE DECISION OF THE HON'BLE DELHI ITAT BENCHES AND HON'BLE DELHI HIGH COURT, REDUCES THE TAXABLE INCOME TO NIL AND THUS, NO INCOME IS TAXABLE IN INDIA. 19. HENCE, WE HEREBY HOLD THAT THE CORRECT ATTRIBUTION RATE BE TAKEN AT 15% OF THE GROSS BOOKING FEE FOR THE YEARS IN APPEAL B EFORE US. 20. AS PER THE TABLE ABOVE, INDIAN RELATED EXPENSES AR E MORE THAN ATTRIBUTED GROSS BOOKING FEES TO THE PE IN INDIA, IT W OULD EXTINGUISH THE ASSESSMENT OF TAX AS NO FURTHER INCOME IS TAXABLE IN INDIA . THE AO MAY CHECK THE CORRECTNESS OF THE FIGURES BEFORE GIVING EFFECT T O THIS ORDER. ON THE ISSUE OF ALLOWABILITY OF DISTRIBUTION EXPENSES : 21. FOR AYS 1995-96 TO 2006-07, THE ASSESSING OFFICER WAS ALLOWED THE DISTRIBUTION EXPENSES INCURRED BY THE COMPANY. THE DEL HI ITAT AND HONBLE DELHI HIGH COURT FOR AY 1995-96 TO AY 2006-07 IN THE PREDECESSOR COMPANY NAMELY GALILEO INTERNATIONAL INC. ALLOWED 100% DEDU CTION OF DISTRIBUTION EXPENSES AND HELD OVERALL TAXABILITY AS NIL OF THE ALL EGED PE IN INDIA. 22. FOR AY 2016-17 AND AY 2017-18 IN CASE OF COMPANY S SUCCESSOR ENTITY NAMELY, TRAVELPORT INTERNATIONAL OPERATIONS LTD., TH E ASSESSING OFFICER AND 24 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV LD. DRP ALLOWED DEDUCTION OF DISTRIBUTION EXPENSES (70% ) FROM ATTRIBUTED REVENUE. 23. FOR AY 2012-13 (ONE OF YEARS IN CAPTIONED MATTER) , BOTH LD. DRP AND THE ASSESSING OFFICER HAS ALLOWED 100% DISTRIBUTION EXPEN SES BY RELYING ON HONBLE DELHI HIGH COURTS DECISION IN CASE OF COMPANY/IT S PREDECESSOR COMPANY FOR AY 1995-96 TO AY 2006-07. THE RELEVANT E XTRACT IS AS UNDER: THE PANEL TAKING NOTE OF THE ABOVE JURISDICTIONAL HIGH COURT ORDER IN THE A OWN CASE IS OF THE FIRM VIEW THAT ANY DEPARTURE FROM TH E STATED STAND OF THE HONBLE HIGH COURT OF DELHI SHALL TANTAMOUNT TO JUDICIAL IND ISCIPLINE AND BREACH OF DOCTRINE OF BINDING PRECEDENT AND CONSISTENCY. RESPECTFULLY FOLLOWING THE VERDICT OF THE HON ME COURT, THE PANEL IS PLEASED TO CONCEDE THE GROU NDS OF APPEAL PRESSED BY A. 24. FOR AY 2015-16, THE LD. DRP IN ITS DIRECTION IN C OMPANYS OWN CASE ACCEPTED THAT DISTRIBUTION EXPENSES ARE INTEGRAL EXPENSES FOR CRS COMPANIES LIKE COMPANY AND THEREFORE A DEDUCTION SHOULD BE ALLO WED OF SUCH EXPENSES. THE RELEVANT EXTRACT OF DRP DIRECTIONS IS ENUMERATED A S UNDER: 3.5 ....PERUSAL OF VARIOUS CASES OF CRS SYSTEMS OP ERATORS SUCH AS AMADEUS, SABRE AND TRAVEL PORT (GALILEO) IT IS SEEN THAT AMOUNTS V ARYING: FROM 25% TO 70% IS PAID / PAYABLE TO THE GPS/ NMC COMPANIES IN INDIA. IN SO ME CASES SUCH COMPANIES CLAIM TO BE LOCATED OUTSIDE INDIA. BE THAT AS IT MA Y, SUCH PAYMENTS ARE MADE BY THE CRS COMPANY OF THEIR AFFILIATES FOR MAINTAINING THE NETWORK OF SUBSCRIBERS / TRAVEL AGENTS WHO ARE THE REVENUE EARNERS AS POINTS OF SALE. SUCH GPS OPERATORS, INTER GLOBE TO IN THE PRESENT CASE ARE THE NODAL AG ENCY IN A GIVEN TERRITORY TO ESTABLISH AND DEVELOP THE NETWORK OF SUBSCRIBERS AN D THE REQUISITE IT INFRASTRUCTURE AND SERVERS FOR THE BUSINESS. WE ARE OF THE VIEW TH AT WHERE SUCH DIRECT EXPENSES ATTRIBUTED TO THE REVENUE, EARNED FROM THE SOURCES OF INDIA ARE IDENTIFIABLE, THEY NEED TO BE DEDUCTED AT SOURCE AND IN THE FIRST PLAC E. 25 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 25. THUS, IT WAS DULY ACCEPTED BY THE REVENUE AUTHORITI ES THAT THE DISTRIBUTION EXPENSES INCURRED BY THE ASSESSEE IS FOR MAINT AINING THEIR NETWORK OF SUBSCRIBERS/ TRAVEL AGENTS AND THUS, AN INSEP ARABLE PART OF THE BUSINESS AND THUS IT CANNOT BE DENIED THAT THE EXPENSES HA VE BEEN INCURRED FOR THE PURPOSE OF THE BUSINESS. 26. IT IS ALSO AN ACCEPTED FACT THAT THERE IS ONLY ONE BUSINESS OF THE COMPANY I.E., THE CRS BUSINESS. THEREFORE, ALL EXPENSES INCURRED BY COMPANY INCLUDING DISTRIBUTION EXPENSES CAN ONLY BE REL ATED TO SUCH BUSINESS. THUS, THE AOS ARGUMENT THAT DISTRIBUTION FEES IS NOT RELATED TO ITS BUSINESS SINCE ITS NOMENCLATURE IN INVOICES IS SPECIFIED AS DA TA PROCESSING CHARGES INSTEAD OF DISTRIBUTION FEES LACKS BASIC FALLACY. THE SIMILAR ISSUE HAS COME UP BEFORE THE DELHI ITAT IN CASE OF ANOTHER CRS E NTITY I.E., AMADEUS IT GROUP SA FOR AY 2007-08 TO AY 2012-13 DATED 26 O CTOBER 2020 (ITA NO. 4906/DEL/2010, ITA NO. 5150/DEL/2011, ITA NO. 60/DE L/2013, ITA NO. 1824/DEL/2014, ITA NO. 1204/DEL/2015 AND ITA NO. 16 26/DEL/2016, WHEREIN THE DISTRIBUTION EXPENSES INCURRED BY THE ASSESSEE WERE ALLOWED. 27. RELEVANT EXTRACT IS RE-PRODUCED AS UNDER: '17. WE HAVE GONE THROUGH THE HISTORY OF SUCH EXPEN DITURE AND FIND THAT THE ADDITION IS BEING MADE OWING TO CONFUSION IN THE DE SCRIPTION OF THE SERVICES AS 'EXPORT OF PROCESSED DATA/SOFTWARE OR' DISTRIBUTIO N FEE.' '18. THIS EXPENDITURE HAS BEEN ALLOWED BY THE CO-OR DINATE BENCH OF TRIBUNAL FROM THE ASSESSMENT YEARS 1996-97 TO 2006-07. SINCE, THE FACTS HAVE NOT BEEN DISPUTED IN THE ABSENCE OF ANY MATERIAL CHANGE, WE HEREBY AL LOW THE CLAIM OF DISTRIBUTION EXPENSES. 26 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 28. IT IS ALSO ON RECORD THAT THE DISTRIBUTION COMMISSIO N HAS BEEN MADE TO RESIDENT OF INDIA AND DULY OFFERED TO TAX. HENCE, THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED IN THE INSTANT CASE. SINCE, THERE IS NO CHANGE IN THE FACTUAL MATRIX AND LEGAL PROPOSITION, WE HEREBY ALLOW THE CLAIM OF THE ASSESSEE. ALLOWABILITY OF OTHER EXPENSES: 29. THE FOLLOWING TABLE DEPICTS THE POSITION OF NEGATI VE PROFITS COMPUTED POST ALLOWANCE OF BOOKING FEE AND DISTRIBUTION EXPENSES: PARTICULARS AY 2007-08 AY 2008-09 AY 2009-10 AY 2010-11 AY 2011-12 AY 2012-13 AY 2014-15 BOOKING FEE (USD) 55,029,465 70,035,529 66,511,669 75,676,788 79,826,594 77,519,539 67,339,472 15% OF BOOKING FEE 8,254,420 10,505,329 9,976,750 11,351,518 11,973,989 11,627,931 10,100,921 LESS: DISTRIBUTION EXPENSES (USD) 37,136,627 47,658,043 45,981,980 51,036,204 58,011,833 56,922,872 49,691,247 NET LOSS POSITION (USD) (28,882,207) (37,152,714) (36,005,230) (39,684,686) (46,037,844) (45,294,941) (39,590,326) 30. THE AO DISALLOWED ENTIRE AMOUNT (100%) CLAIMED BY THE ASSESSEE ON ACCOUNT OF OTHER EXPENSES SUCH AS ROYALTY, VENDOR COST, LICEN SE FEE OWING TO NON-DEDUCTION OF WITHHOLDING TAX. FROM THE ABOVE TA BLE, THE POSITION OF THE PROFIT/LOSS OF THE ASSESSEE IS EVIDENT. AFTER DEDUCTION OF THE DISTRIBUTION EXPENSES AND 15% BOOKING FEE, THE ASSESSEE IS LEFT WITH NO TAXABLE PROFIT. CONSIDERING THE DISALLOWANCE @ 30% U/S 40(A)(IA) IN AC CORDANCE WITH THE LAW LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. HERBALIFE INTERNATIONAL INDIA (P.) LTD. 69 TAXMAN.COM 205 WHER EIN THE HIGH COURT STRUCK DOWN DISCRIMINATING TREATMENT OF DISALLOWANCE U/S 4 0(A)(I) AND SECTION 40(A)(IA) OF THE ACT BY RELYING ON ARTICLE 2 6(3) OF THE DTAA BETWEEN INDIA AND US, WE HEREBY DIRECT THE AO TO RE-COMPUTE T HE NET LOSSES COMPUTING THE DISALLOWANCE ON OTHER EXPENSES @ 30%. 27 ITA NOS. 5601/DEL/2010, 426/DEL/2012 ITA NOS.357/DEL/2013, 746/DEL/2014 ITA NOS.2101 & 6162/DEL/2015 CO NO. 01/DEL/2021 ITA NO. 6515/DEL/2017 ITA NOS. 3032, 3033 & 3034/DEL/2016 TRAVELPORT GLOBAL DISTRIBUTION SYSTEM BV 31. ADDITIONAL GROUNDS TAKEN UP BY THE ASSESSEE STANDS WI THDRAWN, HENCE NOT REQUIRED TO BE ADJUDICATED. 32. CROSS OBJECTION NO. 1 & 2 IN ITA NO. 6162/DEL/2015 FOR A.Y. 2012-13 ARE INFRUCTUOUS IN VIEW OF THE ADJUDICATION ABOVE. 33. CROSS OBJECTION NO. 3 IN ITA NO. 6162/DEL/2015 FOR A.Y. 2012-13- DUE CREDIT FOR THE TDS BE GIVEN. 34. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE AND CO ARE ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/10/2021. SD/- SD/- (KUL BHARAT) ( DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 13/10/2021 *SUBODH KUMAR, SR. PS* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR