SABRE ASIA PACIFIC PTE LTD, MUMBAI V. DCIT (IT) 1(1)(1), MUMBAI

ITA 486/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0305 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 31-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Keywords: Business income; Transfer pricing; Double taxation relief; International transaction; Rule of consistency; Deemed to accrue or arise in india; Additional evidence; Permanent establishment; Initiation of penalty proceedings; Wholly owned subsidiary
• Section: 143(3); 244A; 234B; 154

Judgement Text

P A G E | 1 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI G.S.PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO . 486 /MUM/2016 ./ I.T.A. NO.4882/MUM/2015 ./ I.T.A. NO.7367/MUM/2010 ./ I.T.A. NO.2120/MUM/2014 ./ I.T.A. NO.7400/MUM/2012 ./ I.T.A. NO.1704/MUM/2015 ./ I.T.A. NO.8479/MUM/2011 ( / ASSESSMENT YEAR S : 2005 - 06 TO 2011 - 12) SABRE ASIA PACIFIC P TE. LTD. (EA R LIER KNOWN AS M/S ABACUS INTERNATIONAL PTE LTD.) , ABACUS PLAZA, 3 TAMPINES CENTRAL I, # 08 - 01 SINGAPORE 529540 C/O DELOITTE HASKINS & SELLS LLP INDIA BULLS FINANCIAL CENTRE TOWER 3, 28 TH FLOOR, SENAPATI BAPAT MARG, ELPHINSTONE (W), MUMBAI - 400 013 / VS. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) - 1(1)(1), ROOM NO. 117, 1 ST FLOOR, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400 038 . ./ ./ PAN/GIR NO. AABCA6590M ( / APPELLANT ) : ( / RESPONDENT ) ./ I.T.A. NO.4780/MUM/2015 ( / ASSESSMENT YEAR: 2005 - 06 ) DCIT (IT) - 1(1)(1) ROOM NO. 117, 1 ST FLOOR, SCINDIA HOUSE, N.M. ROAD, BALLARD ESTATE, MUMBAI 400 038 / VS. M/S ABACUS INTERNATIONAL PTE, LTD. C/O DELOITTE HASKINS & SELLS 264 - 265 VASWANI CHAMBERS DR. A.B. ROAD, WORLI MUMBAI 400018. ./ ./ PAN/GIR NO. AABCA6590M ( / APPELLANT ) : ( / RESPONDENT ) P A G E | 2 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 / APPELLANT BY : SHRI NITESH JOSHI , A.R / RESPONDENT BY : SHRI V. JANARDHANAN , D.R / DATE OF HEARING : 23.1 1.2017 / DATE OF PRONOUNCEMENT : 16 .0 2 .2018 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER THE PRESENT SET OF CROSS APPEALS FILED BOTH BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY THE CIT(A) - 55, MUMBAI FOR A . YS 2005 - 06 TO 2011 - 12. TH E ASSESSEE BEING AGGRIEVED WITH THE AFORESAID ORDERS OF THE CIT(A) IS IN APPEAL BEFORE US IN ALL OF THE AFOREMENTIONED YEARS , WHILE FOR THE REVENUE IS I N APPEAL ONLY AGAINST THE ORDER OF THE CIT(A) FOR A . Y 2005 - 06. THAT AS COMMON ISSUE S ARE INVOLVED IN THE AFOREMENTIONED AP P EALS , THEREFORE, THE SAME ARE BEING TAKEN UP AND DISPOSED OF TOGETHER BY WAY OF A CONSOLIDATE ORDER. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE FOR A . Y 2005 - 0 6. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: P A G E | 3 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 ITA NO. 4882/MUM/2015 AY: 2005 - 06 THE APPELLANT OBJECTS TO THE ORDER DATED 30 MARCH 2015 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) - 55, MUMBAI ['CIT(A)'] FOR THE AFORESAID ASSESSMENT YEAR INTER - ALIA ON THE FOLLOWING GROUNDS: 1. BUSINESS CONNECTION / PERMANENT ESTABLISHMENT ('PE') IN INDIA 1.1 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE APPELLANT HAD A PE IN INDIA IN TER MS OF ARTICLES 5(1) AND 5(8) OF THE INDIA - SINGAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTAA'). 2. INCOME ATTRIBUTABLE TO PE 2.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER ('AO') OF TREATING A SUM OF RS. 33,61,54,184/ - (GROSS RECEIPTS OF RS. 43,11,16,273/ - LESS MARKETING SERVICES FEES OF RS. 9,49,62,089/ - ) AS INCOME ATTRIBUTABLE TO THE PE IN INDIA AND COMPUTING THE INCOME LIABLE TO TAX IN INDIA AS RS. 3,36,15,419/ - (10% OF RS. 33,61,54,184/ - ). 2.2 THE LEARNED CIT(A) ERRED IN CALCULATING THE INCOME LIABLE TO TAX OF RS. 3,36,15,419/ - ON PRESUMPTIVE BASIS BY ESTIMATING THE PROFIT MARGIN OF THE APPELLANT AS 10% OF THE RECEIPTS ATTRIBUTABLE TO INDIAN OPERATIONS OF RS. 33,61,54,184/ - . 2.3 THE CIT(A) HAS E RRED IN HOLDING THAT THE ESTIMATION OF INCOME OF THE APPELLANT BY THE AO OF OVERALL REVENUES FROM INDIAN OPERATIONS IS JUSTIFIED AND CORRECT. 2.4 THE LEARNED CIT(A) ERRED IN HOLDING THAT IF ANY DEDUCTION OF MARKETING SERVICES FEES CAN BE CLAIMED BY THE APPELLANT, IT CAN BE CLAIMED ONLY AGAINST THE REVENUES FROM INDIA OPERATIONS AND NOT AGAINST THE INCOME ESTIMATED BY THE AO ONLY AT 10% OF THE TOTAL REVENUES. 2.5 THE LEARNED CIT(A) ERRED IN OBSERVING THAT THE ESTIMATION OF 10% OF OVERALL REVENUES FROM INDIAN OPERATIONS AS PER RULE 10 OF INCOME - TAX RULES, 1962 AS INCOME OF APPELLANT HAS BEEN UPHELD BY INCOME - TAX APPELLATE TRIBUNAL ('ITAT') WITHOUT APPRECIATING THAT WHILE DECIDING THE ISSUE ON ATTRIBUTION OF INCOME, THE ITAT HAS NOT RELIED ON RULE 10. 2.6 THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE ITAT DECISION IN THE APPELLANT'S OWN CASE FOR EARLIER YEARS AND DELHI HIGH COURT JUDGMENT IN THE CASE OF GALILEO INTERNATIONAL INC. (336 ITR 264) DESPITE OF NO CHANGE IN FACTS. 3. REIMBURSEMENT O F EXPENSES 3.1 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EXPENSES REIMBURSED BY ABACUS DISTRIBUTION SYSTEMS (INDIA) PVT. LTD. (ADSILL) AMOUNTING TO RS.2,05,49,465/ - ARE PART OF BUSINESS INCOME OF THE APPELLANT AND THEREBY TAXING RS. 20,54,946/ - (I.E. 10% OF RS.2,05149,465/ - ). 3.2 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE EXPENSES REIMBURSED BY ADSIL WERE TOWARDS EXPENSES INCURRED BY THE P A G E | 4 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 APPELLANT ON LINE CHARGES, INSTALLATION CHARGES, SERVICE CHARGES AND OTHER EXPENSES AND IN THE NATURE OF PURE REIMBURSEMENT NOT HAVING ANY ELEMENT OF INCOME / SERVICE. 3.3 THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE ADDITIONAL EVIDENCE FILED BY THE APPELLANT. 3.4 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT EVEN IF THE REIMBURSEMENT IS CONSIDERED AS PART OF BUSINESS INCOME, THERE SHOULD NOT BE ANY INCOME CHARGEABLE TO TAX SINCE THE EXPENDITURE PAID BY THE APPELLANT (I.E. MARKETING SERVICES FEES PAID TO ADS IL) IS SUFFICIENT TO ABSORB ITS INCOME. 3.5 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE DECISION OF THE ITAT IN APPELLANT'S OWN CASE FOR AY 2004 - 05. 4. APPLICABILITY OF ARTICLE 24 OF INDIA - SINGAPORE TAX TREATY ('DTAA') AND INTEREST INCOME 4.1 THE LEARNED CIT(A) ERR ED IN UPHOLDING THE ORDER OF THE AO TO THE EFFECT THAT THE BENEFIT OF ARTICLE 24 OF THE DTAA IS NOT AVAILABLE TO THE APPELLANT. 4.2 THE LEARNED CIT(A) ERRED IN HOLDING THAT TAX SHOULD BE LEVIED OIL INCOME OF RS. 3,95,453/ - @ 20% BY APPLYING THE PROVISIONS OF SECTION L15A OF THE ACT INSTEAD OF 15% AS PER DTAA. 5. TRANSFER PRICING ADJUSTMENT ON ADVANCES 5.1 THE LEARNED CIT(A) ERRED IN CONFIRMING A TRANSFER PRICING ADJUSTMENT OF RS.1,30,38,944/ - UNDER SECTION 92CA(4), IN RESPE CT OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT DURING THE YEAR ENDED 31 MARCH 2005. 5.2 THE LEARNED CIT(A) WHILE DETERMINING THE ARM'S LENGTH INTEREST RATE ERRED IN NOT APPRECIATING THE BUSINESS AND ECONOMIC CIRCUMSTANCES PREVAILING AT THE TIME OF PROVIDING THE INTEREST FREE LOAN OF RS.12,41,80,420/ - BY THE APPELLANT TO ADSIL IN THE PROPER PERSPECTIVE. 5.3 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING / CONSIDERING THAT IN RESPECT OF THE ADJUSTMENT OF RS.1,30,38,944/ - TO THE TOTAL INCOME OF THE APPELLANT REPRESENTING ALLEGED ARM'S LENGTH INTEREST ON THE INTEREST - FREE LOAN GRANTED BY THE APPELLANT TO ADSIL, NO CORRESPONDING DEDUCTION IS ALLOWED TO ADSIL IN ITS TAX RETURN OR ASSESSMENTS, AND ACCORDINGLY AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. 5.4 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) ERRED BY NOT ALLOWING CORRESPONDING DEDUCTION OF THE ALLEGED ARM'S LENGTH INTEREST OIL ON THE INTEREST FREE LOAN GRANTED BY THE APPELLANT IN THE HANDS OF ADSIL. 5.5 THE LEARNED CIT (A) ERRED BY NOT CONSIDERING THE FACT THAT IF THE APPELLANT HAD CHARGED INTEREST INSTEAD OF THE LOAN BEING INTEREST FREE THERE WOULD BE LOSS TO REVENUE OF INDIA, CONSIDERING THE DEDUCTIBILITY OF THE INTEREST EXPENSE IN THE HANDS OF THE BORROWER (I.E. ADSIL) AND LOW WITHHOLDING TAX IN RESPECT OF INTEREST DUE TO THE APPELLANT. P A G E | 5 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 5.6 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEARNED CIT(A) ERRED IN LAW BY USING PRIME LENDING RATE INSTEAD OF LIBOR FOR DETERMINING THE ARM'S LENGTH INTEREST AMOUNT. 5.7 THE LEARNED CIT(A) ERRED IN APPLYING THE RATE OF 40% ON THE INTEREST INCOME AS AGAINST THE RATE PRESCRIBED IN SECTION L15A OF THE ACT. 5.8 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT EVEN IF THE INTEREST INCOME IS CONSIDERED AS PART OF BUSINESS INCOME, THERE SHOULD NOT BE ANY INCOME CHARGEABLE TO TAX SINCE THE EXPENDITURE PAID BY THE APPELLANT (I.E. MARKE TING SERVICE FEES PAID TO ADSIL) IS SUFFICIENT TO ABSORB ITS INCOME AND ACCORDINGLY THERE WILL BE NO LOSS TO THE REVENUE. 6. LEVY OF INTEREST UNDER SECTION 234B 6.1 THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE A . O THAT INTEREST OF RS. 76.83,037/ - SHOULD BE LEVIED UNDER SECTION 23413 OF THE ACT. 6.2 THE LEARNED DCIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN APPELLANTS OWN CASE FOR LEVY OF INTEREST UNDER SECTION 234B OF THE ACT. 7. GENERAL 7. 1 EACH ONE OF THE ABOVE G ROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 7.2 THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 2. THE REVENUE ON THE OTHER HAND ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: 1. WHILE HOLDING THAT THE AMOUNT RECEIVED FROM M/S ABACUS DISTRIBUTION SYSTEM INDIA LIMITED IN THE FORM OF LINE CHARGE, INSTALLATION CH ARGES, SERVICE CHARGES AND OTHER CHARGES ARE NOT IN THE NATURE OF REIMBURSEMENT OF EXPENSES , WHETHER LD. CIT(A) HAS ERRED IN FAILING TO EXPRESSLY DIRECT THE ASSESSING OFFICER TO TAX THE SAID RECEIPTS AS BUSINESS INCOME AS WAS DONE BY HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR A.Y. 2004 - 05. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) BE SET ASIDE ON THE ABOVE GROUNDS AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHI CH MAY BE NECESSARY. 3 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY RESIDENT OF SINGAPORE ENGAGED IN THE BUSINESS OF PROMOTION, DEVELOPMENT, OPERATION, MARKETING AND MAINTENANCE OF A P A G E | 6 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 COMPUTERIZED RESERVATION SYSTEM ( FOR SHORT CRS). THE PRIMARY BUSINESS OF THE ASSESSEE IS TO MAKE AIRLINE RESERVATION S FOR AND ON BEHALF OF THE PARTICIPATING AIRLINES BY USING THE CRS. THE PARTICIPATING AIRLINES PROVIDE THE NECESSARY INFORMATION, WHICH IS DISPLAYED TO THE TRAVEL AGENTS THROUGH OUT THE WORLD SO THAT THEY COULD GUIDE THEIR CUSTOMERS TO MAKE THE NECESSARY REQUESTS FOR BOOKING OF TICKETS THROUGH THE CRS. THE ASSESSEE LICENSE S THE RIGHT TO MARKET THE CRS TO A COMPANY IN EACH OF THE ASIA PACIFIC COUNTRIES , I.E A NATIONAL MARKE TING COMPANY ( FOR SHORT NMC ), WHICH IN TURN MARKET S THE CRS DIRECTLY TO THE TRAVEL AGENTS. THE ASSESSEE ALSO SOLICITS THE PARTICIPATION OF THE TRAVEL RELATED VENDORS, E.G AIRLINES, TOUR OPERATORS, CAR RENTAL AGENCIES AND HOTELS, SO AS TO LIST THEIR SERVICES IN THE CRS IN ORDER TO ENABLE THE TRAVEL AGENTS TO MAKE BOOKING FOR THEIR SERVICES THROUGH THE CRS. THE AIRLINES /TRAVEL - RELATED VENDORS PAY T O THE ASSESSEE A FEE FOR EACH OF THE BOOKING MADE BY THE TRAVEL AGENTS. THAT FOR EACH OF THE BOOKING MADE THROUGH THE NMCS SUBSCRIBERS COMMISSION IS PAID BY THE ASSESSEE TO THE NMC . THE ASSESSEE HAD LICENSED ITS WHOLLY OWNED INDIAN SUBSIDIARY COMPANY, VIZ . ABACUS DISTRIBUTION SYSTEM (INDIA) LTD. ( FOR SHORT ADSIL ) AS ITS NMC IN INDIA. 4 . THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, VIZ. A . Y 2005 - 06 ON 30.10.2005, DECLARING TOTAL INCOME OF RS.3,95,453/ - . D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD RECEIVED TOTAL FEES OF RS.41,03,60,052/ - ( USD 95,05,676/ - @ 43.17) IN RESPECT OF ITS ACTIVITY OF PROVIDING A IRLINE R ESERVATION S IN INDIA. THE ASSESSEE FURTHER CLAIM ED TO HAVE PAID AN AMOUNT OF RS.10,30,00,289/ - TO ADSIL BY WAY OF COMMISSION FOR THE MARKETING SERVICES RENDERED BY THE SAID NMC . P A G E | 7 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 5 . THE ASSESSEE ON BEING CALLED UPON BY THE A.O TO EXPLAIN THE REASON FOR NOT OFFERING THE FEES RECEIVE D FROM PROVIDING THE AI RLINE R ESERVATION S IN INDIA FOR TAX, SUBMITTED THAT AS IT DID NOT HAVE ANY P ERMANENT E STABLISHMENT ( FOR SHORT PE) IN INDIA WITHIN THE MEANING OF ARTICLE 5 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND SINGAPORE , THEREFORE, THE INC OME , IF ANY, ACCRUING OR ARISING IN INDIA OR DEEMED TO ACCRUE OR ARISE IN INDIA COULD NOT BE BROUGHT TO TAX IN INDIA. THE ASSESSEE SUBMITTED BEFORE THE A.O THAT THERE WAS NO CONTRACTUAL OR BUSINESS RELATIONSHIP BETWEEN THE ASSESSEE AND THE CUSTOMER WHO MAD E THE PAYMENT TO THE AIRLINES THROUGH THE TRAVEL AGENT, WHICH RESULTED TO GENERATION OF REVENUE IN THE HANDS OF THE AIRLINES AND NOT OF THE ASSESSEE. THE ASSESSEE IN ORDER TO FORTIFY ITS AFORESAID CONTENTION ELABORAT ED BEFORE THE A.O THE SEQUENCE OF EVENTS INVOLVED IN ITS BUSINESS, VIZ. (I). THE TRAVEL AGENTS FOR RAISING OF A QUERY OR REQUESTING FOR A BOOKING USED THE EQUIPMENT OW NED AND PROVIDED BY ADSIL ; (II) . T HE MESSAGE WAS TRANSMITTED THROUGH THE MTNL LINES TO SOCIETE INTERNATIONALE TELECOMMUNICATIONS AERONAUTIQUES (FOR SHORT SITA) NETWORK IN ALL THE CITIES , FROM WHERE IT WAS TRANSMITTED VIA SITA NETWORK TO ABACUS HOST IN USA ; (III). T HAT ON RECEIVING THE MESSAGE THE AIRLINES COMPUTER WOULD BE CONSULTED BY THE A BACUS HOST FOR THE LATEST POSITION ON SE AT AVAILABILITY , A ND IF A SEAT WOULD BE AVAILABLE THE BOOKING IS CONFIRMED BY THE ABACUS HOST COMPUTER AND IS CONVEYED TO THE TRAVEL AGENT IN INDIA ; (IV) . T HE TRAVEL AGENT ON RECEIVING THE MESSAGE OF CONFIRMED BOOKING FROM ABACUS THROUGH THE SAME COMMUNICATION CHANNELS WHICH WERE USED FOR IT S OUTGOING MESSAGE , WOULD RECEIVE THE TICKET IMAGE FROM THE ABACUS HOST , WHICH EITHER WOULD BE PRINTED BY THE PRINTER IN HIS OFFICE OR ISSUE D MANUALLY TO THE CUSTOMER. IT WAS SUBMITTED BY THE ASSESSEE P A G E | 8 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THAT IT DI D NOT HAVE A PE IN INDIA, FOR THE REASON, VIZ. (I). THERE WAS NO CONTRACTUAL RELATIONSHIP BETWEEN THE ASSESSEE AND THE CUSTOMER WHO MAKES THE PAYMENT TO THE AIRLINE THROUGH THE TRAVEL AGENT, AS THE REVENUE GENERATED WAS OF THE AIRLINE AND NOT OF THE ASSESS EE; (II). THE ASSESSEE HAD NO PE IN INDIA IN TERMS OF ARTICLE 5(8) OF THE INDIA - SINGAPORE TAX TREATY; (III). THE FACT THAT THE SINGAPORE ENTITY CONTROLLED THE COMPANY ADSIL WOULD NOT BY ITSELF CONSTITUTE A PE OF THE ASSESSEE IN INDIA; (IV). ADSIL MAY BE AN AGENT OF THE ASSESSEE, BUT HOWEVER, IT WAS NOT CARRYING ON ANY OF THE ACTIVITIES MENTIONED IN ART I CLE 5(8) ON THE BASIS OF WHICH IT COULD BE HELD TO BE A PE OF THE ASSESSEE IN INDIA; AND (V). ADSIL WAS EVEN OTHERWISE ACTING INDEPENDENTLY. THE ASSESSEE IN ORDER TO SUPPORT ITS CONTENTION THA T IT DID NOT HAVE A PE IN INDIA , RELIED ON THE ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL , VIZ. ITAT DELHI B BENCH IN THE CASE OF GALILEO INTERNATIONAL INC. VS. DCIT (2009) 116 ITD 1 AND AMADEUS GLOBAL TRAVEL DI STRIBUTION S . A VS. DCIT & ANR. (2008) 113 TTJ 767 . 6 . THE A.O AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE IN ORDER TO IMPRESS UPON HIM THAT IT DID NOT HAVE ANY PE/ BUSINESS ACTIVITIES IN INDIA, WAS HOWEVER NOT PERSUADED TO ACCEPT THE SAME. THE A.O OBSER VED THAT THE PRINCIPAL ACTIVITIES, VIZ. MARKETING, DISTRIBUTION, SALES AND REVENUE GENERATION HAD TAKEN PLACE IN INDIA. THE A.O AFTER PERUSING THE RECITALS IN THE DISTRIBUTION AGREEMENT EXECUTED BE TWEEN THE ASSESSEE AND ADSIL OBSERVED THAT IT STOOD CLEARLY REVEALED THAT ADSIL WAS CARRYING ON THE BUSINESS ACTIVITIES OF THE ASSESSEE IN INDIA. THE A.O WAS OF THE VIEW THAT ADSIL WAS FUNCTIONING AS A CONTROLLED SUBSIDIARY OF THE ASSESSEE AND WAS EXCLUSIV ELY PERFORMING THE MARKETING AND DISTRIBUTION OF CRS FOR THE ASSESSEE. T H E A.O OBSERVED THAT THE ASSESSEE CARRIED OUT ITS ACTIVITIES P A G E | 9 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 OF CRS THROUGH THE ABACUS COUNTRY NODE LOCATED IN INDIA, WHICH REMAINED UNDER THE MANAGEMENT AND CONTROL OF THE ASSESSEE . T HE A.O IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS CONCLUDED THAT THE ASSESSEE HAD A FIXED PLACE OF BUSINESS IN INDIA WHICH SERVED AS A DISTRIBUTION POINT FOR ITS SERVICES IN INDIA. THE A.O FURTHER OBSERVED THAT AS ADSIL WAS SECURING BUSINESS FOR THE ASS ESSEE BY ENTERING INTO SUBSCRIPTION AGREEMENT S WITH THE TRAVEL AGENTS AND THE SAID ACTIVITY WAS HABITUALLY, WHOLLY AND EXCLUSIVELY PERFORMED BY ADSIL FOR THE ASSESSEE, THEREFORE, IT COULD SAFELY BE CONCLUDED THAT ADSIL CONSTITUTED AN AGENCY PE OF THE ASSES SEE IN TER MS OF ARTICLE 8(C) AND 9 OF THE INDIA - SINGAPORE DTAA . THE A.O FORTIFIED HIS AFORESAID CONVICTION BY TAKING SUPPORT OF THE FACT THAT THE INQUIRIES MADE FROM AIR INDIA LTD REVEALED THAT ADSIL WHICH DID NOT HAVE ANY AGREEMENT WITH THE AIRLINES, PROVIDED SERVICES AND ASSISTANCE TO AIR INDIA TO RESOLVE PROBLEMS R ELATING TO CONNECTIVITY RESERVATION SYSTEM, ACCOUNTING AND BILLING, WHICH THUS PROVED THAT ADSIL WAS CARRYING ON THE ACTIVITIES OF THE ASSESSEE IN INDIA. THE A.O FURTHER OBSERVED THAT THE FACT THAT THE ASSESSEE HAD ADVANCED INTEREST FREE LOANS TO ADSIL TO BOOST ITS OWN BUSINESS IN INDIA PROVED TO THE HILT THAT ADSIL WAS NOT AN INDEPENDENT AGENT. THE A.O FURTHER OBSERVED THAT THE ITAT , DELHI IN THE CASE OF M/S GALI LEO INTERNATIONAL INC. VS. DCIT (2009) 116 ITD 1 (DEL) AND AMADEUS GLOBAL TRAVEL DISTRIBUTION V S. DCIT (2008) 113 TTJ 767 (DEL) WHICH HAD BEEN RELIED UPON BY THE ASSESSEE, OBSERVED THAT SUCH ACTIVITIES THROUGH A NODE AND AGENT WOULD CONSTITUTE A PE UNDER THE DTAA. THE A.O IN THE BACKDROP OF HIS AFORESAID DELIBERATIONS CONCLUDED THAT THE ASSESSEE HAD A PE IN TERMS OF ARTICLE 5 OF THE INDIA - SINGAPORE TREATY. P A G E | 1 0 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 7 . THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE REVISED THE AMOUNT OF THE GROSS RECEIPT S FROM THE AIRLINE S DURING THE YEAR AT RS.39,69,27,136/ - ( USD 90,97,574/ - @ 43.63). HOW EVER, THE A.O NOT INSPIRED BY THE VERACITY OF THE REVISED CLAIM OF GROSS RECEIPTS FURNISHED BY THE ASSESSEE , THEREFORE, PROCURED THE INFORMATION FROM AI R INDIA LIMITED REGARDING THEIR TRANSACTIONS WITH THE ASSESSEE AND THE PAYMENTS MADE. THE A.O OBSERVED T HAT THE INFORMATION SHARED BY AIR INDIA LTD . REVEALED THAT THE ASSESSEE HAD SUPPRESS ED ITS RECEIPTS BY AN AMOUNT OF RS.2,07,56,221/ - (USD 4,80 ,801.95 @ RS. 43.17) . THE ASSESSEE IN ITS ATTEMPT TO RECONCILE THE AFORESAID VARIANCE IN THE FIGURES REPORTED BY AIR INDIA LTD. AS AGAINST THOSE DISCLOSED BY IT, FURNISHED A RECONCILIATION WITH THE A.O. HOWEVER, THE A.O BEING OF THE VIEW THAT THE INFORMATION FURNISHED BY THE ASSESSEE DID NOT EXPLAIN THE DISCREPANCY AS HAD EMERGED F ROM THE RECORDS, THEREFORE, DECLINED TO ACCEPT THE SAME. THE A.O AFTER TAKING THE BASE GROSS RECEIPTS OF RS. 41,03,60,052/ - (AS EARLIER REPORTED BY THE ASSESSEE) AND THE SUPPRESSED RECEIPTS OF RS. 2,07,56,221/ - (SUPRA), WORKED OUT THE GROSS RECEIPTS OF THE ASSESSEE AT RS.43,11,16,273/ - . THE A.O FURTHER OBSERVED THAT WHILE FOR THE ASSESSEE HAD IN FORM 3CEB REPORTED PAYMENT OF COMMISSION OF RS.10,30,00,289/ - TO ADSIL DURING THE YEAR UNDER CONSIDERATION, BUT HOWEVER, HAD THEREAFTER VIDE ITS LETTER DATED 19.11.2 008 FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS CLAIMED THE SAME AT RS.9,49,62,089/ - (USD 21,76,532/ - @ 43.63). THE ASSESSEE ON BEING CALLED UPON BY THE A.O TO PUT FORTH AN EXPLANATION AS REGARDS THE DIFFERENCE IN THE AFORESAID AMOUNT S , SUBMITTED THAT THE SAME WAS DUE TO THE TIMING DIFFERENCE ADJUSTMENT WHICH HAD EMERGED FOR THE REASON THAT THE CALENDAR YEAR OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS DIFFERENT AS A GAINST THAT FOLLOWED BY P A G E | 11 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 ADSIL. THE A.O NOT BEING IMPRESSED BY THE AFORESAID EXPLANAT ION OF THE ASSESSEE OBSERVED THAT AS THE COMMISSION PAYMENT TO ADSIL WAS ARRIVED ON THE BASIS OF MONTHLY BREAKUP, THEREFORE, THERE COULD BE NO TIMING DIFFERENCE. THE A.O ON THE BASIS OF HIS AFORE SAID CONVICTION REJECTED THE EXPLANATION OF THE ASSESSEE AND TOOK THE COMMISSION PAID BY THE ASSESSEE TO ADSIL AT RS. 9,49,62,089/ - . THE A.O IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS WORKED OUT THE NET RECEIPTS OF THE ASSESSEE IN INDIA, AS UNDER : GROSS RECEIPTS :RS. 43,11,16,273/ - LESS: MARKETING EXPENSES (PAID TO ADSIL) ( - ): RS. 9,49,62,089/ - BALANCE : RS. 33,61,54,184/ - THE INCOME ATTRIBUTABLE TO THE PE WAS ESTIMATED BY THE A.O AT 10% OF THE AFORESAID AMOUNT AT RS. 3,36,15,419/ - . 8 . THE A.O FURTHER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAD RECEI VED CERTAIN PAYMENTS FROM ADSIL, AS UND ER: - LINE CHARGES RS.12,032,811/ - INSTALLATION CHARGES RS. 424,493/ - SERVICE CHARGES RS. 4,100,034/ - OTHER EXPENSES RS. 3,992,027/ - TOTAL RS.20,549,465/ - THE ASSESSEE SUBMITTED THAT THE AFORESAID AMOUNTS WERE IN THE NATURE OF REIMBURSEMENT OF EXPENSES WHICH WERE INCURRED BY IT ON BEHALF OF ADSIL. THE ASSESSEE EXPLAINING THE NATURE OF THE EXPENSES SUBMITTED THAT THE L INE CHARGES AND SERVICES CHARGES WERE INCURRED FOR PROVIDING THE CONNECTIVITY TO THE TRAVEL AGENTS, WHILE FOR THE SERVICE CHARGES WERE THE EXPENSES INCURRED FOR ACCESSING THE CRS. IT WAS SUBMITTED B Y THE ASSESSEE THAT THE CONNECTI VITY GLOBALLY PROVIDED BY SITA WAS BILLED TO P A G E | 12 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE ASSESSEE, WHICH IN TURN HAD RAISED THE BILLS ON ITS INDIAN NMC, VIZ. ADSIL FOR ITS SHARE IN THE EXPENSE . IN RESPECT OF THE OTHER EXPENSES THE ASSESSEE SUBMITTED THAT THE SAME INCLUDED CO URIER CHARGES , TRAVEL RELATE D EXPENSES, MARKETING AND CONSULTING FEES AND FEES FOR BACK OFFICE ACCOUNTING PACKAGES. IT WAS SUBMITTED BY THE ASSESSEE THAT AFTER MAKING THE PA YMENTS TO THE SUPPLIERS/SERVICE PROVIDERS , IT WOULD RECHARGE THE APPLICABLE COST TO ADSIL. THE ASSESSEE IN ORDER TO DRIVE HOME ITS CONTENTION THAT THE AFORESAID AMOUNTS RECEIVED FROM ADSIL WERE IN THE NATU RE OF REIMBURSEMENT OF EXPENSES, SUBMITTED THAT THE SAME COULD SAFELY BE GATHERED FROM THE FA CT THAT NO SERVICES WERE PROVIDED TO ADSIL. THE ASSESSEE IN ORDER TO FORTIFY ITS AFORESAID CONTENTION SUBMITTED THAT IN THE TPSR FILED IN FORM 3CEB , THE AFORESAID AMOUNTS WERE SHOWN AS REIMBURSEMENT OF EXPENSES AND WERE NOT CONSIDERED AS AN INTERNATIONAL T RANSACTION AS THE TRANSACTIONS WERE WITH THE THIRD PARTIES. IT WAS SUBMITTED BY THE ASSESSEE THAT THE TRANSFER PRICING OFFICER (FOR SHORT TPO) HAD ACCEPTED THE CLAIM OF THE ASSESSEE AND HAD NOT CHARACTERIZED THE AFORESAID TRANSACTIONS AS AN INTERNATIONAL TRANSACTION IN HIS ORDER. HOWEVER, THE A.O BEING OF THE VIEW THAT THE ASSESSEE HAD FAILED TO PLACE ON RECORD THE NECESSARY DOCUMENTARY EVIDENCE WHICH WOULD SUBSTANTIATE ITS CLAIM THAT THE AFORESAID RECEIPTS WERE IN THE NATURE OF REIMBURSEMENT OF EXPENSES , THEREFO RE, DECLINED TO ACCEPT THE SAME AND CONCLUDED THAT THE AMOUNT OF RS.2,05,49,465/ - RECEIVED BY THE ASSESSEE FROM ADSIL WAS IN THE NATURE OF FEE FOR TECHNICAL SERVICES WITHIN THE MEANING OF ARTICLE 12 OF THE INDIA - SINGAP ORE TAX TREATY . 9 . THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS SUBMITTED BEFORE THE A.O THAT AS THE INCOME OF THE ASSESSEE WAS LIABLE TO TAX IN SINGAPORE ON ACCRUAL BASIS AND NOT WITH REFERENCE TO THE P A G E | 13 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 AMOUNT WHICH IS REMITTED TO SINGAPORE, THEREFORE, THE PROVIS IONS OF ARTICLE 24 OF THE DTAA WHICH IS APPLICABLE ONLY IN RESPECT OF INTEREST/DIVIDENDS WOULD NOT BE TRIGGERED AS REGARDS THE FEES WHICH WAS RECEIVED BY THE ASSESSEE FROM THE AIRLINES IN ITS BANK ACCOUNT IN SINGAPORE. STILL FURTHER, THE ASSESSEE SUBMITTE D THAT AS REGARDS THE INTEREST INCOME OF RS. 3,95,463/ - EARNED BY THE ASSESSEE UNDER SEC. 244A OF THE ACT, THE A.O HAD HIMSELF ANALYSED THE ISSUE AND HAD GRANTED THE BENEFIT OF INDIA - SINGAPORE TAX TREATY TO THE ASSESSEE ( AS TAX OF RS. 59,318/ - WAS DEDUCTED AT SOURCE @15%). THE A.O OBSERVING THAT THE AFORESAID PLEA OF THE ASSESSEE WAS NOT ACCEPTED BY THE CIT(A) IN THE ASSESSES OWN CASE FOR A.Y 2004 - 05, THEREFORE, CALLED UPON THE ASSESSEE TO PLACE ON RECORD EVIDENCE AS REGARDS REMITTANCE OF AMOUNT TO SINGAPOR E. HOWEVER, AS THE ASSESSEE FAILED TO PLACE ON RECORD EVIDENCE REGARDING REMITTANCES OF THE AMOUNTS RECEIVED FROM ITS INDIAN OPERATIONS TO SINGAPORE , AS REQUIRED UNDER THE TREATY, NOR COULD PROVE THAT THE SAID RECEIPTS HAD BEEN OFFERED TO TAX IN SINGAPORE ON ACCRUAL BASIS, THEREFORE, THE A.O BEING OF THE VIEW THAT AS THE ASSESSEE HAD FAILED TO SATISFY THE CONDITIONS SPECIFIED IN ARTICLE 24 OF DTAA, CONCLUDED THAT THE BENEFIT OF THE TREATY COULD NOT BE GRANTED TO IT. THE A.O ON THE BASIS OF HIS AFORESAID OBS ERVATIONS ALSO SUBJECTED THE INTEREST INCOME OF RS.3,95,453/ - EARNED BY THE ASSESSEE UNDER SEC. 244A OF THE INCOME - TAX ACT, 1962, TO TAX @ 40% INSTEAD OF 15% AS PER DTAA/20% BY APPLYING THE PROVISIONS OF SEC. 115A. 10 . THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FURTHER OBSERVED THAT THE ASSESSEE HAD GIVEN USD DENOMINAT ED ECB LOAN TO ITS WHOLLY OW NED SUBSIDIARY COMPANY IN INDIA, VIZ. ADSIL. IT WAS OBSERVED BY THE A.O THAT THE INTEREST ON THE SAID LOAN WAS WAIVED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THAT ON A REFERENCE TO P A G E | 14 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE TPO THE AFORESAID INTEREST FREE LOAN WAS TREATED AS AN INTERNATIONAL TRANSACTION AND THE ARMS LENGTH PRICE (ALP) OF INTEREST IN RESPECT OF SUCH LOAN WAS WORKED OUT ON THE BASIS OF INDIAN P RIME LENDING RATE (PLR) OF 10.5% AT RS.1,30,38,994/ - . THE A.O ADOPTING THE OBSERVATIONS OF THE TPO MADE AN ADDITION OF RS.1,30,38,944/ - TO THE TOTAL INCOME OF THE ASSESSEE. 11 . AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A ). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS OF THE ASSESSEE THAT AS IT HAD NO BUSINESS CONNECTION/ P ERMANENT E STABLISHMENT IN INDIA, THEREFORE, NO INCOME WAS LIABLE TO BE BROUGHT TO TAX IN INDIA, HOWEVER, DID NOT FIND FAVOUR WITH THE SAME. THE CIT(A ) BEING OF THE VIEW THAT AS THE ISSUE OF PE IN INDIA WAS COVERED AGAINST THE ASSESSEE BY THE ORDERS PASSED BY THE COORDINATE BENCHES OF THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A.YS 1999 - 2000 TO 2004 - 05 AND ALSO BY THE ORDER OF HIS PREDECESSOR IN THE CASE OF THE ASSESSEE FOR A.Y 2004 - 05, THUS OBSERVING THAT ADMITTEDLY AS THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION, VIZ. A . Y 200 5 - 0 6 REMAINED THE SAME , THEREFORE, FOLLOWED THE AFORESAID ORDERS AND CONCLUDED THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD A PE IN INDIA WITHIN THE MEANING OF ARTICLE 5( 1) AND 5(8) OF THE INDIA - SINGAPORE TREATY . THE C I T(A) T O SUPPORT HIS AFORESAID FINDING OBSERVED THAT THE ISSUE OF PE IN INDIA WAS ALSO DECIDED AGAINST THE ASSESSEE BY TH E DISPUTE RESOLUTION PANEL (FOR SHORT DRP) IN THE SUBSEQUENT YEARS I.E A.YS 2006 - 07 TO 2010 - 11. 12 . THE CIT(A) FURTHER ADVERTING TO THE ISSUE AS TO WHETHER ANY INCOME OF THE ASSESSEE WAS TAXABLE IN INDIA FOR THE REASON THAT ITS MARKETING, DISTRIBUTION, SALES AND REVENUE GENERATION ACTIVITIES HAD TAKE N PLACE IN INDIA AND WHETHER 10% OF THE OVERALL REVENUES P A G E | 15 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 GENERATED FROM ITS INDIAN OPERATIONS WERE TO BE TREATE D AS THE INCOME OF THE ASSESSEE , OBSERVED THAT ONCE IT WAS HELD THAT THE ASSESSEE HAD A PE IN IN DIA, THE REVENUES GENERATED FROM ITS INDIA OPERATIONS WERE LIABLE TO BE TAXED IN INDIA AS PER LAW. THE CIT(A) OBSERVED THAT THE SAID ISSUE WAS ALSO DECIDED BY THE COORDINATE BENCHES OF THE TRIBUNAL IN THE ASSESSES OWN CASE IN THE EARLIER YEARS AND THE ESTI MATION OF 10% OF OVERALL REVENUES FROM INDIA OPERATIONS AS PER RULE 10 OF THE INCOME TAX RULES, 1962 AS THE INCOME OF THE ASSESSEE WAS UPHELD BY THE TRIBUNAL. RATHER, THE CIT(A) OBSERVED THAT THE TRIBUNAL HAD IN THE EARLIER YEARS HELD THAT 15% OF THE GROSS RECEIPTS PERTAINING TO THE INDIA BOOKINGS SHALL BE THE INCOME ATTRIBUTABLE TO THE INDIA OPERATIONS OF THE ASSESSEE. THE CIT(A) OBSERVED THAT IN THE CASE OF THE ASSESSEE FOR THE SUBSEQUENT YEARS THE DECISION OF THE DRP ON THE AFORESAID ISSUE WAS ALSO AGAIN ST THE ASSESSEE. THE CIT(A) IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS UPHELD THE ESTIMATION OF INCOME OF THE PE OF THE ASSESSEE BY THE A.O. 1 3 . THE CIT(A) ADVERTING TO THE CONTENTION OF THE ASSESSEE THAT THE A.O HAD ERRED IN WORKING OUT THE AMOUNT OF FEES RECEIVED BY THE ASSESSEE FROM THE AIRLINES AND THE COMMISSION PAID TO ITS NMC IN INDIA, VIZ. ADSIL, OBSERVED THAT IF ANY DEDUCTION OF THE COMMIS SION PAID TO NMC WAS TO BE CLAIMED BY THE ASSESSEE, THE SAME COULD ONLY BE ALLOWED AGAINST THE REVENUES FROM THE INDIAN OPERATIONS AND NOT AGAINST THE INCOME ESTIMATED BY THE A.O AT 10% OF THE TOTAL REVENUES. THE CIT(A) OBSERVED THAT THE DRP IN THE CASE OF THE ASSESSEE FOR THE SUBSEQUENT YEARS I.E A.YS 2006 - 07 TO 2010 - 11 HAD HELD THAT THE ESTIMATION OF THE INCOME OF THE ASSESSEE AT 10% OF TOTAL REVENUES WOULD TAKE CARE OF ALL THE DEDUCTIONS. THE CIT(A) HELD A CONVICTION THAT ONCE THE INCOME OF THE ASSESSEE WAS ESTIMATED AT A CERTAIN PERCENTAGE P A G E | 16 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 OF THE TURNOVER AS PER RULE 10, NO FURTHER DEDUCTION AFTER THE CULMINATION OF SUCH ESTIMATION WOULD BE PERMISSIBLE. T H E CIT(A) OBSERVED THAT THOUGH THE ISSUE UNDER CONSIDERATION WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN THE ASSESSES OWN CASE , BUT HOWEVER, THE REVENUE HAD CARRIED THE SAME IN FURTHER APPEAL BEFORE THE HIGH COURT, WHICH WAS PENDING DISPOSAL. THE CIT(A) NOTICED THAT FOR THE REASON THAT THE APPEAL OF THE REVENUE WAS PENDING BEFORE THE HIGH CO URT, THE DRP HAD DECIDED THE ISSUE AGAINST THE ASSESSEE IN ITS CASE FOR A.Y 2010 - 11. THE CIT(A) IN THE BACKDROP OF THE AFORESAID FACTS FOLLOWED THE DECISION OF THE DRP AND DECIDED THE ISSUE AGAINST THE ASSESSEE. HOWEVER, T HE CIT(A) OBSERVING THAT THE A.O HAD NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AS RE GARDS THE AMOUNT OF THE GROSS RECEIPTS /FEES RECEIVED FROM THE AIRLINES AND COMMISSION PAID TO ADSIL, THEREFORE, DIRECTED THE A.O TO DETERMINE THE CORRECT INCOME OF THE ASS ESSEE ATTRIBUTABLE TO ITS IND IA OPERATIONS AFTER CONSIDERING THE AFORESAID SUBMISSIONS. 14 . THE ASSESSEE DURING THE COURSE OF THE HEARING OF THE APPEAL IN ORDER TO FORTIFY ITS CONTENTION THAT THE AMOUNT OF RS. 2, 05,49,465/ - RECEIVED FROM ADSIL W AS IN THE NATURE OF REIMBURSEMENT OF EXPENSES , FURNISHED ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962, WITH THE CIT(A). T HE CIT(A) AFTER PERUSING THE OBJECTIONS OF THE A.O TO THE ADMISSION OF THE ADDITIONAL EVIDENCE, WAS PERSUADED TO BE I N AGREEMENT WITH HIM THAT AS THE ASSESSEE DESPITE SUBSTANTIAL TIME PROVIDED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD FAILED TO PLACE ON RECORD THE SAID MATERIAL, THEREFORE, THE SAME COUL D NOT BE ADMITTED AS AN ADDITIONAL EVIDENCE DURING THE COUR SE OF THE APPELLATE PROCEEDINGS BEFORE HIM. THUS, THE CIT(A) IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS UPHELD THE ORDER OF THE A.O TO THE EXTENT THE P A G E | 17 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 LATTER HAD DECLINED TO ACCEPT THE CLAIM OF THE ASSESSEE THAT THE AFORESAID AMOUNTS WERE BY WAY OF REIMB URSEMENT OF EXPENSES BY ADSIL. HOWEVER, T HE CIT(A) FOLLOWING THE ORDER PASSED BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A . Y 2004 - 05 , CONCLUDED THAT THE AFORESAID AMOUNTS SO RECEIVED BY THE ASSESSEE FROM ADSIL COULD NOT BE CHARACTERISED AS FEES FOR TECH NICAL SERVICES . T HE CIT(A) FOLLOWING THE ORDER PASSED BY THE DRP IN THE CASE OF THE ASSESSEE FOR A.Y S 2006 - 07 TO 2010 - 11 WHEREIN ONLY 10% OF THE REIMBURSEMENT EXPENSES WERE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE, FOLLOWED THE SAME AND HELD THAT 10% OF THE AFOREMENTIONED AMOUNT WAS LIABLE TO BE TAXED AS THE BUSINES S INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . 15 . THE CIT(A) ADVERTING TO THE CONTENTION OF THE ASSESSEE THAT THE A.O HAD WRONGLY BROUGHT THE INCOME OF THE ASSESSEE TO TAX UNDER THE ACT AND NOT AS PER THE INDIA - SINGAPORE TREATY, OBSERVED THAT THE SAID ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ITS CASE FOR A . Y 2004 - 05. THE CIT( A ) FURTHER OBSERVED THAT AS THE CO NDITION OF ACTUAL REMITTANCE OF INCOME FOR TRIGGERING THE PROVISIONS OF ARTICLE 24 HAD NOT BEEN SATISFIED BY THE ASSESSEE, THEREFORE, THE BENEFIT OF ARTICLE 24 OF THE DTAA WOULD NOT BE AVAILABLE TO THE ASSESSEE. THE CIT(A) ON THE BASIS OF HIS AFORESAID OBS ERVATIONS DECLINED THE BENEFIT OF ARTICLE 11 OF THE INDIA - SINGAPORE TAX TREATY AND HELD THAT THE INTEREST ON INCOME - TAX REFUND FOR THE SAID REASON WAS LIABLE TO BE TAXED @20% AS PER SECTION 115JA OF THE ACT. 16 . THE CIT(A) FURTHER DELIBERATED ON THE TRANSF ER PRICING ADJUSTMENT OF RS.1,30,38,994/ - MADE BY THE A.O/TPO BY TREATING THE INTEREST FREE LOAN ADVANCED BY THE ASSESSEE TO ITS WOS , VIZ. ADSIL BY DETERMINING P A G E | 18 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE ARMS LENGTH INTEREST IN RESPECT OF THE AFORESAID LOAN AS PER INDIAN PLR OF 10.50%. IT WAS IN TER ALIA SUBMITTED BY THE ASSESSEE THAT FOR THE PURPOSE OF COMPUTING THE ARMS LENGTH RATE OF INTEREST IN RESPECT OF THE INTEREST FREE LOAN GIVEN BY THE ASSESSEE TO ITS AE, VIZ. ADSIL, THE LIBOR RATE PREVAILING AS ON 31.03.2005 SHOULD HAVE BEEN CONSIDERED AND NOT THE INDIAN PLR. HOWEVER, T HE CIT(A) WAS NOT PERSUADED TO BE IN AGREEMENT WITH THE AFORESAID CLAIM OF THE ASSESSEE. THE CIT(A) BEING OF THE VIEW THAT AS THE AFORESAID ISSUE HAD BEEN ADJUDICATED BY THE DRP - IV, MUMBAI, AGAINST THE ASSESSEE IN A . Y 2010 - 11 AND THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION WERE SIMILAR TO THOSE INVOLVED IN AY 2010 - 11, THEREFORE, FOLLOWED THE PRINCIPLE OF CONSISTENCY AND DISMISSED THE AFORESAID CONTENTION OF THE ASSESSEE . 17 . THAT BOTH THE ASSESSEE AND THE RE VENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT AS COMMON ISSUE S ARE INVOLVED IN THE AFOREMENTIONED APPEALS, THEREFORE , THE SAME ARE TAKEN UP AND DISPOSED OF TOGETHER. TH E LD. AUTHORIZED REPRESENTATIVE (F OR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE ISSUE AS TO WHETHER THE ASSESSEE H AS A PE IN INDIA AND TO WHAT EXTENT THE INCOME OF THE ASSESSEE WOULD ATTRIBUTABLE TO THE SAME HAD BEEN LOOKED INT O BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A . Y S 1999 - 2000 TO 2004 - 05. IT WAS SUBMITTED BY THE LD. A . R THAT THOUGH THE TRIBUNAL HAD CONSISTENTLY HELD THAT THE ASSESSEE HAD BUSINESS CONNECTION/PE IN INDIA, BUT HOWEVER, HAD CONCLUDED THAT 15% OF THE GROSS RECEIPTS PERTAINING TO INDIA BOOKINGS WERE TO BE TAKEN AS THE INCOME ATTRIBUTABLE TO THE INDIA OPERATIONS OF THE ASSESSEE. THE LD. A.R DRAWING FORCE FROM THE AFORESAID OBSERVATIONS OF THE TRIBUNAL , SUBMITTED THAT AS THE ASSESSEE HAD PAID 25% OF THE GROSS RECEIPTS P A G E | 19 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 PERTAINING TO INDIA BOOKINGS TO ITS NMC, VIZ. ADSIL BY WAY OF COMMISSION, WHICH WERE HIGHER THAN THE INCOME ATTRIBUTABLE TO INDIA, THEREFORE, THERE WAS NO FURTHER INCOME ATTRIBUTABLE TO INDIA ON WHICH TAX WOULD BE PAYABLE BY THE ASSESSEE. T HE LD. A.R SUBMITTED THAT AS THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, VIZ. A . Y 2005 - 06 REMAINED THE SAME AS WERE INVOLVED IN THE EARLIER YEAR YEARS, THEREFORE, KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY AS HAD BEEN EMPHASISED BY THE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 (SC) AND GODREJ & BOYCE MANU FACTURING CO. LTD. VS. DCIT 394 ITR 449 (SC), A DIFFERENT VIEW ON THE BASIS OF THE SAME FACTS COULD NOT BE SUSTAINED. THE LD. A.R RELYING ON THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL, VIZ. ITAT, DELHI IN THE CASE OF GALILEO INTERNATIONAL INC. VS. DCIT ( 2009) 116 ITD 1 (DEL) FOR A . YS 1995 - 96 TO 1998 - 1999, SUBMITTED THAT THE TRIBUNAL IN THE AFOREMENTIONED CASE AFTER CARRYING OUT A FAR ANALYSIS IN THE SAID CASE HAD OBSERVED THAT THE INCOME ATTRIBUTABL E TO THE CRS OPERATIONS CARRIED OUT IN INDIA COULD FAIRLY BE TAKEN AT 15%. THE LD. A.R SUBMITTED THAT THE APPEAL FILED BY THE REVENUE AGAINST THE AFORESAID ORDER OF THE TRIBUNAL WAS DISMISS ED BY THE HONBLE HIGH COURT OF DELHI IN CIT VS. G A LILEO INTERNATIONAL INC. ( 2011) 336 ITR 264 (DEL) BY OBSERVING THAT THE DETERMINATION OF THE INCOME WAS IN ACCORDANCE WITH THE CBDT CIRCULAR NO. 23, DATED 23 RD JULY, 1969, AND THE JUDGMENT OF THE HONBLE S UPREME COURT IN THE CASE OF DIT VS. MORGAN STANLEY & CO. INC. ( 2007) 292 ITR 416 (SC) . PER CONTRA, THE LD. DEPARTMENT AL REPRESENTATIVE (FOR SHORT D.R) SUBMITTED THAT ONCE THE EXISTENCE OF THE PE WAS PROVED, THEN IT WAS OBLIGATORY TO DETERMIN E THE VALUE OF THE TRANSACTIONS BY APPLYING THE ARMS LENGTH TEST WHICH WAS A PART OF THE T RANSFER PRICING PROVISIONS . P A G E | 20 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE LD. D.R IN ORDER TO IMPRESS UPON US THAT THE ALP IN RESPECT OF THE TRANSACTIONS BETWEEN THE ASSESSEE AND ITS PE C OULD BE ARRIVED AT ON LY AFTER CARRYING OUT A FAR ANALYSIS, SUBMITTED THAT AS THE T RANSFER PRICING PROVISIONS AND THE RELATED RULES WERE INTRODUCED IN INDIA ONLY WITH EFFECT FROM 01.04.2002, VIDE THE F INANCE ACT, 2001, THEREFORE, THE SAME COULD NOT HAVE BEEN INVOKED BY THE TRIB UNAL AND THE HONBLE HIGH COURT OF DELHI WHILE DISPOSING OF THE APPEAL S FOR A.YS 1995 - 96 TO 1998 - 99 IN THE CASE OF GALILEO INTERNATIONAL INC. (SUPRA). IT WAS THUS THE CONTENTION OF THE LD. D . R THAT ATTRIBUTION OF 15% OF THE GROSS RECEIPTS TO THE CRS OPERAT IONS CARRIED OUT IN INDIA IN THE CASE OF GALILEO INTERNATIONAL INC. (SUPRA) BY THE TRIBUNAL AND THE HONBLE HIGH COURT, BEING DISTINGUISHABLE IN THE BACKDROP OF THE AFORESAID FACTS, THUS , COULD NOT BE TRANSPOSED AND READ AS A GUIDELINE FOR ADJUDICATING THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION , VIZ . A . Y 2005 - 06. IT WAS SUBMITTED BY THE LD. D.R THAT THE P RINCIPLE OF CONSISTENCY AS WAS HEAVILY RELIED UPON BY THE LD. A . R WAS ABSOLUTELY MISCONCEIVED AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE LD. D.R TAKING US THROUGH THE OBSERVATIONS OF THE TRIBUNAL RECORDED IN THE CASE OF GALILEO INTERNATIONAL INC.(SURPA) , SUBMITTED THAT THE TRIBUNAL WHILE CONCLUDING THAT 15% OF THE REVENUE ACCRUING TO THE ASSESSEE COULD REASONABLY BE ATTRIBUTED AS THE INCOME OF THE ASSESSEE ACCRUING OR ARISING FROM THE BOOKINGS MADE IN INDIA , HAD SPECIFICALLY OBSERVED THAT AT THE RELEVANT POINT OF TIME THERE W ERE NO GUIDELINES AVAILABLE FOR DETERMINING AS TO WHAT SHOULD BE THE INCOME REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT BY THE ASSESSEE IN INDIA . THE LD. D .R ON THE BASIS OF THE AFORESAID FACTS SUBMITTED THAT IT COULD SAFELY BE CONCLUDED THAT THE ALP AT 15% OF THE REVENUE IN RESPECT OF THE YEARS FALLING IN THE ERA OF PRE - TP REGULATIONS IN INDIA CANNOT BE P A G E | 21 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 APPLIED TO THE PRESENT CASE OF THE ASSESSEE FOR A . Y 2005 - 06. THE LD. D.R SUBMITTED THAT THE VERY FACT THAT THE ASSESSEE HAD SUFFERED A LOSS IN RESPECT OF ITS TRANSACTIONS WITH THE PE IN ITSELF PROVED THAT THE ASSESSEE HAD NOT CHARGED THE PRICE AT ARMS LENGTH. ON THE BASIS OF THE AFORESAID CONTENTIONS IT WAS VEHEMENTLY SUBMITTED BY THE LD. D.R THAT THE COMPARISON OF THE FUNCTIONS PERFORMED , ASSETS USED AND RISK ASSUMED BY THE ASSESSEE AND ITS PE, VIZ. ADSIL WAS INDISPENSABLY REQUIRED FOR WORKING OUT THE INCOME OF THE ASSESSEE ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA. THE LD. D.R IN THE BACKDROP OF HIS AFORESAID SUBMISSIONS AVERRED THAT THE ISSUE IN ALL FAIRNESS WAS REQUIRED TO BE SET ASIDE TO THE A.O/TPO IN ORDER TO FACILITATE DETERMINATION OF THE ALP OF THE AFORESAID INTERNATIONAL TRANSACTIONS . T HE LD. A.R REBUTTING THE AFORESAID CONTENTIONS OF THE REVENUE , SUBMITTED THAT AS THE DETERMINATION OF 15% OF REVENUE AS ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA WAS ALREADY BASED ON A FAR ANA LYSIS, THEREFORE , NO PURPOSE WOULD BE SERVED BY RESTORING THE MATTER TO THE A.O. THE LD. A.R STRONGLY OBJECTED TO THE CONTENTIONS RAISED BY THE REVENUE ON THE GROUND THAT THE LD. D.R WAS TRYING TO SET UP A NEW CASE BEFORE THE TRIBUNAL, WHICH WAS NOT PERMIS SIBLE IN THE EYES OF LAW. THE LD. A.R IN SUPPORT OF HIS AFORESAID CONTENTION THAT THE PARTIES CANNOT BE PERMITTED TO MAKE A NEW CASE BEFORE THE TRIBUNAL , RELIED ON THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. PRAKASH I SHAH ( 200 8) 115 ITD 167 (SB )( ITAT). THE LD. A.R IN SUPPORT OF HIS CONTENTION THAT 15% OF THE REVENUE WAS ATTRIBUTABLE TO THE CRS OPERATIONS CARRIED OUT IN INDIA , SUBMITTED THAT THE SAME HAD BEEN DELIBERATED UPON AND ACCEPTED BY THE COORDINATE BENCHES OF THE TRIBUNAL AND BY THE HONBLE HIGH CO URT OF DELHI IN THE FOLLOWING CASES: - P A G E | 22 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 SR. NO. NAME CITATION ASSESSMENT YEARS 1. GALILEO NETHERLAND BV 367 ITR 319 (DELHI HC) 2003 - 04 TO 2006 - 07 2. GALILEO INTERNATIONAL INC. 180 TAXMAN 357 (DELHI HC) 1995 - 96 TO 1998 - 99 3. AMADEUS GLOBAL TRAVEL DISTRIBUTION 3 TAXMANN.COM 777 (DELHI) 2003 - 04 TO 2005 - 06 4. AMADEUS GLOBAL TRAVEL DISTRIBUTION S.A 11 TAXMANN.COM 153 (DELHI) 1996 - 97 TO 1998 - 99 5. SABRE INC. 2009 TAXMANN.COM 1020 (DELHI) 1999 - 00 TO 2005 - 06 TH AT IT WAS SUBMITTED BY THE LD. A.R THAT IN THE CASE OF GALILEO NE DERLAND BV VS. ASST. DIRECTOR OF INCOME - TAX (INTERNATIONAL TAXATION) ( 2014) 367 ITR 319 (DEL), THE HONBLE HIGH COURT NOT FINDING FAVOUR WITH THE SETTING ASIDE OF THE MATTER BY THE TRIBUNAL TO THE FILE OF THE A.O FOR FRESH DETERMINATION OF PROFITS ATTRIBUTABLE TO THE CSR OPERATIONS OF THE ASSESSEE IN INDIA , DID NOT FIND FAVOUR WITH THE ORDER OF THE TRIBUNAL, AND HAD IN THE BA CKDROP OF THE P RINCIPLE OF CONSISTENCY FOLLOWED ITS ORDERS FOR THE EARLIER YEARS PASSED IN THE CASE OF AMADEUS GLO B AL TRAVEL DISTRIBUTORS S.A (SUPRA) AND SABRE INC. (SUPRA). THE LD. A.R FURTHER ADVANCING HIS CONTENTION S AS REGARDS TH E AMOUNT OF RS.2,05,49, 465/ - RECEIVED BY THE ASSESSEE FROM ADSIL, SUBMITTED THAT THE SAME WAS PURELY IN THE NATURE OF REIMBURSEMENT OF EXPENSES AND HAD WRONGLY BEEN ASSESSED BY THE A.O AS FEES FOR TECHNICAL SERVICES (FOR SHORT FTS) . THE LD. A.R SUBMITTED THAT THOUGH THE CIT( A) HAD VACATED THE OBSERVATION OF THE A.O AND HELD THAT THE AFORESAID AMOUNTS WERE NOT LIABLE TO BE BROUGHT TO TAX AS FTS, BUT HOWEVER, HAD ERRED IN NOT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THEY WERE THE AMOUNTS RECEIVED BY THE ASSESSEE FROM ADSIL BY WAY OF REIMBURSEMENT OF ITS SHARE OF EXPENSES WHICH WERE INCURRED BY P A G E | 23 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE ASSESSEE ON ITS BEHALF. THE LD. A.R TO FORTIFY HIS CONTENTION THAT THE AFORESAID AMOUNTS RECEIVED BY THE ASSESSEE WERE BY WAY OF REIMBURSEMENT OF EXPENSES, SUBMITTED THAT NEITHER ANY SERVICES WERE PROVIDED BY THE ASSESSEE TO ADSIL, NOR ANY MARK UP IN RESPECT OF THE AFORESAID AMOUNTS WAS CHARGED BY THE ASSESSEE . THE LD. A.R. SUBMITTED THAT THE ASSESSEE IN ORDER TO SUBSTANTIATE HIS AFORESAID CONTENTION HAD FURNISHED WITH THE CIT(A) ADDITIONAL EVIDENCE UNDER RULE 46A, BUT HOWEVER , THE SAME W AS NOT ADMITTED BY HIM. THE LD. A.R. IN ORDER TO SUPPORT HIS CONTENTION THA T THE AFORESAID AMOUNT OF RS. 2,05,49,465/ - (SUPRA) WAS IN THE NATURE OF REIMBURSEMENT OF EXPENSES, SUBMITTED THAT THE ASSESSEE HAD NOT CONSIDERED THE SAME AS AN INTERNATIONAL TRANSACTION IN ITS TRANSFER PRICING STUDY REPORT (FOR SHORT TPSR ) IN F ORM 3CEB , AND THE SAID CLAIM OF THE ASSESSEE WAS NOT DISLODGED BY THE TPO. ALTERNATIVELY, IT WAS SUBMITTED BY THE LD. A.R THAT KEEPING IN VIEW THE PRINCIPLE LAID DOWN BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A . Y 2004 - 05, THE TAXABILITY IN RELATION TO REIMBURSE MENT OF EXPENSES SHOULD BE THE SAME AS THE INCOME OF THE PE FROM THE CRS ACTIVITIES. THE LD. A.R SUBMITTED THAT IN VIEW OF THE ORDER PASSED BY THE CIT(A), 10% OF THE REIM BURSEMENT OF THE EXPENSES BE REGA RDED AS THE INCOME OF THE ASSESSEE THAT WOULD BE ENTI TLED FOR SET OFF AGAINST THE COMMISSION PAYMENT MADE TO ADSIL. IT WAS SUBMITTED BY THE LD. A.R THAT THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A . Y 2004 - 05 HAD ACCEPTED THE AFORESAID CONTENTION . THE LD. A.R TAKING SUPPORT OF THE AFORESAID FACTS SUBMITTED THA T AS THE AMOUNT PAID TO ADSIL DURING THE YEAR UNDER CONSIDERATION WAS MORE THAN THE INCOME ATTRIBUTABLE TO ITS BUSINESS OPERATIONS (INCLUDING THE INCOME FROM REIMBURSEMENT OF EXPENSES BEING 10% OF RS.2,05,49,465/ - ), THEREFORE, THE NET RESULTS FROM INDIA OP ERATIONS IN THE HANDS OF THE P A G E | 24 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 ASSESSEE RESULTED IN A LOSS. PER CONTRA, THE LD. D.R SUBMITTED THAT THE CIT(A) HAD ADJUDICATED THE AFORESAID ISSUE BY FOLLOWING THE ORDER OF HIS PREDECESSOR PASSED IN THE CASE OF THE ASSESSEE FOR A . Y 2004 - 05 AND HELD THAT THE E XPENSE WERE TO BE CONSIDERED AS BUSINESS INCOME IN THE HANDS OF THE INDIAN PE. THE LD. D.R SUBMITTED THAT BOTH THE ASSESSEE AND THE DEPARTMENT BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) ON THE ISSUE UNDER CONSIDERATION HAD CARRIED THE SAME IN APPEAL BEFO RE THE TRIBUNAL. THE LD. D.R RELYING ON THE OBSERVATIONS OF THE A.O SUBMITTED THAT AS THE ASSESSEE HAD ABSOLUTELY FAILED TO SUBSTANTIATE ON THE BASIS OF DOCUMENTARY EVIDENCE THAT THE AMOUNTS RECEIVED FROM ADSIL WERE IN THE NATURE OF REIMBURSEMENT OF EXPENS ES, THEREFORE, THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE A.O. IT WAS SUBMITTED BY THE LD. D.R THAT THE A.O HAD RIGHTLY BROUGHT THE AFORESAID AMOUNT TO TAX AS F EES FOR TECHNICAL SERVICES AS PER ARTICLE 12 OF INDIA - SINGAP ORE DTAA. THE LD. D.R ASSAILING THE AFORESAID OBSERVATION OF THE CIT(A) SUBMITTED THAT HE HAD ERRONEOUSLY CHARACTERIZED THE RECEIPTS AS BUSINESS INCOME OF THE ASSESSEE. IT WAS SUBMITTED BY THE LD. D.R THAT IN ALL FAIRNESS THE MATTER MAY BE SET ASIDE TO THE A. O FOR MAKING NECESSARY VERIFICATIONS AS REGARDS THE NATURE OF THE RECEIPTS. 1 8 . THE LD. AUTHORIZED REPRESENTATIVE TAKING UP THE ISSUE AS REGARDS THE DENIAL OF THE BENEFIT OF ARTICLE 11 OF THE INDIA - SINGAP ORE TAX TREATY AND SUBJECTING THE INTEREST ON INCOM E TAX REFUND TO TAX UNDER SEC. 115A OF THE ACT, FAIRLY CONCEDED THAT THE ISSUE HAD BEEN DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN A . Y 2004 - 05 , FOR THE REASON THAT SUPPORTING EVIDEN CE TO PROVE THAT THE INTEREST ON REFUND WAS REMITTED / R ECEIVED IN SINGA P ORE WAS NOT SUBMITTED BY THE ASSESSEE . PER CONTRA, THE LD. D.R SUBMITTED THAT THE ISSUE MAY BE ADJUDICATED IN THE P A G E | 25 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 BACKDROP OF TH E OBSERVATIONS RECORDED BY THE T RIBUNAL IN THE ASSESSES OWN CASE FOR A . Y 2004 - 05. 19. THE LD. A .R FURTHER ADVERTED TO THE ISSUE PERTAINING TO THE TREATING OF THE INTEREST FREE LOAN GIVEN BY THE ASSESSEE TO ITS WOS CO MPANY IN INDIA, VIZ. ADSIL , AS AN INTERNATIONAL TRANSACTION AND DETERMINING OF THE ARMS LENGTH INTEREST IN RESPECT OF SUCH LOAN BASED ON INDIAN PL R OF 10.50% AT RS. 1,30,38,994/ - . IT WAS SUBMITTED BY THE LD. A.R THAT AS THE INTEREST FREE LOAN WAS GIVEN BY THE ASSESSEE TO ITS INDIAN NMC, VIZ. ADSIL , WITH A VIEW TO FINANCIAL LY STRENGTHEN THE SAID COMPANY AND IN ORDER TO FACILITATE IT TO GARNER MORE CU STOMERS IN THE INDIAN MARKET , WHICH IN TURN WOULD HAD BENEFITED THE BUSINESS OF THE ASSESSEE, THEREFORE, NO TRANSFER PRICING ADJUSTMENT WAS CALLED FOR IN RESPECT OF THE SAID LOAN TRANSACTION. THE LD. A.R THOUGH INITIALLY SUBMITTED THAT AS THE ASSESSEE HAD NOT CHARGED ANY SPECIFIED PRICE ON THE AFORESAID LOAN, THEREFORE , NO TRANSFER PRICING ADJUSTMENT COULD HAVE BEEN MADE IN ITS HANDS, BUT THEREAFTER , SUBMITTED THAT HE WAS NO T PRES SING THE SAID CONTENTION. THE LD. A.R SUBMITTED THAT EVEN IF A TP ADJUSTMENT W AS PERMISSIBLE, THE ALP INTEREST RATE COULD NOT HAVE EXCEEDED THE LIBOR BEING THE RATE OF INTEREST APPLICABLE TO USD. THE LD. A.R IN SUPPORT OF HIS CONTENTION , RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENT S : - CIT VS. VFS GLOBAL SERVICES PVT. LTD. (ITA NO . 336 OF 2015 DATED 19 JULY 2017) (BOM HC) CIT VS. COTTON NATURALS (I) PVT. LTD. (ITA NO. 233/2014 DATED 27 MARCH 2015) (DEL HC) FIRESTAR INTL PVT. LTD. VS. ASSIST. CIT (ITA NO. 488/MUM/2015 DATED 31 MAY 2015 FOR AY 2010 - 11) TOOLTECH GLOBAL ENG. PVT. LTD. VS. DCIT ITA NO. 273/PN/2014 VIDE ORDER DATED 28.08.2014. P A G E | 26 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 IT WAS SUBMITTED BY THE LD. A.R THAT THE REVENUE IN SUPPORT OF ITS CONTENTION THAT THE RATE OF INTEREST FOR DETERMINATION OF ALP SHOULD BE THE RATE CHARGED IN THE COUNTRY WHERE THE LOAN IS REC EIVED OR CONSUMED HAD RELIED ON THE ORDER OF A COORDINATE BENCH OF THE TRIBUNAL ON THE CASE OF G EODESIC (79 TAXMANN.COM 215) , WHICH HAD FOLLOWED THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. TATA AUTO COMP S YSTEMS LTD ( 2015) 374 IT R 516 (BOM) . THE LD. A.R SUBMITTED THAT IN THE CASE OF TATA AUTO C OMP SYSTEMS LTD. ( S UPRA) THE HIGH COURT HAD DISMISSED THE APPEAL OF THE REVENUE BECAUSE T HE ORDER OF THE TRIBUNAL IN THE CASE OF V.V.F. LTD. & TECH MAHINDRA LTD, WHICH WERE FOLLOWED IN THE CA SE OF TATA AUTO C OMP LTD (SUPRA), WAS ACCEPTED BY THE REVENUE AND WERE NOT FURTHER CARRIED IN APPEAL. THE LD. A.R IN THE BACKDROP OF THE AFORESAID FACTS SUBMITTED THAT AS THE REVENUE HAD ACCEPTED THE ORDER OF THE TRIBUNAL IN THE OTHER CASES WHICH WERE FOLLOWED BY THE TRIBUNAL IN THE CASE OF TATA AUTOC OMP SYSTEM LTD. (SUPRA) , THEREFORE, THE HIGH COURT GOING BY THE SAID FACT ALONE HAD NOT GIVEN ANY FINDING ON THE ISSUE PERTAINING TO THE RATE OF INTEREST THAT WAS TO BE APPLIED. THE LD. A.R SUBMITTED THAT AS A MATTER OF FACT, A FINDING ON THE ISSUE AS REGARDS THE RATE OF INTEREST TO BE APPLIED WAS GIVEN BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. V .F.S GLOBAL SERVICES PVT. LTD. [(ITA NO. 336 O F 2015, DATED 19.07.2017)(B OM) ] , WHEREIN FOLLOWING ITS EARLIER JUDGMENT IN TATA AUTO COMP SYSTEM LTD. (SUPRA) THE HIGH COURT HAD UPHELD THE TRANSFER PRICING ADJUSTMENT BASED ON LIBOR. THE LD. A.R SUBMITTED THAT A PERUSAL OF THE ITATS ORDER IN THE CASE OF TATA AUTOCOMP SYSTEM LTD. (S UPRA) AND TECH MAHIND RA LTD. (SUPRA) CLEARLY SUPPORTED THE CONTENTION OF THE ASSESSEE THAT THE TRANSFER PRICING ADJUSTMENT SHOULD BE BASED ON LIBOR/ EURIBOR AND NOT PLR. THE LD. A.R SUBMITTED P A G E | 27 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THAT IF A TRANSFER PRICING ADJUSTMENT WAS TO BE MADE IN RESPECT OF THE INTEREST ON THE AFORESAID LOAN TRANSACTION , THE SAME HAD TO BE IN CONFORMITY WITH THE RATE OF INTEREST WHICH THE ASSESSEE COULD HAVE CHARGED IF THE ECB LOAN WOULD HAVE BEEN ADVANCED BY IT IN INDIA TO A NON - AE. THE LD. A.R TO DRIVE HOME HIS AFORESAID CONTENTION RELIED ON THE RBI CIRCULAR DATED 31.01.2004 , AS PER WHICH UNDER THE A UTOMATIC ROUTE SUCH INTEREST SHOULD BE BASED ON LIBOR. IT WAS THUS THE CONTENTION OF THE LD. A.R THAT IF THE ASSESSEE COULD NOT HAVE CHARGED INTEREST FROM A NON - AE ON INDIAN PLR, THEREFORE, IT COULD NOT BE EXPECTED TO CHARGE SUCH INTEREST FROM ITS AE, VIZ. ADSIL. THE LD. A.R FURTHER AVERRED THAT IN CASE A TRANSFER PRICING ADJUSTMENT IN RESPECT OF THE ECB LOAN WAS TO BE CARRIED OUT , THEN THE INTEREST INCOME ON THE SAID LOAN COU LD SAFELY BE HELD AS AN INCOME WHICH WOULD BE ENTITLED TO BE SET OFF AGAINST THE COMMISSION PAID BY THE ASSESSEE TO ADSIL. PER CONTRA, THE LD. D.R IN SUPPORT OF HIS CONTENTION RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF AUTOC O MP SYSTEM LTD. (SUPRA). IT WAS SUBMITTED BY THE LD. D.R THAT THE OBSERVATIONS OF THE HIGH COURT THAT THE ALP OF THE INTEREST IN THE CASE OF LOANS ADVANCED TO ASSOCIATE ENTERPRISES WERE TO BE DETERMINED ON THE BASIS OF RATE OF INTEREST BEING CHARGED IN THE COUNTRY WHERE THE LOAN IS RECEIVED/CONSUMED , THUS , NEGATED BOTH OF THE CLAIMS OF THE ASSESSEE , VIZ. (I) THAT THE INTEREST ON LOAN IS NOT AN INTERNATIONAL TRANSACTION ; AND (II) THAT EVEN IF IT IS CONSIDERED AS AN INTERNATIONAL TRANSACTION , THEN LIBOR WAS TO BE ADOPTED FOR MAKING THE TRANSFER PRICING ADJUSTMENT. THE LD. D.R TAKING SUPPORT OF HIS AFORESAID CONTENTIONS AVERRED THAT AS IN THE CASE OF THE PRESENT ASSESSEE THE LOAN HAD BEEN CONSUMED IN INDIA, THEREFORE, THE INDIAN PLR HAS TO BE CONSIDERED AS ALP. THE LD. D.R SUBMITTED THAT THE RELIANCE PLACED BY THE ASSESSEE ON THE P A G E | 28 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF V.V.F. GLOBAL SERVICES LTD. (SUP R A) WHEREIN THE LIBOR RATE WAS UPHELD AS ALP RATE WAS DISTINGUISHABLE ON FACTS , AS UNLIKE THE CASE OF THE ASSESSEE WHERE THE LOAN WAS RECEIVED/CONSUMED IN INDIA, IN THE SAID CASE THE LOAN WAS RECEIVED/CONSUMED IN CANADA OR DUBAI WHERE LIBO R IS A RATE OF INTEREST THAT WAS BEING CHARGED IN THE SAID RESPECTIVE COUNTRIES. 20 . THE LD. A.R HAD FURTHER ASSAILED BEFORE US THE LEVY OF INTEREST OF RS.76,83,037/ - BY THE A.O UNDER SEC. 234B OF THE ACT. THE LD. A.R TAKING SUPPORT OF THE JUDGMENT OF HONBLE HIGH COURT OF BOMBAY IN THE ASSESSES OWN CASE FOR A . Y 2003 - 04, SUBMITTED THAT THE HIGH COURT RELYING ON I TS EARLIER JUDGMENT IN THE CASE OF DIRECTOR OF INCOME - TAX (INTERNATIONAL TAXATION) VS. NGC NETWORK ASIA LLC (2009) 313 ITR 187 (BOM) HAD CONCLUDED THAT WHEN A DUTY IS CAST ON THE PAYER TO DEDUCT TAX AT SOURCE, THEN ON A FAILURE OF THE PAYER TO DO SO NO IN TEREST CAN BE IMPOSED ON THE PAYEE UNDER SEC. 234B . IT WAS THUS SUBMITTED BY THE LD. A.R THAT AS THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE REMAINED THE SAME AS WERE THERE IN ITS CASE FOR A.Y 2003 - 04, THEREFORE, ON THE FAILURE ON THE PART OF THE PAYER TO DEDUCT TAX AT SOURCE, NO INTEREST UNDER SEC. 234B WAS LEVIABLE IN THE HANDS OF THE ASSESSEE . PER CONTRA, TH E LD. D.R DID NOT CONTROVERT THE AFORESAID CONTENTION ADVANCED BY THE LD. A.R BEFORE US. 21 . WE HAVE HEARD THE A UTHORIZED R EPRESENTATIVES FOR BOT H THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE SHALL FIRST ADVERT TO THE CONTENTION OF THE LD. A.R THAT THE ASSESSEE HAD NO P ERMANENT E STABLISHMENT (PE) IN INDIA. WE FIND THAT THE ISSUE AS TO WHETHER THE ASSESSEE HAD A PE IN INDIA , OR P A G E | 29 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 NOT , HAD BEEN DELIBERATED UPO N BY THE TRIBUNAL IN THE ASSESS ES O WN CASE FOR A . Y S 1999 - 2000 TO 2004 - 05. THE TRIBUNAL IN THE AFOREMENTIONED APPEALS UPHOLDING THE ORDERS OF THE LOWER AUTHORITIES HAD CONCLUDED THAT THE ASSESSEE WAS HAVING BUSINESS CONNECTION AND PE IN INDIA. WE FIND THAT THOUGH THE ASSESSEE HAD RAISED A GROUND OF APPEAL ASSAILING T HE OBSERVATIONS OF THE DRP THAT THE ASSESSEE HAD A PE IN INDIA IN TERMS OF ARTICLE 5(1) AND 5(8) OF THE INDIA - SINGAP ORE DTAA, BUT HOWEVER , DURING THE COURSE OF THE HEARING OF THE APPEAL NO CONTENTION WAS ADVANCED BY THE LD. A.R TO SUPPORT HIS AFORESAID CLA IM. WE THUS FOLLOWING THE ORDER S PASSED BY THE COORDINATE BENCHES OF THE TRIBUNAL IN THE ASSESSES OWN CASE IN A . YS 1999 - 2000 TO 2004 - 05 , UPHOLD THE ORDER OF THE DRP THAT THE ASSESSEE HAD A BUSINESS CONNECTION/PE IN INDIA. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE BEFORE US IS DISMISSED . 22 . WE NOW ADVERT TO THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT OF INCOME THAT WAS ATTRIBUTABLE TO ITS PE IN INDIA. WE FIND THAT THE LD. A.R HAD SUBMITTED THAT AS HELD BY THE COORDINATE BENCHES OF THE TR IBUNAL IN THE ASSESSES OWN CASE FOR A . YS 1999 - 2000 TO 2004 - 05, 15% OF THE GROSS RECEIPTS PERTAINING TO INDIA BOOKINGS WERE TO BE TAKEN AS THE INCOME ATTRIBUTABLE TO THE INDIA OPERATIONS OF THE ASSESSEE. THE LD. A.R HAD FURTHER AVERRED THAT AS THE ASSESSEE HAD PAID A COMMISSION OF 25% OF THE GROSS RECEIPTS PERTAINING TO INDIA BOOKINGS TO ITS NMC, VIZ. ADSIL, WHICH WAS HIGHER THAN THE INCOME ATTRIBUTABLE TO INDIA , THEREFORE, NO INCOME REMAINED IN THE HANDS OF THE ASSESSEE WHICH COULD BE BROUGHT TO TAX IN INDIA. WE FIND THAT TO THE CONTRARY THE LD. D.R HAD SUBMITTED THAT NOW WHEN THE T RANSFER PRICING PROVISIONS AND THE RELATED RULES HAD BEEN NOTIFIED WITH EFFECT FROM 01.04.2002, VIDE THE FINANCE ACT, 2001, THEREFORE, THE ADOPTION OF P A G E | 30 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE ADHOC ALP OF 15% OF THE GROSS RECEIPTS AS THE INCOME OF THE ASS ESSEE ATTRIBUTABLE TO ITS INDIA OPERATIONS COULD NOT BE SUSTAINED. WE FIND THAT THE LD. D.R HAD SUBMITTED THAT FOR FAIR DETERMINATION OF THE INCOME OF THE ASSESSEE ATTRIBUTABLE TO ITS PE IN INDIA, THE ALP WAS REQUIRE D TO BE DETERMINED AFTER CARRYING OUT A FAR ANALYSIS. THE LD. D.R HAD SUBMITTED BEFORE US THAT AS THE RELIANCE PLACED BY THE ASSESSEE ON THE JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS HELD THAT ALP AT 15% OF THE GROSS RECEIPTS IN RESPECT OF CR S OPERATION WOULD BE JUSTIFIED PERTAINED TO THE ERA OF PRE - TP REGULATIONS , THEREFORE, THE SAME COULD NOT BE ADOPTED AS A YARDSTICK AND TRANSPOSED AS SUCH FOR DETERMINING THE INCOME OF THE ASSESSEE ATTRIBUTAB LE TO ITS PE IN INDIA FOR THE YEAR UNDER CONSIDERATION, VIZ. A . Y 2005 - 06 . THE LD. D.R ON THE BASIS OF HIS AFORESAID CONTENTIONS HAD SUBMITTED THAT THE ISSUE WAS REQUIRED TO BE SET ASIDE TO THE A.O/TPO FOR FAIR DETERMINATION OF THE INCOME OF THE ASSESSEE AT TRIBUTABLE TO ITS PE IN INDIA . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE CONTENTIONS OF THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES. WE THOUGH WOULD FAIRLY CONCEDE THAT THE CONTENTION RAISED BY THE LD. D.R IN HIS ATTEMPT TO SEEK A FAR ANALYSI S FOR FAIR DETERMINATION OF THE INCOME OF THE ASSESSEE ATTR IBUTABLE TO ITS PE IN INDIA AT THE FIRST BLUSH APPEAR ED TO BE VERY CONVINCING, BUT HOWEVER , AFTER DELIBERATING ON THE SAME AT LENGTH , WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SAME. WE FIND THAT AS AVERRED BY THE LD. A.R THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A . YS 1999 - 2000 TO 2004 - 05 HAD CONSISTENTLY HELD THAT ONLY 15% OF THE GROSS RECEIPTS OF THE ASS ESSEE COULD BE ATTRIBUTED AS ACCRUING OR ARISING TO THE PE IN INDIA. WE FURTHER FIND THAT THE TRIBUNAL IN THE AFOREMENTIONED CASES HAD ALSO OBSERVED THAT AS THE ASSESSEE HAD INCURRED EXPENDITURE @ 25% OF GROSS RECEIPTS ON P A G E | 31 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 ACCOUNT OF PAYMENT OF COMMISSION T O ITS NMC IN INDIA, VIZ. ADSIL, THEREFORE, THERE REMAIN ED NO INCOME IN THE HANDS OF THE ASSESSEE WHICH COULD BE BROUGHT TO TAX IN INDIA. WE FIND THAT SUCH OBSERVATIONS WERE RECORDED BY THE TRIBUNAL WHILE DISPOSING OF THE APPEALS OF THE ASSESSEE FOR A . Y 199 9 - 2000 ( ITA NO. 3903/MUM/2006 ) , A . Y 2001 - 02 ( ITA NO.4789/MUM/2007 ) AND A . Y 2002 - 03 ( ITA NO. 4790/MUM/2007 ) VIDE ITS CONSOLIDATE ORDER DATED 20.08.2010 . WE FIND THAT THE AFORESAID ORDER S HAD THEREAFTER BEEN FOLLOWED BY THE TRIBUNAL WHILE DISPOSING OF THE AP PEAL OF THE ASSESSEE FOR A . Y 2000 - 01 (ITA NO. 346/MUM/2007) AND A . Y 2003 - 04 (ITA NO. 1756/MUM/2007), VIDE ITS ORDER DATED 20.05.2011. WE FURTHER FIND THAT THE TRIBUNAL WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE FOR A . Y 2004 - 05 IN ITA NO. 1045/MUM/2008, DATED 31.05.2013 HAD AGAIN FOLLOWED ITS AFOREMENTIONED ORDERS. WE ARE OF THE CONSIDERED VIEW THAT AS THE FACTS OF THE CASE HAD NOT WITNESSED ANY CHANGE AS AGAINST THOSE WHICH WERE INVOLVED IN THE CASE OF THE ASSESSEE FOR THE AFOREMENTIONED EARLIER YEARS, THEREFORE , FOLLOWING THE PRINCIPLE OF CONSISTENCY AS HAD BEEN EMPHASIZED BY THE HONBLE SUPREME COURT IN THE CASE OF RADHSOAMI SATSANG VS. CIT (193 ITR 321) (SC) AND GODREJ & BOYCE MANUFACTURE CO. LTD. VS. DCIT (2017) (39 4 ITR 449) (SC) , FIND ING NO REASON TO TAKE A DIFFERENT VIEW , FOLLOW THE SAME . BEFORE PARTING, WE MAY HEREIN OBSERVE THAT WE ARE NOT PERSUADED TO ACCEPT THE CONTENTION OF THE LD. D.R THAT THE ADHOC ADOPTION OF 15% OF THE GROSS RECEIPTS OF THE ASSESSEE AS ITS INCOME ATTRIBUTABLE TO INDIA OPERATIONS AS OBSERVED BY THE TRIBUNAL IN THE CASE OF GALILEO INTERNATIONAL INC. VS. DCIT ( 2009) 116 ITD 1 (DEL) FOR A . YS 1995 - 96 TO 1998 - 99 , WHICH THEREAFTER HAD BEEN APPROVED BY THE HIGH COURT OF DELHI IN CIT VS. GALILEO I NTERNATIONAL INC. (2011) (336 ITR 264) (DEL) WOULD NOT BE P A G E | 32 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 APPLICABLE TO THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y 2005 - 06 , FOR THE REASON THAT THE ADJUDICATION IN THE AFORESAID CASE S WAS IN RESPECT OF THE YEARS FALLING WITHIN THE S WEEP OF THE ERA OF PRE - T RANSFER PRICING PROVISIONS, WHICH ALONGWITH THE RELATED RULES WERE NOTIFIED IN INDIA WITH EF FECT FROM 01.04.2002, VIDE THE F INANCE ACT, 2001 . WE ARE OF THE CONSIDERED VIEW THAT NOT ONLY THE LD. D.R BY RAISING THE AFORESAID CONTENTIO N H AD TRIED T O BUILD UP A NEW CASE BEFORE US WHICH IS NOT PERMISSIBLE IN THE EYES OF LAW, BUT RATHER, WHILE RAISING THE AFORESAID CONTENTION HAD ALSO LOST SIGHT OF THE FACT THAT THE AFORESAID VIEW AS REGARDS ADOPTION OF 15% OF THE GROSS RECEIPTS OF THE ASSESSEE AS ITS INCOME ATTRIBUTABLE TO INDIA OPERATIONS WAS ALSO TAKEN BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A . YS 2002 - 03 TO 2004 - 05 , WHICH PERTAINED TO THE PERIOD SUBSEQU ENT TO THE INTRODUCTION OF THE T RANSFER PRICING PROVISIONS. WE FURTHER FIND TH AT THE HIGH COURT OF DELHI WHILE DISMISSING THE APPEAL OF THE REVENUE IN THE CASE OF CIT VS. GALILEO INTERNATIONAL INC. (2011) (336 ITR 264), HAD OBSERVED THAT THE DETERMINATION OF THE INCOME OF THE PE FROM THE CRS ACTIVITIES IN THE SAID CASE WAS IN CONFOR MITY WITH THE CBDT CIRCULAR NO. 23, DATED 23.07.1969 AND THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF DIT VS. MORGAN STANLEY & CO. INC. ( 2007) 292 ITR 416 (SC) . WE THUS FIND OURSELVES PERSUADED TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R THAT SINCE THE DETERMINATION OF 15% OF THE GROSS RECEIPTS AS ATTRIBUTABLE TO THE CSR OPERATIONS CARRIED OUT BY THE ASSESSEE IN INDIA IS ALREADY BASED ON A FAR ANALYSIS, THEREFORE, NO PURPOSE WOULD BE SERVED BY RESTORING THE MATTER TO THE FILE OF THE A. O. WE MAY AT THIS STAGE ALSO OBSERVE THAT IN THE CASE OF GALILEO NE D ERLAND BV ( 2014) 367 ITR 319 (DEL) , WHEREIN SIMILAR FACTS WERE INVOLVED, THE HIGH COURT FOLLOWING ITS ORDER PASSED IN THE EARLIER YEARS IN THE CASE OF THE P A G E | 33 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 ASSESSEE , HAD IN THE BACKDROP OF THE P RINCIPLE OF CONSISTENCY REVERSED THE ORDER OF THE TRIBUNAL WHICH HAD SET ASIDE THE MATTER TO THE FILE OF THE A.O FO R FRESH DETERMINATION OF THE INCOME ATTRIBUTABLE TO THE CSR OPERATIONS CARRIED OUT BY THE ASSESSEE IN INDIA . WE THUS IN THE TERMS OF OUR AFORESAID OBSERVATIONS AND FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSES OWN CASE FOR THE PRECEDING YEARS, THEREFORE, CONCLUDE THAT 15% OF THE GROSS RECEIPTS PERTAINING TO INDIA BOOKINGS SHALL BE THE INCOME ATTRIBUTABLE TO THE INDIA OPERATION S OF THE ASSESSEE. WE MAY HEREIN OBSERVE THAT WE ARE ALSO PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN T HE ASSESSES OWN CASE FOR A . YS 1999 - 2000 TO 2004 - 05 THAT AS THE COMMISSION PAID BY THE A SSESSEE TO ITS NMC, VIZ. ADSIL AT 25% OF ITS GROSS RECEIPTS PERTAINING TO INDIA BOOKINGS WAS HIGHER THAN THE INCOME ATTRIBUTABLE TO INDIA, THEREFORE, NO PART OF THE AFORESAID INCOME WOULD REMAIN IN THE HANDS OF THE ASSESSEE WHICH COULD BE BROUGHT TO TAX IN INDIA. WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS ALLOW THE G ROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE BEFORE US. 23 . WE NO W ADVERT TO THE CONTENTION OF THE LD. A.R THAT THE CIT(A) HAD ERRED IN HOLDING THAT 10% OF THE EXPENSES REIMBURSED BY ADSIL A MOUNTING TO RS.2,05,49,465/ - WERE TO BE HELD AS THE BUSINESS INCOME OF THE ASSESSEE. WE FIND THAT THE ASSESSEE HAD SUBMITTED BEFORE THE A.O THAT ADSIL HAD REIMBURSED THE FOLLOWING EXPENSES WHICH WERE INCURRED BY THE ASSESSEE ON ITS BEHALF: - PARTICULARS A MOUNT (RS.) LINE CHARGES [PAYMENTS TO SITA FOR CONNECTIVITY OF TRAVEL AGENTS (LEASE LINES) 12,032,811/ - INSTALLATION CHARGES (PAYMENTS TO SITA FOR ONE TIME INSTALLATION COST OF LEASE LINES) 424,593/ - P A G E | 34 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 SERVICE CHARGES (PAYMENTS TO SITA AND SABRE FOR T HE TRAVEL AGENTS ACCESSES TO THE PRICING MODULE FOR DOING THE TICKET BOOKING) 4,100,034/ - OTHER EXPENSES (COURIER CHARGES, TRAVEL RELATED EXPENSES, MARKETING AND CONSULTING FEES, FEES FOR BACK OFFICE ACCOUNTING PACKAGES, ETC. 3,992,027/ - TOTAL 20,549,465/ - WE FIND THAT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE ITS CLAIM THAT THE AMOUNT RECEIVED FROM ADSIL WAS IN THE NATURE OF REIMBURSEMENT OF EXPENSES, THEREFORE, THE A.O HAD TREATED THE SAME AS F EES FOR TECHNICAL SERVICES AS PER ARTICLE 12 OF THE INDIA SINGAP ORE DTAA. WE FIND THAT ON APPEAL THE ASSESSEE HAD FURNISHED WITH THE CIT( A ) ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULE, 1963, IN ITS ATTEMPT TO FORTIFY ITS CLAIM THAT THE AFORESAID RECEIPTS WERE IN THE NATURE OF REIMBURSEMENT OF EXPENSES BY ADSIL. HOWEVER, THE CIT(A) BEING OF THE VIEW THAT THE ASSESSEE DESPITE BEING AFFORDED SUFFICIENT OPPORTUNITY BY THE A.O HAD FAILED TO SUBSTANTIATE ITS AFORESAID CONTENTION AND P LACE ON RECORD THE AFOREMENTIONED DOCUMENTARY EVIDENCE, THEREFORE, IT COULD NOT BE PERMITTED TO FURNISH THE SAME BY WAY OF ADDITIONAL EVIDENCE BEFORE HIM. WE HAVE DELIBERATED ON THE FACTS AND ARE PERSUADED TO BE IN AGREEMENT WITH THE CIT(A) THAT AS THE ASS ESSEE DESPITE HAVING BEEN AFFORDED SUFFICIENT OPPORTUNITY BY THE A.O, HAD HOWEVER FAILED TO FURNISH THE SAID DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CONTENTION DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THEREFORE , IT COULD NOT BE PERMITTED TO UNDO T HE SAID LAPSE IN THE GARB OF FILING OF ADDITIONAL EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY. WE THUS FIND ING NO INFIRMITY IN THE AFORESAID OBSERVATIONS OF THE CIT(A) , THEREFORE, UPHOLD THE DECLINING OF THE ADMISSION OF THE ADDITIONAL EVIDENCE BY HIM . W E HOWEVER FIND P A G E | 35 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT NOW WHEN THE CIT(A) IN L INE WITH THE ORDERS OF THE A.O AND DRP IN THE CASE OF THE ASSESSEE FOR THE SUBSEQUENT YEARS HAD OBSERVED THAT 10% OF THE AFORESAID AMOUNT WAS TO BE BROUGHT TO TA X AS THE BUSINESS INCOME OF THE ASSESSEE, THEREFORE, THE SAME WOULD BE ENTITLED FOR SET OFF AGAINST THE COMMISSION PAYMENT MADE BY THE ASSESSEE TO ITS NMC, VIZ. ADSIL. THE LD. A.R HAD SUBMITTED BEFORE US THAT IF THE AMOUNT OF RS.20,54,947/ - WAS TAKEN AS THE BUSINESS INCOME OF THE ASSESSEE, STILL THERE WOULD BE NO INCOME CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE , BECAUSE THE AMOUNT OF MARKETING FEES PAID BY THE ASSESSEE TO ADSIL OF RS. 10,30,00,287/ - WOU LD ABSORB THE SAID INCOME ELEMENT. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE CONTENTION ADVANCED BY THE LD. A.R THAT 10% OF THE REIMBURSEMENT AMOUNT AS CLAIMED BY THE ASSESSEE WHICH HAD BEEN CHARACTERIZED BY THE CIT(A) AS THE BUSINESS INCOME WOULD JU STIFIABLY BE ENTITLED FOR SET OFF AGAINST THE COMMISSION PAYMENT MADE BY THE ASSESSEE TO ADSIL , MERITS ACCEPTANCE . HOWEVER, WE MAY HEREIN OBSERVE THAT AS THE QUANTIFICATION OF THE GROSS RECEIPTS AND COMMISSION PAID TO ADSIL HAD BEEN RESTORED BY THE CIT(A) TO A.O, THEREFORE, THE COMMISSION PAID BY THE ASSESSEE TO ITS NMC, VIZ. ADSIL WOULD BE THAT AS DETERMINED BY THE A.O. THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 24 . WE NOW ADVE RT TO THE APPEAL OF THE REVENUE WHEREIN THE ORDER OF THE CIT(A) HAD BEEN ASSAILED BEFORE US ON THE GROUND THAT HE HAD ERRED IN VACATING THE OBSERVATIONS OF THE A.O THAT THE AFORESAID AMOUNT OF RS. 2,05,49,465/ - WAS LIABLE TO BE BROUGHT TO TAX AS FEES FOR TECHNICAL SERVICES IN THE HANDS OF THE ASSESSEE, AND HAD RATHER WRONGLY CONCLUDED THAT THE SAME WAS TO BE ASSESSED AS ITS BUSINESS P A G E | 36 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 INCOME. WE HAVE DELIBERATED ON THE ISSUE UNDER CONSIDERATION AND ARE OF THE CONSIDERED VIEW THAT THOUGH AS PER THE FACTS BORNE FROM THE RECORDS IT EMERGES THAT ADSIL WAS SIMPLY RENDERING SERVICES IN THE NATURE OF MARKETING TO THE ASSESSEE, BUT HOWEVER, THERE IS NOTHING AVAILABLE ON THE RECORDS WHICH COULD PERSUADE US TO CONCLUDE THAT THE AFORESAID RECEIPTS WERE IN THE NATURE OF FEES FOR TECHNICA L SERVICES PAID BY ADSIL TO THE ASSESSEE, WHICH THUS WERE LIABLE TO BE BROUGHT TO TAX AS PER ARTICLE 12 OF THE INDIA - SINGAP ORE DTAA. WE THUS AS OBSERVED HEREINABOVE ARE OF THE CONSIDERED VIEW THAT 10% OF THE AMOUNT CLAIMED BY THE ASSESSEE TO HAVE BEEN REC EIVED FROM ADSIL BY WAY OF REIMBURSEMENT OF EXPENSES IS TO BE ASSESSED AS BUSINESS INCOME , WHICH WOULD BE ENTITLED FOR SET OFF AGAINST THE AMOUNT OF COMMISSION PAID BY THE ASSESSEE TO ADSIL. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS DISMISSED. 25 . WE SHALL NO W ADVERT TO THE CONTENTION OF THE ASSESSEE THAT THE CIT(A) HAD ERRED IN HOLDING THAT TAX SHOULD BE LEVIED ON INTEREST INCOME OF RS.3,95,453/ - @ 20% BY APPLYING THE PROVISIONS OF SEC. 115A OF THE ACT , INSTEAD OF 15% AS PER DTAA. WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD ARRIVED AT THE AFORESAID OBSERVATIONS RELYING ON THE ORDER PASSED BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR A . Y 2004 - 05, VIZ. ITA NO. 1045/MUM/2008, DATED 31.05.2013 , AND THUS DENYING THE BENEFIT OF ARTICLE 11 OF THE INDIA - SINGAP ORE TAX TREATY HAD HELD THAT THE INTEREST O N INCOME TAX REFUND WAS LIABLE TO BE BROUGHT TO TAX UNDER SEC. 115A OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT AS THE ISSUE AND THE FACTS INVOLVED IN THE PRESENT APPEAL REMAIN THE SAME, THEREFORE, NO INFIRMITY EMERGES FROM THE AFORESAID FINDING S OF THE CIT(A). WE THUS UPHOLD THE ORDER OF THE CIT(A) IN CONTEXT OF THE P A G E | 37 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 ISSUE UNDER CONSIDERATION. THE GROUND OF APPEAL NO. 4 RAISED BY THE ASSESSEE IS DISMISSED. 26 . WE NOW ADVERT TO THE CONTENTION OF THE ASSESSEE THAT THE CIT(A) HAD ERRED IN UPHOLD ING THE TRANSFER PRICING ADJUSTMENT IN RESPECT OF USD DENOMINATED INTEREST FREE ECB LOAN WHICH WAS ADVANCED BY THE ASSESSEE TO ITS WHOLLY OWNED SUBSIDIARY COMPANY IN INDIA, VIZ. ADSIL. WE FIND THAT THE INTEREST FREE LOAN WHICH WAS ADVANCED BY THE ASSESSEE TO ITS NMC, VIZ. ADSIL , WAS TREATED BY THE REVENUE AS AN INTERNATIONAL TRANSACTION WHOSE ARMS LENGTH INTEREST WAS WORKED OUT BY APPLYING THE INDIAN PLR OF 10.50%. THE LD. A.R HAD SUBMITTED BEFORE US THAT AS THE AFORESAID AMOUNT WAS ADVANCED BY THE ASSESSEE TO ITS WOS, VIZ. ADSIL WITH A VIEW TO FINANCIAL LY STRENGTHEN THE SAID COMPANY WHICH WAS THE N ATIONAL MARKETING COMPANY FOR THE ASSESSEE IN INDIA, AS THE SAME WOULD HAD FACILITATED GARNERING OF MORE CUSTOMERS FO R THE ASSESSEE IN THE INDIA MARKET, THEREFORE , THE SAID ADVANCING OF INTEREST FREE LOAN WHICH WAS PROMPTED BY BUSINESS PRUDENCE AND COMMERCIAL REASONS , THUS NOT LIABLE TO BE SUBJECTED TO A TRANSFER PRICING ADJUSTMENT. WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE AFORESAID CONTENTION OF THE LD. A.R. WE ARE OF THE CONSIDERED VIEW THAT AS THE ADVANCING OF THE AFORESAID LOAN BY THE ASSESSEE TO ADSIL WAS AN INTERNATIONAL TRANSACTION, THEREFORE, THE TRANSFER PRICING PROVISIONS STOOD INVOKED . WE MAY HEREIN OB SERVE THAT THE LD. A.R HAD NOT DRAWN OUR ATTENTION TO ANY JUDICIAL PRONOUNCEMENT WHICH WOULD GO TO SUPPORT HIS AFORESAID VIEW. WE FIND THAT THOUGH THE LD. A.R HAD ASSAILED THE TRANSFER PRICING ADJUSTMENT IN RESPECT OF THE AFORESAID TRANSACTION FOR THE REASON THAT AS THE ASSESSEE HAD NOT CHARGED ANY SPECIFIED PRICE, THEREFORE, NO TRANSFER PRICING ADJUSTMENT IN RESPECT OF THE AFORESAID TRANSACTION WAS PERM ISSIBLE, BUT HOWEVER, HE HAD DURING P A G E | 38 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE COURSE OF HEARING OF THE APPEAL SBMITTED THAT HE WAS NOT PRESSING THE SAID CONTENTION. WE FIND THAT THE LD. A.R HAD DURING THE COURSE OF THE HEARING OF THE APPEAL FOCUSSED HIS CONTENTIONS IN RESPECT OF THE TRANSFER P RICING ADJUSTMENT , ON THE GROUND THAT THE ALP INTEREST RATE SHOULD NOT HAVE EXCEEDED THE LIBOR BEING THE RATE OF INTEREST APPLICABLE TO USD. WE FIND SUBSTANTIAL FORCE IN THE C ONTENTION RAISED BY THE LD. A.R BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATI ON AND ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. D.R THAT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. TATA AUTO C OMP SYSTEMS LTD. ( 2015) 374 ITR 516 (BOM) HAD CONCLUDED THAT ALP IN THE CASE OF LOANS ADVAN CED TO AE WAS TO BE DETERMINED ON THE BASIS OF RATE OF INTEREST BEING CHARGED IN THE COUNTRY WHERE THE LOAN IS RECEIVED/CONSUMED. WE HAVE PERUSED THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF TATA AUTOCOMP SYSTEMS LTD. (SUPRA) AND FIND TH AT THE HONBLE HIGH COURT HAD AS A MATTER OF FACT DISMISSED THE APPEAL OF THE REVENUE , FOR THE REASON THAT AS THE TRIBUNAL WHILE PASSING THE IMPUGNED ORDER IN THE CASE OF TATA AUTOCOMP SYSTEMS LTD. VS. ACIT (2012) (21 TAXMANN.COM 6) (MUM) HAD FOLLOWED THE VIEW TAKEN BY THE COORDINATE BENCHES OF THE TRIBUNAL IN THE CASE OF V.V.F LTD. VS. DY. CIT (ITA NO. 673/MUM/2006) AND DY. CIT VS. TECH MAHINDRA LTD. (2011) 12 TAXMANN.OCM 132 (MUM) , HO WEVER, N EITHER OF THE SAID ORDERS WERE FURTHER ASSAILED BY THE REVENUE . THUS, THE HIGH COURT TAKING COGNIZANCE OF THE FACT THAT THE REVENUE HAD ACCEPTED THE DECISION OF THE TRIBUNAL IN THE CASE OF V.V.F. LTD. (SUPRA) AND TECH MAHINDRA LTD. (SUPRA) , THEREFO RE, IT WOULD NOT BE PERMITTED ON THE PART OF THE REVENUE TO TAKE A DIFFERENT VIEW , AS AGAINST THE ONE WHICH HAD BEEN ALLOWED TO ATTAIN FINALITY. WE FIND THAT IT WAS ON THE BASIS OF THE AFORESAID P A G E | 39 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 OBSERVATIONS THAT THE HONBLE HIGH COURT HAD DECLINED TO ENTE RTAIN THE APPEAL FILED BY THE REVENUE. WE THUS ARE OF THE CONSIDERED VIEW THAT THE CONTENTION OF THE LD. D.R THAT THE HONBLE HIGH COURT HAD OBSERVED THAT THE ALP IN RESPECT OF INTEREST ON THE LOANS ADVANCED TO AES IS TO BE DETERMINED ON THE BASIS OF RATE OF INTEREST BEING CHARGED IN THE COUNTRY WHERE THE LOANS IS RECEIVED/CONSUMED IS ABSOLUTELY MISCONCEIVED. WE ARE RATHER PERSUADED TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R THAT THE ISSUE AS REGARDS THE DETERMINATION OF THE ALP IN RESPECT OF IN TEREST ON LOAN ADVANCED TO AE WAS LOOKED INTO BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - 1 VS. M/S VFS GLOBAL SERVICES PVT. LTD. (ITA NO. 336/MUM/2015, DATED 19.01.2017), WHEREIN THE HIGH COURT DEALING WITH THE CONTENTION OF THE REVENUE THAT TH E TRIBUNAL WAS NOT JUSTIFIED IN DIRECTING THE A.O/TPO TO DETERMINE THE ALP INTEREST BY CONSIDERING THE LIBOR PLUS 2% , AS AGAINST THE RATES OF THE INDIAN MARKET, HAD OBSERVED THAT THE VIEW OF THE TRIBUNAL AS REGARDS DETERMINATION OF THE ALP INTEREST AT LIBO R PLUS 2% APPEAR ED TO BE IN CONFORMITY WITH THE EARLIER JUDGMENT OF THE HIGH COURT IN THE CASE OF CIT - 2 VS. TATA AUTOCOMP SYSTEMS LTD. (ITA NO. 1320/MUM/2012, DATED 03.02.2015). WE ARE OF THE CONSIDERED VIEW THAT THE HONBLE HIGH COURT OF BOMBAY WHILE DISPOSIN G OF THE APPEAL FILED BY T HE REVENUE IN THE CASE OF CIT - 1 VS. M/S V.F.S GLOBAL SERVICES PVT. LTD. (ITA NO. 336/MUM/2015, DATED 19.07.2017 ) WAS NOT PERSUADED TO BE IN AGREEMENT WITH THE CONTENTION OF THE REVENUE THAT THE TRIBUNAL HAD ERRED IN DIRECT ING THE A.O/TPO TO DETERMINE THE ALP INTEREST BY CONSIDERING THE LIBOR PLUS 2% AND NOT THE RATES OF THE INDIAN MARKET. WE FURTHER FIND THAT A COORDINATE BENCH OF THE TRIBUNAL, ITAT, PUNE BENCH B, PUNE, HAD IN THE CASE OF TOOL TECH GLOBAL ENGINEERING PVT. LTD. VS. DCIT (ITA NO. 273/PN/2014, DATED P A G E | 40 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 22.08.2014) HAD OBSERVED THAT IN THE CASE OF A TRANSACTION IN FOREIGN CURRENCY BETWEEN TWO CROSS BORDER ENTITIES , THE ALP SHOULD BE COMPUTED IN CONTEXT OF THE PREVAILING LENDING PRACTISES IN THE INTERNATIONAL MARK ET. THE TRIBUNAL HAD FURTHER OBSERVED THAT IN RESPECT OF SUCH INTERNATIONAL TRANSACTIONS, THE DOMESTIC BANK RATE WOULD NOT BE A SOUND BASIS AND RATHER INTERNATIONAL LY ACCEPTED LIBOR RATE WOULD BE THE PROPER BASIS FOR BENCHMARKING THE ALP INTEREST RATE IN R ESPECT OF THE SAID TRANSACTIONS. WE FURTHER FIND THAT THE HONBLE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME TAX - 1 VS. M/S COTTON NATURALS (I) PVT. LTD. (ITA NO. 233/MUM/2014, DATED 27.03.2015) HAD OBSERVED THAT THE INTEREST RATE APPLICABLE SHOULD BE THAT OF THE CURRENCY CONCERNED IN WHICH THE LOAN HAS TO BE REPAID. THE HONBLE HIGH COURT HAD DISAGREED WITH THE VIEW THAT THE INTEREST RATES WERE TO BE COMPUTED ON THE BASIS OF INTEREST PAYABLE ON THE CURRENCY OR LEGAL TENDER OF THE PLACE OR THE COUNTRY OF RESIDENCE OF EITHER PARTY. IT WAS FURTHER OBSERVED BY THE HIGH COURT THAT THE CURRENCY IN WHICH THE LOAN IS TO BE REPAID NORMALLY DETERMINED THE RATE OF INTEREST. THE AFORESAID JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF M/S COTT ON NATURALS (I) PVT. LTD. (SUPRA) HAD THEREAFTER BEEN FOLLOWED BY A COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S FIRESTAR INTERNATIONAL PVT. LTD. VS. ACIT, MUMBAI (ITA NO. 488/MUM/2015, DATED 31.07.2015). THE TRIBUNAL BY TAKING SUPPORT OF THE AFORE SAID JUDGMENT OF THE HIGH COURT OF DELHI HAD CONCLUDED THAT THE APPLICATION OF THE STATE BANK OF INDIA PLR OF 11.75% FOR DETERMINING THE ALP OF THE INTEREST O N LOAN ADVANCED IN USD BY THE ASSESSEE TO ITS AE , COULD NOT BE APPROVED. WE HAVE DELIBERATED ON TH E ISSUE UNDER CONSIDERATION AND FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN IN THE AFORESAID JUDICIAL PRONOUNCEMENT S, ARE THUS OF THE P A G E | 41 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 CONSIDERED VIEW THAT THE ALP OF THE INTEREST ON THE LOANS ADVANCED BY THE ASSESSEE TO ITS SUBSIDIARY COMPANY, VIZ. ADSIL WAS TO BE DETERMINED ON LIBOR AND NOT AS PER THE INDIAN PLR RATE SO ADOPTED BY THE A.O/TPO. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS DIRECT THE A.O /TPO T O TAKE ALP OF THE INTEREST ON THE LOAN ADVANCED BY THE ASSESSEE TO ADSIL AS PER THE LIBOR RATE PLUS 2% . WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS PARTLY ALLOW THE GROUND OF APPEAL NO. 5 RAISED BY THE ASSESSEE BEFORE US. 27 . THE ASSESSEE HAD FURTHER A SSAILED BEFORE US THE LEVY OF INTEREST UNDER SEC. 234B OF RS. 76,83,037/ - BY THE A.O , WHICH THEREAFTER HAD BEEN AFFIRMED BY THE CIT(A). IT WAS SUBMITTED BY THE LD. A.R THAT THE HONBLE HIGH COURT OF BOMBAY IN THE ASSESS E S OWN CASE FOR A . Y 2003 - 04, VIZ. THE DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VS. M/S ABACUS INTERNATIONAL PTE. LTD. (ITA (L) NO. 2424/MUM/2010, DATED 01.07.2011) , RELYING ON ITS EARLIER JUDGMENT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VS. N.G.C NETWORK ASIA CCC (2009) 313 ITR 187 (BOM), HAD CONCLUDED THAT THE TRIBUNAL HAD RIGHTLY DELETED THE INTEREST LEVIED ON THE ASSESSEE UNDER SEC. 234B OF THE ACT. WE THUS IN TERMS OF THE AFORESAID OBSERVATIONS OF THE HONBLE HIGH COURT DIRECT THE A.O TO DELETE THE INTEREST LEV IED ON THE ASSESSEE UNDER SEC. 234B. THE GROUND OF APPEAL NO. 6 RAISED BY THE ASSESSEE IS ALLOWED. 28 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. 29 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED, IN TERMS OF OUR AFORESAID OBSERVATIONS. P A G E | 42 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 ITA NO. 7367/MUM/2010 AY: 2006 - 07 30 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2006 - 07. THE ASSESSEE ASSAILING THE O RDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: THE APPELLANT OBJECTS TO THE OR DER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME - TAX ACT, 1961 DATED 23 AUGUST 2010 (RECEIVED ON 30 AUGUST 2010) PASSED BY THE DEPUTY DIRECTOR OF INCOME - TAX, (INTERNATIONAL TAXATION) - 1(1), MUMBAI ('DDIT') FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING AMONG OTHER GROUNDS: 1. THE LEARNED DDIT ERRED IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS.69,217,625/ - . 2. BUSINESS CONNECTION /PERMANENT ESTABLISHMENT IN INDIA 2.1 THE LEARNED DDIT ERRED IN HOLDING THAT THE APPELLANT HAD A BUSINESS CONNECTION IN INDIA IN TERMS OF THE INCOME - TAX ACT, 1961 AND A PERMANENT ESTABLISHMENT ('PE') IN INDIA IN TERMS OF THE INDIA - SINGAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTAA'). 2.2 THE LEARNED DDIT ERRED IN HOLDING THAT ABACUS DISTRIBUTION SYSTEMS (INDIA) PVT. LTD. ('ADSIL') FUNCTIONS UNDER THE DIRECT CONTROL OF ITS PRINCIPAL NAMELY THE APPELL ANT. 2.3 THE LEARNED DDIT ERRED IN HOLDING THAT THE APPELLANT HAS A FIXED PLACE OF BUSINESS IN INDIA. 2.4 THE LEARNED DDIIT ERRED IN HOLDING THAT THE APPELLANT MAINTAINS TELECOMMUNICATION NETWORK IN INDIA THROUGH WHICH MESSAGES ARE TRANSMITTED. 2.5 THE LEA RNED DDIT ERRED IN OBSERVING THAT THE APPELLANT CARRIES OUT ITS ACTIVITIES OF COMPUTERIZED RESERVATION SYSTEM (CRS) THROUGH THE ABACUS COUNTRY NODE LOCATED IN INDIA AND IS UNDER THE MANAGEMENT AND CONTROL OF THE APPELLANT. 2.6 THE LEARNED DDIT ERRED IN OBS ERVING THAT ADSIL SECURES BUSINESS FOR THE APPELLANT BY ENTERING INTO SUBSCRIPTION AGREEMENT WITH THE TRAVEL AGENTS AND THIS ACTIVITY IS HABITUALLY, WHOLLY AND EXCLUSIVELY PERFORMED BY ADSIL FOR THE APPELLANT. THE LEARNED DDIT FURTHER ERRED IN HOLDING THAT ADSIL CONSTITUTES AGENCY PE IN TERMS OF ARTICLE 8(C) AND 9 OF INDIA - SINGAPORE DTAA. 2.7 THE LEARNED DDIT ERRED IN OBSERVING THAT ADSIL IS DEPENDENT ON THE APPELLANT FOR ITS FINANCIAL EXISTENCE AND I S PERFORMING ONLY ACTIVITIES FOR THE APPELLANT AND THAT ADSIL IS NOT AN INDEPENDENT AGENT. 3. INCOME ATTRIBUTABLE TO PE P A G E | 43 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 3.1 THE LEARNED DDIT ERRED IN TREATING A SUM OF RS. 53,28,56,124/ - AS INCOME ATTRIBUTABLE TO THE PE IN INDIA AND COMPUTING THE INCOME LIA BLE TO TAX IN INDIA AS RS.5,32,85,612/ - . 3.2 THE LEARNED DDIT ERRED IN CALCULATING THE INCOME OF THE APPELLANT ON PRESUMPTIVE BASIS BY ESTIMATING THE PROFIT MARGIN OF THE APPELLANT AS 10% OF THE RECEIPTS ATTRIBUTABLE TO INDIAN OPERATIONS OF RS. 53,28,56,124/ - AND TREATING A SUM OF RS. 5,32,85,6 12/ - AS THE INCOME OF THE APPELLANT. 3.3 THE LEARNED DDIT ERRED IN CONSIDERING THE BASE GROSS RECEIPTS AS US$ 1,19,87,764/ - INSTEAD OF US$ 1,11,83,749/ - AS INDICATE D IN THE GROSS RECEIPTS STATEMENT SUBMITTED BY THE APPELLANT. 3.4 THE LEARNED DDJT ERRED IN ADDING AN AMOUNT OF US$ 8,04,015/ - TO THE GROSS RECEIPTS ON THE BASIS OF THE STATEMENT SUBMITTED BY INDIAN AIRLINES WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAS RECONCILED THE DIFFERENCE IN THE AMOUNTS, WHICH WAS PRIMARILY ON ACCOUNT OF INCLUSION OF BOOKINGS GENERATED FROM OTHER MARKETS BY INDIAN AIRLINES. 3.5 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED DDIT ERRED IN INCLUDING AN AMOUNT OF US$ 1,95,236/ - IN THE GROSS RECEIPTS IN RESPECT OF INDIAN AIRLINES, WHICH PERTAINS TO MARCH 2005. 3.6 THE LEARNED DDIT ERRED IN NOT DEDUCTING THE COMMISSION PAID TO ADSIL OF RS. 12,26 , 88,584/ - . IN THE ATTRIBUTION OF INCOME ON THE BASIS THAT THE INCOME IS ESTIMATED AS PER RULE 10 OF THE INCOME - TAX RULES AND IN LIGHT OF THE FACT THAT THE CBDT HAS WITHDRAWN CIRCULAR NO. 23 DATED 23 JULY 1969 VIDE CIRCULAR NO. 7/2009 DATED 29 OCTOBER 2009. 3.7 WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE APPELLANT IS NOT LIABLE TO TAX IN INDIA AS REMUNERATION PAID TO ADSIL CONSUMED THE ENTIRE INCOME AND THERE WAS NO FURTHER INCOME CHARGEABLE TO TAX IN INDIA. 4. REIMBURSEMENT OF EXPENSES 4.1 THE LEARNED DDIT ERRED IN HOLDING THE EXPENSES REIMBURSED BY ADSIL AMOUNTING TO RS. 2,93,20,127/ - AS FORMING PART OF BUSINESS INCOME OF THE APPELLANT AND TAXING 10% OF THE SAID AMOUNT (I.E. RS. 29,32,012/ - ). 4.2 THE LEARNED DDIT ERRED IN NOT APPRECIATING THAT THE EXPENSES REIMBURSED BY ADSIL WERE TOWARDS EXPENSES INCURRE D BY THE APPELLANT ON LINE CHARGES, SERVICE CHARGES AND OTHER EXPENSES AND THE SAME WERE IN THE NATURE OF PURE REIMBURSEMENT NOT HAVING ANY ELEMENT OF INCOME / SERVICE. 5. APPLICABILITY OF ARTICLE 24 OF INDIA SINGAPORE DTAA THE LEARNED DDIT ERRED IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT THE PROVISIONS OF ARTICLE 24 OF INDIA - SINGAPORE DTAA ARE NOT TRIGGERED. 6. TRANSFER PRICING ADJUSTMENT 6.1 THE LEARNED DDIT ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS. 1,30,00,000/ - U/S 92CA(4) OF THE ACT, IN P A G E | 44 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 RESPECT OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT DURING THE YEAR ENDED 31 MARCH 2006. 6.2 THE LEARNED DDIT IN DETERMINING THE ARMS LENGTH INTEREST RATE ERRED IN NOT APPRECIATING IN THE PROPER PERSPECTIVE THE BUSINESS AND ECONOMIC CIRCUMSTANCES PREVAILING AT THE TIME OF PROVIDING THE INTEREST FREE LOAN OF RS. 12,66,62,900/ - BY THE APPELLANT TO THE ASSOCIATED ENTERPRISE 6.3 THE LEARNED DDIT ERRED IN NOT APPRECIATING / CONSIDERING THAT IN RESPECT OF THE AFORESAID ADJUSTMENT OF RS. 1,30,00,000/ - TO THE TOTAL INCOME OF THE APPELLANT (REPRESENTING ALLEGED ARM'S LENGTH INTEREST ON THE INTEREST - FREE LOAN GRANTED BY THE APPELLANT TO ITS ASSOCIATED ENTERPRISE - ABACUS DISTRIBUTION SYSTEMS INDIA PRIVATE L IMITED) CORRESPONDING DEDUCTION IN TAX ASSESSMENTS IS NOT CLAIMED BY THE AFORESAID ASSOCIATED ENTERPRISE, AND ACCORDINGLY AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. 6.4 THE LEARNED DDIT ERRED BY NOT ALLOWING CORRESPONDING DEDUCTION IN THE HANDS OF THE SAID ASSOCIATED ENTERPRISE OF THE INTEREST FREE LOAN GRANTED BY THE APPELLANT. I. THE LEARNED DDIT ERRED IN NOT APPRECIATING THAT THERE IS NO LOSS TO THE REVENUE BY GRANTING OF INTEREST FREE LOAN BY THE APPELLANT TO ITS AFORESAID AE. II. THE LEARNED DDIT ERRED BY NOT CONSIDERING THE FACT THAT IF THE APPELLANT HAD CHARGED INTEREST INSTEAD OF THE LOAN BEING INTEREST FREE THERE WOULD BE LOSS TO REVENUE OF INDIA CONSIDERING THE DEDUCTIBILITY OF THE INTEREST EXPENSE IN THE HANDS OF THE BORROWER AND LOW WITHHOLDING TAX IN RESPECT OF INTEREST DUE TO THE ASSESSEE. 6.5 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE APPELLANT STATES THAT THE LEARNED DDIT ERRED IN LAW BY USING PRIME LENDING RATE INSTEAD OF LIBOR FOR DETERMINING THE ARMS LENGTH INTEREST AMOUNT. 7. SHORT CREDIT OF TDS THE LEARNED DDIT ERRED IN GIVING SHORT CREDIT OF TDS FOR RS. 38,50,596/ - 8. LEVY OF INTEREST UNDER SECTION 234B 8.1 THE LEARNED DDIT ERRED IN LEVYING INTER EST UNDER SECTION 234B OF RS. 21,17,980/ - . 8.2 THE LEARNED DDIT ERRED IN NOT APPRECIATING THAT IN CASE A VIEW IS TAKEN THAT THE INCOME EARNED BY IT IS LIABLE TO TAX IN INDIA, APPROPRIATE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE BY THE PERSONS WHO PAID THE INCOME. ACCORDINGLY, NO ADVANCE TAX WAS PAYABLE BY THE APPELLANT (ENTIRE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE) AND THE QUESTION OF LEVY OF INTEREST UNDER SECTION 234B FOR DELAYED PAYMENT OF TAX DOES NOT ARISE. 9. LEVY OF INTEREST UNDER SECTION 234D THE LEARNED DDIT ERRED IN LEVYING INTEREST UNDER SECTION 234D OF RS. 36,08,313/ - . P A G E | 45 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 10. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 11. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 31 . THE LD. A.R TAKING COGNIZANCE OF THE FACT THAT CERTAIN COMMON ISSUES WERE INVOLVED IN THE APPEALS OF THE ASSESSEE FOR THE A.YS 2005 - 06 TO 2011 - 12, THEREFORE, FOR THE SAKE OF READY REFERENCE HAD PLACED ON RECORD A CHART REVEALING THE SAID COMMON ISSUES. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE WHEREIN THE ASSESSEE HAD ASSAILED THE INCOME ASSESSED BY THE A.O AT RS. 8,96,95,213/ - , BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. THE LD. A.R SUBMITTED THAT THE ISSUES AND THE FACTS INVOLVED IN G ROUND S OF APPE AL NO (S) . 2 TO 6 WERE THE SAME AS WERE INVOLVED IN THE GROUNDS OF APPEAL NO(S). 1 TO 5 IN THE APPEAL OF THE ASSESSEE FOR A . Y 2005 - 06, VIZ. ITA N O . 4882/MUM/2015 .THE AFORESAID FACTUAL POSITION SO CANVASSED BEFORE US HAD NOT BEEN REBUTTED BY THE LD. D.R. WE HAVE PERUSED THE GROUNDS OF APPEAL NO(S). 2 TO 6 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL AND FIND THAT THE SAME PERTAIN TO THE ISSUES VIZ. (I). EXISTENCE OF THE PE/BUSINESS CONNECTION OF THE ASSESSEE IN INDIA; (II). ATTRIBUTION OF INCOME TO PE; (III). REIMBURSEMENT OF EXPENSES; (IV). APPLICABILITY OF ARTICLE 24 OF INDIA - SINGAPORE DTAA AND INTEREST INCOME; AND (V). TRANSFER PRICING ADJUSTMENT OF THE INTEREST ON LOAN ADVANCED TO ASDIL. WE ARE OF THE CONSIDERED VIEW THAT AS THE SAID ISSUES HAD BEEN ADJUDI CATED BY US WHILE DISPOSING OF THE GROUNDS OF APPEAL NO(S) 1 TO 5 OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO.4882/MUM/2015, THEREFORE, THE VIEW THEREIN TAKEN BY US WHILE DISPOSING OF THE AFORESAID RESPECTIVE GROUNDS OF APPEAL SHALL APPLY MUTATIS MUTANDIS FOR THE ADJUDICATION OF THE GROUNDS OF APPEAL NO(S). 2 TO 6 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL BEFORE US. THE GROUNDS OF APPEAL P A G E | 46 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 NO(S). 2 TO 6 OF THE PRESENT APPEAL ARE THUS DISPOSED OF IN TERMS OF OUR AFORESAID OBSERVATIONS. 32 . THE ASSESSEE H AD FURTHER BY WAY OF GROUND OF APPEAL NO. 7 CLAIMED THAT THE DDIT (IT) - 1(1), MUMBAI, WHILE PASSING THE ORDER UNDER SEC. 143(3) R.W.S 144C(13) HAD ERRED IN GIVING SHORT CREDIT OF TDS OF RS.38,50,596/ - . IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH THE ASSESSEE HAD SUBMITTED THE ORIGINAL TDS CERTIFICATES AND AN INDEMNITY BOND IN RESPECT OF ITS AFORESAID CLAIM, HOWEVER, THE SAME HAD NOT ALLOWED BY THE DRP. WE HAVE PERUSED THE ORDER OF THE DRP AND FIND FROM THE RECORDS THAT THOUGH THE ASSESSEE AS PER ITS OBJECTION TO THE DRAFT ASSESSMENT ORDER UNDER SEC.143(3) R.W.S 144C(1), DATED. 31.12.2009, HAD OBJECTED TO THE SHORT CREDIT OF TDS OF RS. 38,50,596/ - HOWEVER, THE SAME HAD NOT BEEN ADJUDICATED UPON BY THE DRP . WE THUS RESTORE THE MAT T ER TO THE FILE OF THE A.O WITH A DIRECTION TO VERIFY THE FACTUAL POSITION AND GIVE CONSEQUENTIAL EFFECT TO THE SAME. NEEDLESS TO SAY, THE A.O WHILE GIVING EFFECT TO OUR AFORESAID DIRECTION SHALL AFFORD AN OPPORTUNITY TO THE ASSESSEE WHO SHALL REMAIN AT A LIBERTY TO FORTIFY ITS AFORESAID CLAIM. THE GROUND OF APPEAL NO. 7 IS ALLOWED FOR STATISTICAL PURPOSE S . 33 . THE ASSESSEE FURTHER BY WAY OF GROUND OF APPEAL NO. 8 HAD ASSAILED THE LEVY OF INTEREST OF RS. 21,17,980/ - BY THE A.O UNDER SEC. 234B . WE ARE OF THE CONSIDERED VIEW THAT AS THE I SSUE AS REGARDS LEV Y OF INTEREST UNDER SEC. 234B HAD BEEN ADJUDICATED BY US IN THE AFOREMENTIONED APPEAL OF THE ASSESSEE FOR A . Y 2005 - 06, VIZ. ITA 4882/MUM/2015, THEREFORE, OUR DIRECTIONS PASSED WHILE DISPOSING OF THE AFORESAID G ROUND OF APPEAL NO. 6 IN TH E CASE OF THE ASSESSEE FOR A.Y. 2005 - 06, VIZ. ITA 4882/MUM/2015 SHALL TO THE SAID EXTENT APPLY P A G E | 47 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 MUTATIS MUTANDIS FOR DISPOSING OF THE GROUND OF APPEAL NO. 8 RAISED BY THE ASSESSEE BEFORE US IN THE PRESENT APPEAL. THE GROUND OF APPEAL NO. 8 IS ALLOWED IN TER MS OF OUR AFORESAID OBSERVATIONS. 34 . TH E ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 9 CHALLENGED THE LEVY OF INTEREST OF RS. 36,08,313/ - BY THE A.O UNDER SEC. 234 D. THE LD. A.R HAD DURING THE COURSE OF HEARING OF THE APPEAL NOT ASSAILED THE VALIDITY OR POINTED OUT ANY MISTAKE ON THE PART OF THE A.O IN CHARGING INTEREST UNDER SEC. 234D. WE ARE OF THE CONSIDERED VIEW THAT AS THE QUANTIFICATION OF THE SAME WOULD BE CONSEQUENTIAL TO GIVING EFFECT TO OUR AFORESAID ORDER, THEREFORE, THE A.O SHALL WHILE GI VING APPEAL EFFECT TO OUR ORDER GIVE THE NECESSARY EFFECT TO THE SAME . THE GROUND OF APPEAL NO. 9 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 35 . THE G ROUND S OF APPEAL NO (S) . 10 AND 11 BEING GENERAL IN NATURE ARE DISMISSED AS NOT PRESSED. 36 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 8479/MUM/2011 AY: 2007 - 08 35 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2007 - 08. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: THE APPELLANT OBJECTS TO THE ORDER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME - TAX ACT, 1961 DATED 11 OCTOBER 2011 (RECEIVED ON 17 OCTOBER 2011) PASSED BY THE DEPUTY DIRECTOR OF INCOME - TAX, (INTERNATIONAL TAXATION) - 1(1), MUMBAI ('DDIT') FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING AMONG OTHER GROUNDS: 1. THE LEARNED DDIT ERRED IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS. 8,81,87,359 / - . P A G E | 48 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 2. BUSINESS CONNECTION I PERMANENT ESTABLISHMENT IN INDIA 2.1 THE LEARNED DDIT ERRED IN HOLDING THAT THE APPELLANT HAD A BUSINESS CONNECTION IN INDIA IN TERMS OF THE INCOME - TAX ACT, 1961 AND A PERMANENT ESTABLISHMENT ('PE') IN INDIA IN TERMS OF THE INDIA - SIN GAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTAA'). 2.2 THE LEARNED DDIT ERRED IN HOLDING THAT ABACUS DISTRIBUTION SYSTEMS (INDIA) PVT. LTD. ('ADSIL') FUNCTIONS UNDER THE DIRECT CONTROL OF ITS PRINCIPAL NAMELY THE APPELLANT. 2.3 THE LEARNED DDIT ERRED IN HOLDING THAT THE APPELLANT HAS A FIXED PLACE OF BUSINESS IN INDIA. 2.4 THE LEARNED DDIT ERRED IN HOLDING THAT THE APPELLANT MAINTAINS TELECOMMUNICATION NETWORK IN INDIA THROUGH WHICH MESSAGES ARE TRANSMITTED. 2.5 THE LEARNED DDIT ERRED IN OBSERVING THAT TH E APPELLANT CARRIES OUT ITS ACTIVITIES OF COMPUTERIZED RESERVATION SYSTEM (CRS) THROUGH THE ABACUS COUNTRY NODE LOCATED IN INDIA AND IS UNDER THE MANAGEMENT AND CONTROL OF THE APPELLANT. 2.6 THE LEARNED DDIT ERRED IN OBSERVING THAT ADSIL SECURES BUSINESS F OR THE APPELLANT BY ENTERING INTO SUBSCRIPTION AGREEMENT WITH THE TRAVEL AGENTS AND THIS ACTIVITY IS HABITUALLY, WHOLLY AND EXCLUSIVELY PERFORMED BY ADSIL FOR THE APPELLANT. THE LEARNED DDIT FURTHER ERRED IN HOLDING THAT ADSIL CONSTITUTES AGENCY PE IN TERMS OF ARTICLES 8(C) AND 9 OF INDIA - SINGAPORE DTAA. 2.7 THE LEARNED DDIT ERRED IN OBSERVING THAT ADSIL IS DEPENDENT ON THE APPELLANT FOR ITS FINANCIAL EXISTENCE AND IS PERFORMING ONLY ACTIVITIES FOR THE APPELLANT AND THAT ADS IL IS NOT AN INDEPENDENT AGE NT. 3. INCOME ATTRIBUTABLE TO PE 3.1 THE LEARNED DDIT ERRED IN TREATING A SUM OF RS. 65.08,31,222 / - AS ATTRIBUTABLE TO THE PE IN INDIA AND COMPUTING THE INCOME LIABLE TO TAX IN INDIA AS RS. 6,50,83,122 / - (10% OF RS. 65,08,31,222 / - ). 3.2 THE LEARNED DDIT ERRED IN CALCULATING THE INCOME OF THE APPELLANT ON PRESUMPTION BASIS BY ESTIMATING THE PROFIT MARGIN OF THE APPELLANT AS 10% OF THE RECEIPTS ATTRIBUTABLE TO INDIAN OPERATIONS OF RS. 65,08,31,222 / - AND TREATING A SUM OF RS. 6,50,83,122 / - AS THE INCOME OF T HE APPELLANT. 3.3 THE LEARNED DDIT ERRED IN NOT DEDUCTING THE COMMISSION PAID TO ADSIL OF RS. 16,55,41,921 / - , IN THE ATTRIBUTION OF INCOME ON THE BASIS THAT THE INCOME IS ESTIMATED AS PER RULE 10 OF THE INCOME - TAX RULES AND IN LIGHT OF THE FACT THAT THE CB DT HAS WITHDRAWN CIRCULAR NO. 23 DATED 23 JULY 1969 VIDE CIRCULAR NO. 7/2009 DATED 29 OCTOBER 2009. 4. REIMBURSEMENT OF EXPENSES 4.1 THE LEARNED DDIT ERRED IN HOLDING THAT THE EXPENSES REIMBURSED BY ADSIL AMOUNTING TO RS. 8,73,3 9,453 / - ARE PART OF P A G E | 49 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 BUSINESS INCOME OF THE APPELLANT AND THEREBY TAXING 10% OF THE SAID AMOUNT (I.E. RS. 87,33,945 / - ). 4.2 THE LEARNED DDIT ERRED IN NOT APPRECIATING THAT THE EXPENSES REIMBURSED BY ADSIL WERE TOWARDS EXPENSES INCURRED BY THE APPELLANT ON LINE CHARGES, SERVICE CHARGES AND OTHER EXPENSES AND THE SAME WERE IN THE NATURE OF PURE REIMBURSEMENT NOT HAVING ANY ELEMENT OF INCOME / SERVICE. 5. APPLICABILITY OF ARTICLE 24 OF INDIA - SINGAPORE DTAA THE LEARNED DDIT ERRED IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT THE PROVISIONS OF ARTICLE 24 OF INDIA - SINGAPORE DTAA ARE NOT TRIGGERED. 6. TRANSFER PRICING ADJUSTMENT 6.1 THE LEARNED DDIT ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS.1,43,70,292 / - UNDER SECTION 92CA(4), IN RESPECT OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT DURING THE YEAR ENDED 3 1 MARCH 2007. 6.2 THE LEARNED DDIT ERRED IN DETERMINING THE ARMS LENGTH INTEREST RATE ERRED IN NOT APPRECIATING IN THE PROPER PERSPECTIVE THE BUSINESS AND ECONOMIC CIRCUMSTANCES PREVAILING AT THE TIME OF PROVIDING THE INTEREST FREE LOAN OF RS. 12,40,95,790 / - BY THE APPELLANT TO ADS IL . 6.3 THE LEARNED DDIT ERRED IN NOT APPRECIATING / CONSIDERING THAT IN RESPECT OF THE ADJU STMENT OF RS.1,43,70,292 / - TO THE TOTAL INCOME OF THE APPELLANT REPRESENTING ALLEGED ARM'S LENGTH INTEREST ON THE INTEREST - FREE LOAN GRANTED BY THE APPELLANT TO ADSIL NO CORRESPONDING DEDUCTION IS CLAIMED BY ADSIL IN ITS TAX RETURN OR ASSESSMENTS, AND ACCORDINGLY AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. 6.4 THE LEARNED DDIT ERRED BY NOT ALLOWING CORRESPONDING DEDUCTION OF THE INTEREST FREE LOAN GRANTED BY THE APPELLANT IN THE HANDS OF ADS IL. 6.5 THE LEARNED DDIT ERRED IN NOT APPRECIATING THAT THE RE IS NO LOSS TO THE REVENUE BY GRANTING OF INTEREST FREE LOAN BY THE APPELLANT TO ADSIL. 6.6 THE LEARNED DDIT ERRED BY NOT CONSIDERING THE FACT THAT IF THE APPELLANT HAD CHARGED INTEREST INSTEAD OF THE LOAN BEING INTEREST FREE THERE WOULD BE LOSS TO REVENUE OF INDIA CONSIDERING THE DEDUCTIBILITY OF THE INTEREST EXPENSE IN THE HANDS OF THE BORROWER (I.E. ADSIL) AND LOW WITHHOLDING TAX IN RESPECT OF INTEREST DUE TO THE APPELLANT. 6.7 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE APPELLANT STATES THAT THE LEARNED DDIT ERRED IN LAW BY USING PRIME LENDING RATE INSTEAD OF LIBOR FOR DETERMINING THE ARMS LENGTH INTEREST AMOUNT. 7. SHORT CREDIT OF TDS THE LEARNED DDIT ERRED IN GRANTING TDS CREDIT FOR RS. 3,07,55,35 1/ AS AGAINST CLAIM OF RS. 3,11,76,668/ - IN THE RET URN OF INCOME, LEADING TO A SHORT CREDIT OF TDS OF RS. 4,211,317/ - . 8. LEVY OF INTEREST UNDER SECTION 234B P A G E | 50 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 8.1 THE LEARNED DDIT ERRED IN LEVYING INTEREST UNDER SECTION 234B OF RS. 33,68,532/ - . 8.2 THE LEARNED DDIT ERRED IN NOT APPRECIATING THAT IN CASE A VIEW IS TAKEN THAT THE INCOME EARNED BY IT IS LIABLE TO TAX IN INDIA, APPROPRIATE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE BY THE PERSONS WHO PAID THE INCOME. ACCORDINGLY, NO ADVANCE TAX WAS PAYABLE BY THE APPELLANT (ENTIRE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE) AND THE QUESTION OF LEVY OF INTEREST UNDER SECTION 234B FOR DELAYED PAYMENT OF TAX DOES NOT ARISE. 8.3 THE LEARNED DDIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN APPELLANTS OWN EASE FOR LEVY OF INTEREST UNDER SECTION 234B. 9. LEVY OF INTEREST UNDER SECTION 234D THE LEARNED DDIT ERRED IN LEVYING INTEREST UNDER SECTION 234D OF RS. 55,11,360/ - . 10. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 11. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 37 . THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE WHEREIN THE ASSESSEE HAD ASSAILED THE INCOME ASSESSED BY THE A.O AT RS. 8,81,87,359/ - , BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. THE LD. A.R ADVERTING TO THE GROUNDS OF APPEAL NO(S). 2 TO 6 , SUBMITTED THAT THE ISSUES AND THE FACTS REMAINED THE SAME AS WERE RAISED BY WAY OF GROUNDS OF APPEAL NO(S). 1 TO 5 IN THE APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. IT A NO. 4882/MUM/2015.THE AFORESAID FACTUAL POSITION SO CANVASSED BEFORE US HAD NOT BEEN REBUTTED BY THE LD. D.R. WE HAVE PERUSED THE GROUNDS OF APPEAL NO(S). 2 TO 6 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL AND FIND THAT THE SAME PERTAIN TO THE ISSUES VI Z. (I). EXISTENCE OF THE PE/BUSINESS CONNECTION OF THE ASSESSEE IN INDIA; (II). ATTRIBUTION OF INCOME TO PE; (III). REIMBURSEMENT OF EXPENSES; (IV). APPLICABILITY OF ARTICLE 24 OF INDIA - SINGAPORE DTAA AND INTEREST INCOME; AND (V). TRANSFER PRICING ADJUSTME NT OF THE INTEREST ON LOAN ADVANCED TO ASDIL. WE ARE OF THE CONSIDERED VIEW THAT AS THE AFORE SAID ISSUES HAD BEEN ADJUDICATED BY US WHILE DISPOSING OF THE P A G E | 51 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 GROUNDS OF APPEAL NO(S) 1 TO 5 OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO.4882/MUM/2015, THEREFORE, THE VIEW TAKEN BY US WHILE DISPOSING OF THE AFORESAID RESPECTIVE GROUNDS OF APPEAL SHALL APPLY MUTATIS MUTANDIS FOR THE ADJUDICATION OF THE GROUNDS OF APPEAL NO(S). 2 TO 6 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL BEFORE US. THE GROUNDS OF APPEAL NO(S) . 2 TO 6 OF THE PRESENT APPEAL ARE THUS DISPOSED OF IN TERMS OF OUR AFORESAID OBSERVATIONS. 38 . THE ASSESSEE HAD FURTHER BY WAY OF G ROUND OF APPEAL NO. 7 CLAIMED THAT THE DDIT(IT) - 1(1), MUMBAI, WHILE PASSING THE ORDER UNDER SEC. 143(3) R.W.S 144C(13) HAD BY ALLOWING CRE DIT OF TDS OF RS. 3,07,55,351/ - AS AGAINST CLAIM OF RS.3,11,76,668/ - RAISED BY THE ASSESSEE IN ITS R ETURN OF INCOME, HAD ERRED IN GIVING SHORT CREDIT OF TDS OF RS. 4,21,317/ - . WE THOUGH FIND THAT NEITHER ANY SUCH OBJECTION OF THE ASSESSEE A S REGARDS SHORT CREDIT OF TDS IS BORNE FROM THE RECORDS, NOR THE LD. A.R HA D DRAWN OUR ATTENTION TO ANY SUCH MATERIAL IN SUPPORT OF HIS AFORESAID CONTENTION, HOWEVER, IN ALL FAIRNESS DIRECT THE A.O TO CONSIDER THE SAID CLAIM OF THE ASSESSEE AT THE TIME OF GIVING APPEAL EFFECT TO OUR ORDER. NEEDLESS TO SAY, THE A.O WHILE GIVING EFFECT TO OUR AFORESAID DIRECTION SHALL AFFORD AN OPPORTUNITY TO THE ASSESSEE WHO SHALL REMAIN AT A LIBERTY TO FORTIFY ITS AFORESAID CLAIM BEFORE THE A.O . THE GROUND OF APPEAL NO. 7 IS ALLOWED FOR STATISTICAL PURPOSES. 39 . THE ASSESSEE FURTHER BY WAY OF GROUND OF APPEAL NO. 8 HAD ASSAILED THE LEVY OF INTEREST OF RS. 33,68,532/ - BY THE A.O UNDER SEC. 234B. WE ARE OF THE CONSIDERED VIEW THAT AS THE ISSUE AS REGARDS LEVY OF INTEREST U NDER SEC. 234B HAD BEEN ADJUDICATED BY US IN THE AFOREMENTIONED APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA 4882/MUM/2015, THEREFORE, OUR DIRECTIONS PASSED WHILE DISPOSING OF P A G E | 52 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE AFORESAID GROUND OF APPEAL NO. 6 IN THE CASE OF THE ASSESSEE FOR A.Y. 20 05 - 06, VIZ. ITA 4882/MUM/2015 SHALL TO THE SAID EXTENT APPLY MUTATIS MUTANDIS FOR DISPOSING OF THE GROUND OF APPEAL NO. 8 RAISED BY THE ASSESSEE BEFORE US IN THE PRESENT APPEAL. THE GROUND OF APPEAL NO. 8 IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 40. THE ASSESSEE HAD BY WAY OF G ROUND OF APPEAL NO. 9 CHALLENGED THE LEVY OF INTEREST OF RS. 55,11,360/ - BY THE A.O UNDER SEC. 234D. THE LD. A.R HAD DURING THE COURSE OF HEARING OF THE APPEAL NOT ASSAILED THE VALIDITY OR POINTED OUT ANY MISTAKE ON THE PA RT OF THE A.O IN CHARGING INTEREST UNDER SEC. 234D. WE ARE OF THE CONSIDERED VIEW THAT AS THE QUANTIFICATION OF THE INTEREST UNDER SEC. 234D WOULD BE CONSEQUENTIAL TO GIVING EFFECT TO OUR AFORESAID ORDER, THEREFORE, THE A.O SHALL WHILE GIVING APPEAL EFFE CT TO OUR ORDER GIVE THE NECESSARY EFFECT TO THE SAME. THE GROUND OF APPEAL NO. 9 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 41 . THE GROUNDS OF APPEAL NO (S) . 10 AND11 BEING GENERAL IN NATURE ARE DISMISSED AS NOT PRESSED. 42 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 7400/MUM/2012 AY: 2008 - 09 43 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2008 - 09. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: THE APPELLANT OBJECTS TO THE ORDER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME - TAX ACT, 1961 DATED 26 SEPTEMBER 2012 (RECEIVED ON 17 OCTOBER 2012) PASSED BY THE ADDITIONAL DIRECTOR OF INCOME - TAX, (INTERNATIONAL TAXATION) - 1, P A G E | 53 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 MUMBAI (ADIT') FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING AMONG OTHER GROUNDS: 1. THE LEARNED ADIT ERRED IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS. 9,80,54,487. 2. BUSINESS CONNECTION / PERMANENT ESTABLISHMENT IN INDIA 2.1 THE LEARNED ADIT ERRED IN HOLDING THAT THE APPELLANT HAD A BUSINESS CONNECTION IN INDIA IN TERMS OF THE INCOME - TAX ACT, 1961 AND A PERMANENT ESTABLISHMENT ('PE') IN INDIA IN TERMS OF THE INDIA - SIN GAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTAA'). 2.2 THE LEARNED ADIT ERRED IN HOLDING THAT ABACUS DISTRIBUTION SYSTEMS (INDIA) PVT. LTD. ('ADSIL') FUNCTIONS UNDER THE DIRECT CONTROL OF ITS PRINCIPAL NAMELY THE APPELLANT. 2.3 THE LEARNED ADIT ERRED IN HOLDING THAT THE APPELLANT HAS A FIXED PLACE OF BUSINESS IN INDIA. 2.4 THE LEARNED ADIT ERRED IN HOLDING THAT THE APPELLANT MAINTAINS TELECOMMUNICATION NETWORK IN INDIA THROUGH WHICH MESSAGES ARE TRANSMITTED. 2.5 THE LEARNED ADIT ERRED IN OBSERVING THA T THE APPELLANT CARRIES OUT ITS ACTIVITIES OF COMPUTERIZED RESERVATION SYSTEM (CRS) THROUGH THE ABACUS COUNTRY NODE LOCATED IN INDIA AND IS UNDER THE MANAGEMENT AND CONTROL OF THE APPELLANT. 2.6 THE LEARNED ADIT ERRED IN OBSERVING THAT ADSIL SECURES BUSINESS FOR THE APPELLANT BY ENTERING INTO SUBSCRIPTION AGREEMENT WITH THE TRAVEL AGENTS AND THIS ACTIVITY IS HABITUALLY, WHOLLY AND EXCLUSIVELY PERFORMED BY ADSIL FOR THE APPELLANT. THE LEARNED ADIT FURTHER ERRED IN HOLDING THAT ADSIL CONSTITUTES AGENCY PE IN TERMS OF ARTICLES 8(C) AND 9 OF INDIA - SINGAPORE DTAA. 2.7 THE LEARNED ADIT ERRED IN OBSERVING THAT ADSIL IS DEPENDENT ON THE APPELLANT FOR ITS FINANCIAL EXISTENCE AND IS PERFORMING ONLY ACTIVITIES FOR THE APPELLANT AND THAT ADSIL IS NOT AN INDEPENDENT AGENT. 3. INCOME ATTRIBUTABLE TO PE 3.1 THE LEARNED ADIT ERRED IN TREATING A SUM OF RS. 78,39,07,065/ - AS INCOME ATTRIBUTABLE TO THE PE IN INDIA AND COMPUTING THE I NCOME LIABLE TO TAX IN INDIA AS RS.7,83,90,707/ - (10% OF RS. 78,39,07,065/ - ). 3.2 THE LEARNED ADIT ERRED IN CALCULATING THE INCOME OF THE APPELLANT ON PRESUMPTIVE BASIS BY ESTIMATING THE PROFIT MARGIN OF THE APPELLANT AS 10% OF THE RECEIPTS ATTRIBUTABLE TO INDIAN OPERATIONS OF RS. 78,39,07,065/ - AND TREATING A SUM OF RS.7,83,90,707/ - AS THE INCOME OF THE APPELLANT. 3.3 THE LEARNED ADIT ERRED IN NOT DEDUCTING THE COMMISSION PAID TO ADSIL OF RS.19,12,99,288/ - , IN THE ATTRIBUTION OF INCOME ON THE BASIS P A G E | 54 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THAT THE INCOME IS ESTIMATED AS PER RULE 10 OF THE INCOME - TAX RULES AND IN LIGHT OF THE FACT THAT THE CBDT HAS WITHDRAWN CIRCULAR NO. 23 DATED 23 JULY 1969 VIDE CIRCULAR NO. 7/2009 DATED 29 OCTOB ER 2009. 4. REIMBURSEMENT OF EXPENSES 4.1 THE LEARNED ADIT ERRED IN HOLDING THAT THE EXPENSES REIMBURSED BY ADSIL AMOUNTING TO RS. 5,33,50,529/ - ARE PART OF BUSINESS INCOME OF THE APPELLANT AND THEREBY TAXING 10% OF THE SAID AMOUNT (I.E. RS. 53,35,053/ - ). 4 .2 THE LEARNED ADIT ERRED IN NOT APPRECIATING THAT THE EXPENSES REIMBURSED BY ADSIL WERE TOWARDS EXPENSES INCURRED BY THE APPELLANT ON LINE CHARGES, SERVICE CHARGES AND OTHER EXPENSES AND THE SAME WERE IN THE NATURE OF PURE REIMBURSEMENT NOT HAVING ANY ELE MENT OF INCOME / SERVICE. 4.3 THE LEARNED ADIT ERRED IN OBSERVING THAT THE APPELLANT HAS NOT FILED ANY VOUCHERS OR ACCOUNT STATEMENTS RELATED TO REIMBURSEMENT OF EXPENSES. 4.4 THE LEARNED ADIT / DISPUTE RESOLUTION PANEL ERRED IN NOT ACCEPTING ADDITIONAL EVIDENCE WITH RESPECT TO REIMBURSEMENT OF EXPENSES. 5. APPLICABILITY OF ARTICLE 24 OF INDIA - SINGAPORE DTAA THE LEARNED ADIT ERRED IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT THE PROVISIONS OF ARTICLE 24 OF INDIA - SINGAPORE DTAA ARE NOT TRIGGERED. 6. TRANSFER PRICING ADJUSTMENT 6.1 THE LEARNED ADIT ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS.1,43,28,727/ - UNDER SECTION 92CA(4), IN RESPECT OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT DURING THE YEAR ENDED 31 MARCH 2008. 6.2 THE LEARNED ADIT ERRED IN DETERMINING THE ARMS LENGTH INTEREST RATE ERRED IN NOT APPRECIATING IN THE PROPER PERSPECTIVE THE BUSINESS AND ECONOMICS CIRCUMSTANCES PREVAILING AT THE TIME OF PROVIDING THE INTEREST FREE LOAN OF RS. 11,36,29,880/ - BY THE APPELLA NT TO ADSIL 6.3 THE LEARNED ADIT ERRED IN NOT APPRECIATING / CONSIDERING THAT IN RESPECT OF THE ADJUSTMENT OF RS. 1,43,28,727/ - TO THE TOTAL INCOME OF THE APPELLANT REPRESENTING ALLEGED ARM'S LENGTH INTEREST ON THE INTEREST - FREE LOAN GRANTED BY THE APPELLA NT TO ADSIL NO CORRESPONDING DEDUCTION IS CLAIMED BY ADSIL IN ITS TAX RETURN OR ASSESSMENTS, AND ACCORDINGLY AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. 6.4 THE LEARNED ADIT ERRED BY NOT ALLOWING CORRESPONDING DEDUCTION OF THE INTEREST FREE LOAN GRANTED BY THE APPELLANT IN THE HANDS OF ADSIL. 6.5 THE LEARNED ADIT ERRED IN NOT APPRECIATING THAT THERE IS NO LOSS TO THE REVENUE BY GRANTING OF INTEREST FREE LOAN BY THE APPELLANT TO ADSIL. 6.6 THE LEARNED ADIT ERRED BY NOT CONSIDERING THE FACT THAT IF THE APPELLANT HAD CHARGED INTEREST INSTEAD OF THE LOAN BEING INTEREST FREE THERE WOULD BE LOSS TO REVENUE OF INDIA CONSIDERING THE DEDUCTIBILITY P A G E | 55 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 OF THE INTEREST EXPENSE IN THE HANDS OF THE BORROWER (I.E. ADSIL) AND LOW WITHHOLDING TAX IN RESPECT OF INTEREST DUE TO THE APPEL LANT. 6.7 THE LEARNED ADIT ERRED IN NOT CONSIDERING THE FACT THAT THERE IS NO INTENTION OF SHIFTING OF PROFITS FROM INDIA AND IN FACT THERE IS BENEFIT TO THE ADSIL, AN INDIAN ENTITY, IN FORM OF INTEREST FREE LOAN. 6.8 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE A PPELLANT STATES THAT THE LEARNED ADIT ERRED IN LAW BY USING PRIME LENDING RATE INSTEAD OF LIBOR FOR DETERMINING THE ARMS LENGTH INTEREST AMOUNT. 7. SHORT CREDIT OF TDS THE LEARNED ADIT ERRED IN GRANTING TDS CREDIT FOR RS. 76,84,496 / - AS AGAINST CLAIM OF RS.1,89,84,993/ - IN THE RETURN OF INCOME, LEADING TO A SHORT CREDIT OF T D S O F RS.1,13,00,497/ - LEVY OF INTEREST UNDER SECTION 234B AND 234C 8.1 THE LEARNED ADIT ERRED IN LEVYING INTEREST RS. 1,82,10,913/ - AND RS. 61,741/ - UNDER SECTIONS 234B AND 234C RESPECTIVELY. 8.2 THE LEARNED ADIT ERRED IN NOT APPRECIATING THAT IN CASE A VIEW IS TAKEN THAT THE INCOME EARNED BY IT IS LIABLE TO TAX IN INDIA, APPROPRIATE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE BY THE PERSONS WHO PAID THE INCOME. ACCORD INGLY, NO ADVANCE TAX WAS PAYABLE BY THE APPELLANT (ENTIRE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE) AND THE QUESTION OF LEVY OF INTEREST UNDER SECTIONS 234B AND 234C FOR DELAYED PAYMENT OF TAX DOES NOT ARISE. 8.3 THE LEARNED ADIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN APPELLANTS OWN CASE FOR LEVY OF INTEREST UNDER SECTION 234B. 8. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 10. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 44 . THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE WHEREIN THE ASSESSEE HAD ASSAILED THE INCOME ASSESSED BY THE A.O AT RS. 8,81,87,359/ - , BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. THE LD. A.R ADVERTING TO THE GROUNDS OF APPEAL NO(S).2 TO 6, SUBMITTED THAT THE ISSUES AND TH E FACTS REMAINED THE SAME AS WERE RAISED BY WAY OF GROUNDS OF APPEAL NO(S). 1 TO 5 IN THE APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO. 4882/MUM/2015.THE AFORESAID FACTUAL POSITION SO CANVASSED BEFORE US HAD NOT BEEN REBUTTED BY THE LD. D.R. WE HAVE PERUSED THE GROUNDS OF APPEAL NO(S). 2 TO 6 RAISED BY THE ASSESSEE IN P A G E | 56 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE PRESENT APPEAL AND FIND THAT THE SAME PERTAIN TO THE ISSUES VIZ. (I). EXISTENCE OF THE PE/BUSINESS CONNECTION OF THE ASSESSEE IN INDIA; (II). ATTRIBUTION OF INCOME TO PE; (III). REI MBURSEMENT OF EXPENSES; (IV). APPLICABILITY OF ARTICLE 24 OF INDIA - SINGAPORE DTAA AND INTEREST INCOME; AND (V). TRANSFER PRICING ADJUSTMENT OF THE INTEREST ON LOAN ADVANCED TO ASDIL. WE ARE OF THE CONSIDERED VIEW THAT AS THE AFORESAID ISSUES HAD BEEN ADJUD ICATED BY US WHILE DISPOSING OF THE GROUNDS OF APPEAL NO(S) 1 TO 5 OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO.4882/MUM/2015, THEREFORE, THE VIEW TAKEN BY US WHILE DISPOSING OF THE AFORESAID RESPECTIVE GROUNDS OF APPEAL SHALL APPLY MUTATIS MUTANDIS FOR TH E ADJUDICATION OF THE GROUNDS OF APPEAL NO(S). 2 TO 6 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL BEFORE US. THE GROUNDS OF APPEAL NO(S). 2 TO 6 OF THE PRESENT APPEAL ARE THUS DISPOSED OF IN TERMS OF OUR AFORESAID OBSERVATIONS. 45 . THE ASSESSEE HAD FURT HER BY WAY OF GROUND OF APPEAL NO. 7 CLAIMED THAT THE DDIT(IT) - 1(1), MUMBAI, WHILE PASSING THE ORDER UNDER SEC. 143(3) R.W.S 144C(13) HAD BY ALLOWING CREDIT OF TDS OF RS. 76,84,496/ - AGAINST CLAIM OF RS. 1,89,84,993/ - RAISED BY THE ASSESSEE IN ITS RETURN O F INCOME, ERRED IN GIVING SHORT CREDIT OF TDS OF RS. 1,13,00,497/ - . WE THOUGH FIND THAT NEITHER ANY SUCH OBJECTION OF THE ASSESSEE AS REGARDS SHORT CREDIT OF TDS IS BORNE FROM THE RECORDS, NOR THE LD. A.R HAD DRAWN OUR ATTENTION TO ANY SUCH MATERIAL IN SU PPORT OF HIS AFORESAID CONTENTION, HOWEVER, IN ALL FAIRNESS DIRECT TO A.O CONSIDER THE SAID CLAIM OF THE ASSESSEE AT THE TIME OF GIVING APPEAL EFFECT TO OUR ORDER. NEEDLESS TO SAY, THE A.O WHILE GIVING EFFECT TO OUR AFORESAID DIRECTION SHALL AFFORD AN OPPO RTUNITY TO THE ASSESSEE WHO SHALL BE AT A LIBERTY TO FORTIFY ITS AFORESAID CLAIM BEFORE THE A.O. THE GROUND OF APPEAL NO. 7 IS ALLOWED FOR STATISTICAL PURPOSES. P A G E | 57 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 46 . THE ASSESSEE FURTHER BY WAY OF GROUND OF APPEAL NO. 8 ASSAILED THE LEVY OF INTEREST OF RS. 1,82,10,913 / - UNDER SEC. 234B AND RS, 61,741/ - UNDER SEC. 234C . WE ARE OF THE CONSIDERED VIEW THAT AS THE ISSUE AS REGARDS LEVY OF INTEREST UNDER SEC. 234B HAD BEEN ADJUDICATED BY US IN THE AFOREMENTIONED APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA 4882/MUM/2015, THEREFORE, OUR DIRECTIONS PASSED WHILE DISPOSING OF THE AFORESAID GROUND OF APPEAL NO. 6 IN THE CASE OF THE ASSESSEE FOR A.Y. 2005 - 06, VIZ. ITA 4882/MUM/2015 SHALL TO THE SAID EXTENT APPLY MUTATIS MUTANDIS FOR DISPOSING OF THE GROUND OF APPE AL NO. 8 RAISED BY THE ASSESSEE BEFORE US IN THE PRESENT APPEAL. THAT AS THE LEVY OF INTEREST UNDER SEC. 234C WOULD BE CONSEQUENTIAL TO GIVING EFFECT TO OUR ORDER BY THE A.O, THEREFORE, HE IS DIRECTED ACCORDINGLY. THE GROUND OF APPEAL NO. 8 IS ALLOWED IN T ERMS OF OUR AFORESAID OBSERVATIONS. 4 7 . THE GROUNDS OF APPEAL NO (S) . 9 AND 1 0 BEING GENERAL IN NATURE ARE DISMISSED AS NOT PRESSED. 4 8 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 2120/MUM/2014 AY: 2009 - 10 49 . WE SHALL NOW ADVERT TO THE APPEAL OF THE ASSESSEE FOR A.Y. 2009 - 10. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: THE APPELLANT OBJECTS TO THE ORDER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME - TAX ACT, 1961 DATED 22 JANUARY 2014 (RECEIVED ON 3 FEBRUARY 2014) PASSED BY THE ASSISTANT DIRECTOR OF INCOME - TAX, (INTERNATIONAL TAXATION) - 1(1), MUMBAI ('ADIT') FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING AMONG OTHER GROUNDS: P A G E | 58 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 1. THE LE ARNED ADIT ERRED IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS.13,51,08,490/ - . 2. BUSINESS CONNECTION / PERMANENT ESTABLISHMENT IN INDIA 2.1 THE LEARNED ADIT ERRED IN HOLDING THAT THE APPELLANT HAD A BUSINESS CONNECTION IN INDIA IN TERMS OF THE INCOME - TAX ACT, 1961 AND A PERMANENT ESTABLISHMENT ('PE') IN INDIA IN TERMS OF THE INDIA - SINGAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTAA'). 2.2 THE LEARNED ADIT ERRED IN HOLDING THAT ABACUS DISTRIBUTION SYSTEMS (INDIA) PVT. LTD. ('ADSIL') FUNCTIONS UNDER THE DIRECT CONTROL OF ITS PRINCIPAL NAMELY THE APPELLANT. 2.3 THE LEARNED ADIT ERRED IN HOLDING THAT THE APPELLANT HAS A FIXED PLACE OF BUSINESS IN INDIA. 2.4 THE LEARNED ADIT ERRED IN HOLDING THAT THE APPELLANT MAINTAINS TELECOMMUNICATION NETWORK IN INDIA THROUGH WHICH MESSAGES ARE TRANSMITTED. 2.5 THE LEARNED ADIT ERRED IN OBSERVING THAT THE APPELLANT CARRIES OUT ITS ACTIVITIES OF COMPUTERIZED RESERVATION SYSTEM (CRS) THROUGH THE ABACUS COUNTRY NODE LOCATED IN INDIA AND IS UNDER THE MANAGEMENT AND CONTROL OF THE APPELLANT. 2.6 THE LEARNED ADIT ERRED IN OBSERVING THAT ADSIL SECURES BUSINESS FOR THE APPELLANT BY ENTERING INTO SUBSCRIPTION AGREEMENT WITH THE TRAVEL AGENTS AND THIS ACTIVITY IS HABITUALLY, WHOLLY AND EXCLUSIVE LY PERFORMED BY ADSIL FOR THE APPELLANT. THE LEARNED ADIT FURTHER ERRED IN HOLDING THAT ADSIL CONSTITUTES AGENCY PE IN TERMS OF INDIA - SINGAPORE DTAA. 2.7 THE LEARNED ADIT ERRED IN OBSERVING THAT ADSIL IS DEPENDENT ON THE APPELLANT FOR ITS FINANCIAL EXISTENCE AND IS PERFORMING ONLY ACTIVITIES FOR THE APPELLANT AND THAT ADS IL IS NOT AN INDEPENDENT AGENT. 3. INCOME ATTRIBUTABLE TO PE 3.1 THE LEARNED ADIT ERRED IN TREATING A SUM OF RS. 1,07, 48,41,423/ - AS INCOME ATTRIBUTABLE TO THE PE IN INDIA AND COMPUTING THE INCOME LIABLE TO TAX IN INDIA AS RS. 10,74,84,142/ - (10% OF RS. 1,07,48,41,423/ - ). 3.2 THE LEARNED ADIT ERRED IN CALCULATING THE INCOME OF THE APPELLANT ON PRESUMPTIVE BASIS BY ESTIMATING THE PROFIT MARGIN OF THE APPELLANT AS 10% OF THE RECEIPTS ATTRIBUTABLE TO INDIAN OPERATIONS OF RS. 1,07,48,41,423/ - AND TREATING A SUM OF RS.10,74,84,142 AS THE INCOME OF THE APPELLANT. 3.3 THE LEARNED ADIT ERRED IN NOT DEDUCTING THE COMMISSION PAID TO ADSIL OF RS. 20,36,9 9,260/ - AND MARKETING SERVICE FEE OF RS. 32,61,60,944/ - IN THE ATTRIBUTION OF INCOME ON THE BASIS THAT THE INCOME IS ESTIMATED AS PER RULE 10 OF THE INCOME - TAX RULES AND IN LIGHT OF THE FACT THAT THE CBDT HAS WITHDRAWN CIRCULAR NO. 23 DATED 23 JULY 1969 V IDE CIRCULAR NO. 7/2009 DATED 29 OCTOBER 2009. 3.4 THE LEARNED ADIT / DISPUTE RESOLUTION PANEL ('DRP') ERRED IN OBSERVING THAT THE ESTIMATION OF 10% OF OVERALL REVENUES FROM INDIAN OPERATIONS AS PER RULE 10 OF INCOME - TAX RULES, 1962 AS P A G E | 59 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 INCOME OF APPELLANT HAS BEEN UPHELD BY INCOME - TAX APPELLATE TRIBUNAL ('ITAT'). IT IS SUBMITTED THAT WHILE DECIDING THE ISSUE ON ATTRIBUTION OF INCOME, ITAT HAS NOT RELIED ON RULE 10. 3.5 THE LEARNED ADIT / DRP ERRED IN OBSERVING THAT IF ANY DEDUCTION OF CO MMISSION CAN HE CLAIMED BY THE APPELLANT, IT CAN ONLY BE CLAIMED AGAINST THE REVENUE OF RS. 1,07,48,41,423/ - FROM INDIAN OPERATIONS AND NOT AGAINST THE INCOME ESTIMATED BY THE ADIT AT 10% OF TOTAL REVENUE. 3.6 THE LEARNED ADIT / DRP ERRED IN NOT FOLLOWING THE ITAT DECISION IN THE APPELLANT'S OWN CASE FOR EARLIER YEARS AND DELHI HIGH COURT JUDGMENT IN THE CASE OF GALILEO INTERNATIONAL INC. (336 ITR 264) DESPITE OF NO CHANGE IN FACTS. 4. REIMBURSEMENT OF EXPENSES 4.1 THE LEARNED ADIT ERRED IN HOLDING THAT THE EXPENSES REIMBURSED BY ADSIL AMOUNTING TO RS. 8,38,76,045/ - ARE PART OF BUSINESS INCOME OF THE APPELLANT AND THEREBY TAXING 10% OF THE SAID AMOUNT (I.E. RS. 83,87,605/ - ). 4.2 THE LEARNED ADIT ERRED IN NOT APPRECI ATING THAT THE EXPENSES REIMBURSED BY ADSIL WERE TOWARDS EXPENSES INCURRED BY THE APPELLANT ON LINE CHARGES, SERVICE CHARGES AND OTHER EXPENSES AND THE SAME WERE IN THE NATURE OF PURE REIMBURSEMENT NOT HAVING ANY ELEMENT OF INCOME / SERVICE. 4.3 THE LEARN ED DRP ERRED IN OBSERVING THAT THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE BEFORE THE ADIT TO SUBSTANTIATE ITS CLAIM THAT THE PAYMENTS ARE REIMBURSEMENT. 4.4 WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMITS THAT EVEN IF THE REIMBURSEMENT IS CONSIDER ED AS PART OF BUSINESS INCOME, THERE SHOULD NOT BE ANY INCOME CHARGEABLE TO TAX SINCE THE EXPENDITURE PAID BY THE APPELLANT (I.E. COMMISSION AND MARKETING FEES PAID TO ADSIL) IS SUFFICIENT TO ABSORB ITS INCOME. 5. TRANSFER PRICING ADJUSTMENT 5.1 THE LEARNED ADIT ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS.L,92,36,738/ - UNDER SECTION 92CA(4), IN RESPECT OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT DURING THE YEAR ENDED 3 1 MARCH 2009. 5.2 THE LEARNED ADIT ERRED IN DETERMIN ING THE ARMS LENGTH INTEREST RATE ERRED IN NOT APPRECIATING IN THE PROPER PERSPECTIVE THE BUSINESS AND ECONOMIC CIRCUMSTANCES PREVAILING AT THE TIME OF PROVIDING THE INTEREST FREE LOAN OF RS. 14,57,32.860/ - BY THE APPELLANT TO ADSIL. 5.3 THE LEARNED ADIT ERRED IN NOT APPRECIATING / CONSIDERING THAT IN RESPECT OF THE ADJUSTMENT OF RS. 1,92,36,738/ - TO THE TOTAL INCOME OF THE APPELLANT REPRESENTING ALLEGED ARM'S LENGTH INTEREST ON THE INTEREST - FREE LOAN GRANTED BY THE APPELLANT TO ADSIL NO CORRESPONDING DEDUCTION IS CLAIMED BY ADSIL IN ITS TAX RETURN OR ASSESSMENTS, AND ACCORDINGLY AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. 5.4 THE LEARNED ADIT ERRED BY NOT ALLOWING CORRESPONDING DEDUCTION OF THE INTEREST FREE LOAN GRANTED BY TH E APPELLANT IN THE HANDS OF ADS IL. P A G E | 60 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 5.5 THE LEARNED ADIT ERRED IN NOT APPRECIATING THAT THERE IS NO LOSS TO THE REVENUE BY GRANTING OF INTEREST FREE LOAN BY THE APPELLANT TO ADSIL. 5.6 THE LEARNED ADIT ERRED BY NOT CONSIDERING THE FACT THAT IF THE WOULD BE LOSS TO REVENUE OF INDIA CONSIDERING THE DEDUCTIBILITY OF THE INTEREST EXPENSE IN THE HANDS OF THE BORROWER (I.E. ADSIL) AND LOW WITHHOLDING TAX IN RESPECT OF INTEREST DUE TO THE APPELLANT. 5.7 THE LEARNED ADIT ERRED IN NOT CONSIDERING THE FACT THAT THERE IS NO INTENTION OF SHIFTING OF PROFITS FROM INDIA AND IN FACT THERE IS BENEFIT TO THE ADSIL AN INDIAN ENTITY, IN FORM OF INTEREST FREE LOAN. 5.8 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE APPELLANT STATES THAT THE LEARNED ADIT ERRED IN LAW BY USING PRIME LENDING RATE INSTEAD OF LIBOR FOR DETERMINING THE ARMS LENGTH INTEREST AMOUNT. 5. SHORT CREDIT OF TDS THE LEARNED ADTT ERRED IN GRANTING TDS CREDIT FOR RS. 93,65,71 2/ - AS AGAINST CLAIM OF RS. 1,51,53,660/ - IN THE RETURN OF INCOME, LEADING TO A SHORT CREDIT OF TDS OF RS.57,87,948/ - . 1. LEVY OF INTEREST UNDER SECTION 234B 7.1 THE LEARNED ADI[ ERRED IN LEVYING INTEREST RS. 2,76,60,550 UNDER SECTION 234B. 7.2 THE LEARNED ADIT ERRED IN NOT APPRECIATING THAT IN CASE A VIEW IS TAKEN THAT THE INCOME EARNED BY IT IS LIABLE TO TAX IN INDIA, APPROPRIATE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE BY THE PERSONS WHO PAID THE INCOME. ACCORDINGLY, NO ADVANCE TAX WAS PAYABLE BY THE APPELLANT (ENTIRE TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE) AND THE QUESTION OF LEVY OF INTEREST UNDER SECTION 23413 FOR DELAYED PAYMENT OF TAX DOES NOT ARISE. 7.3 THE LEARNED ADIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN APPEL LANTS OWN CASE FOR LEVY OF INTEREST UNDER SECTION 234B. 8. ADJUSTMENT OF REFUND THE LEARNED ADIT ERRED IN ADJUSTING A SUM OF RS. 75,56,280/ - AS REFUND ALREADY ISSUED, WITHOUT APPRECIATING THE FACT THAT NO SUCH REFUND HAS BEEN ISSUED TO THE APPELLANT. 9. LEVY OF INTEREST UNDER SECTION 234D THE LEARNED ADIT ERRED IN LEVYING INTEREST OF RS. 12,84,568/ - UNDER SECTION 234D OF THE ACT. 10. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 11. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 50 . THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE WHEREIN THE ASSESSEE HAD ASSAILED THE INCOME ASSESSED BY THE A.O AT RS. 13,51,08,490/ - BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. P A G E | 61 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE LD. A.R ADVERTING TO THE GROUNDS OF APPEAL NO(S).2 TO 5, SUBMITTED THAT THE ISSUES AND THE FACTS REMAINED THE SAME AS WERE RAISED BY WAY OF GROUNDS OF APPEAL NO(S). 1 TO 3 AND GROUND OF APPEAL NO. 5 IN THE APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. I TA NO. 4882 /MUM/2015. THE AFORESAID FACTUAL POSITION SO CANVASSED BEFORE US HAD NOT BEEN REBUTTED BY THE LD. D.R. WE HAVE PERUSED THE GROUNDS OF APPEAL NO(S). 2 TO 5 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL AND FIND THAT THE SAME PERTAIN TO THE ISSUES VIZ. (I). EXISTENCE OF THE PE/BUSINESS CONNECTION OF THE ASSESSEE IN INDIA; (II). ATTRIBUTION OF INCOME TO PE; (III). REIMBURSEMENT OF EXPENSES; AND (IV). TRANSFER PRICING ADJUSTMENT OF THE INTEREST ON LOAN ADVANCED TO ASDIL. WE ARE OF THE CONSIDERED VIEW THAT AS THE AFORESAID ISSUES HAD BEEN ADJUDICATED BY US WHILE DISPOSING OF THE GROUNDS OF APPEAL NO(S) 1 TO 3 AND GROUND OF APPEAL NO. 5 OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO.4882/MUM/2015, THEREFORE, THE VIEW TAKEN BY US WHILE DISPOSING OF THE AFO RESAID RESPECTIVE GROUNDS OF APPEAL SHALL APPLY MUTATIS MUTANDIS FOR THE ADJUDICATION OF THE GROUNDS OF APPEAL NO(S). 2 TO 5 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL BEFORE US. THE GROUNDS OF APPEAL NO(S). 2 TO 5 OF THE PRESENT APPEAL ARE THUS DISPOSED OF IN TERMS OF OUR AFORESAID OBSERVATIONS. 51 . THE ASSESSEE HAD FURTHER BY WAY OF GROUND OF APPEAL NO. 6 CLAIMED THAT THE DDIT(IT) - 1(1), MUMBAI, WHILE PASSING THE ORDER UNDER SEC. 143(3) R.W.S 144C(13) HAD BY ALLOWING CREDIT OF TDS OF RS. 93,65,712 / - AS AGAINST THE CLAIM OF RS. 1,51,53,660/ - RAISED BY THE ASSESSEE IN ITS RETURN OF INCOME, HAD THUS ERRED IN GIVING SHORT CREDIT OF TDS OF RS. 57,87,948/ - . HOWEVER, THE LD. A.R DURING THE COURSE OF HEARING OF THE APPEAL SUBMITTED THAT AS THE A.O HAD VIDE HIS ORDER PASSED UNDER SEC. 154 OF THE ACT, DATED 15.02.2016 RECTIFIED THE P A G E | 62 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 6 WAS NOT PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 6 AS NOT PRES SED. 52 . THE ASSESSEE FURTHER BY WAY OF G ROUND OF APPEAL NO. 7 HAD ASSAILED THE LEVY OF INTEREST OF RS. 2,76,60,550/ - UNDER SEC. 234B . WE ARE OF THE CONSIDERED VIEW THAT AS THE ISSUE AS REGARDS LEVY OF INTEREST UNDER SEC. 234B HAD BEEN ADJUDICATED BY US IN THE AFOREMENTIONED APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA 4882/MUM/2015, THEREFORE, OUR DIRECTIONS PASSED WHILE DISPOSING OF THE AFORESAID GROUND OF APPEAL NO. 6 IN THE CASE OF THE ASSESSEE FOR A.Y. 2005 - 06, VIZ. ITA 4882/MUM/2015 SHALL TO THE SAID EXTENT APPLY MUTATIS MUTANDIS FOR DISPOSING OF THE GROUND OF APPEAL NO. 7 RAISED BY THE ASSESSEE BEFORE US IN THE PRESENT APPEAL. THE GROUND OF APPEAL NO. 7 IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 53 . THE ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 8 CLAIMED THAT THE A.O HAD ERRED IN ADJUSTING A SUM OF RS. 75,56,280/ - AS REFUND ALREADY ISSUED, WHILE FOR THE FACT WAS THAT NO SUCH REFUND WAS ISSUED TO THE ASSESSEE . HOWEVER, THE LD. A.R DURING THE COURSE O F HEARING OF THE APPEAL SUBMITTED THAT AS THE A.O HAD VIDE HIS ORDER PASSED UNDER SEC. 154 OF THE ACT, DATED 15.02.2016 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 8 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CO NCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 8 AS NOT PRESSED. 54 . THE ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 9 CLAIMED THAT THE A.O HAD ERRED IN LEVYING AN INTEREST OF RS. 12,84,568/ - UNDER SEC. 234D. HOWEVER, THE LD. A.R DURING THE COUR SE OF HEARING OF THE APPEAL SUBMITTED THAT AS THE A.O HAD VIDE HIS ORDER PASSED UNDER SEC. 154 OF P A G E | 63 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE ACT, DATED 15.02.2016 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 9 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF TH E CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 9 AS NOT PRESSED. 5 5 . THE GROUNDS OF APPEAL NO (S) . 10 AND1 1 BEING GENERAL IN NATURE ARE DISMISSED AS NOT PRESSED. 56 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 1704/MUM/2015 AY: 2010 - 11 57 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2010 - 11. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: THE APPELLANT OBJECTS TO THE ORDER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME - TAX ACT, 1961 ('THE ACT') DATED 21 JANUARY 2015 (RECEIVED ON 23 JANUARY 2015) PASSED BY THE DEPUTY COMMISSIONER OF INCOME - TAX, (INTERNATIONAL TAXATION) - 1(1)(1), MUMBAI ('DC1T') FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING AMONG OTHER GROUNDS: 1. THE LEARNED DCIT ERRED IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS.9,31,78,208/ - . 2. BUSINESS CONNECTION / PERMANENT ESTABLISHMENT IN INDIA 2.1 THE LEARNED DCIT ERRED IN HOLDING THAT THE APPELLANT HAD A BUSINESS CONNECTION IN INDIA IN TERMS OF THE ACT AND A PERMANENT ESTABLISHMENT ('PE') IN INDIA IN TERMS OF THE INDIA - SINGAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTAA'). 2.2 THE LEARNED DCIT ERRED IN HOLDING THAT ABACUS DISTRIBUTION SYSTEMS (INDIA) PVT. LTD. ('ADSIL') FUNCTIONS UNDER THE DIRECT CONTROL OF ITS PRINCIPAL NAMELY THE APPELLANT. 2.3 THE LEARNED DCIT ERRED IN HOLDING THAT THE APPELLANT HAS A FIXED PLACE OF BUSINESS IN INDIA. P A G E | 64 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 2.4 THE LEARNED DCIT ERRED IN HOLDING THAT THE APPELLANT MAINTAINS TELECOMMUNICATION NETWORK IN INDIA THROUGH WHICH ALL THE MESSAGES ARE TRANSMITTED. 2.5 THE LEARNED DCIT ERRED IN OBSERVING THAT THE APPELLANT CARRIES OUT ITS ACTIVITIES OF COMPUTERIZED RESERVATION SYSTEM (CRS) THROUGH THE ABACUS COUNTRY NODE LOCATED IN INDIA WHICH IS UNDER THE MANAGEMENT AND CONTROL OF THE APPELLANT. 2.6 THE LEARNED DCIT ERRED IN OBSERVING THAT ADSIL SECURES BUSINESS FOR THE APPELLANT BY ENTERING INTO SUBSCRIPTION AGREEMENT WITH THE T RAVEL AGENTS AND THIS ACTIVITY IS HABITUALLY, WHOLLY AND EXCLUSIVELY PERFORMED BY ADSIL FOR THE APPELLANT. THE LEARNED DCIT FURTHER ERRED IN HOLDING THAT ADSIL CONSTITUTES AGENCY PE IN TERMS OF INDIA - SINGAPORE DTAA. 2.7 THE LEARNED DCIT ERRED IN OBSERVING THAT ADSIL IS DEPENDENT ON THE APPELLANT FOR ITS FINANCIAL EXISTENCE AND IS PERFORMING ONLY ACTIVITIES FOR THE APPELLANT AND THAT ADSIL IS NOT AN INDEPENDENT AGENT. 3. INCOME ATTRIBUTABLE TO PE 3.1 THE LEARNED DCIT ERRED IN T REATING A SUM OF RS. 72,95,63,237/ - AS INCOME ATTRIBUTABLE TO THE PE IN INDIA AND COMPUTING THE INCOME LIABLE TO TAX IN INDIA AS RS.7,29,56,324/ - (10% OF RS. 72,95,63,237/ - ). 3.2 THE LEARNED DCIT ERRED IN CALCULATING THE INCOME OF THE APPELLANT ON PRESUMPTIVE BASIS BY ESTIMATING THE PROFIT MARGIN OF THE APPELLANT AS 10% OF THE RECEIPTS ATTRIBUTABLE TO INDIAN OPERATIONS OF RS. 72,95,63,237/ - AND TREATING A SUM OF RS. 7,29,56,324/ - A S THE TAXABLE INCOME OF THE APPELLANT. 3.3 THE LEARNED DCIT ERRED IN NOT DEDUCTING THE COMMISSION OF RS.19,78,14,045/ - AND MARKETING SERVICE FEE OF RS. 23,18,65,271/ - PAID TO ADSIL IN THE ATTRIBUTION OF INCOME. 3.4 THE LEARNED DISPUTE RESOLUTION PANEL ('DRP') ERRED IN OBSERVING THAT THE ESTIMATION OF 10% OF OVERALL REVENUES FROM INDIAN OPERATIONS AS PER RULE 10 OF INCOME - TAX RULES, 1962 AS INCOME OF APPELLANT HAS BEEN UPHELD BY INCOME - TAX APPELLATE TRIBUNAL ('ITAT') WITHOUT APPRECIATING THAT WHILE DECIDING THE ISSUE ON ATTRIBUTION OF INCOME, ITAT HAS NOT RELIED ON RULE 10. 3.5 THE LEARNED DCIT / DRP ERRED IN OBSERVING THAT IF ANY DEDUCTION OF COMMISSION AND MARKETING SERVICE FEES PAID TO ADSIL CAN BE CLAIMED BY THE APPEL LANT, IT CAN ONLY BE CLAIMED AGAINST THE REVENUE OF RS. 72,95,63,237/ - FROM INDIAN OPERATIONS AND NOT AGAINST THE INCOME ESTIMATED BY THE DCIT AT 10% OF TOTAL REVENUE. 3.6 THE LEARNED DCIT / DRP ERRED IN NOT FOLLOWING THE ITAT DECISION IN THE APPELLANT'S OWN CASE FOR EARLIER YEARS AND DELHI P A G E | 65 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 HIGH COURT JUDGMENT IN THE CASE OF GALILEO INTERNATIONAL INC. (336 ITR 264) DESPITE OF NO CHANGE IN FACTS. 4. REIMBURSEMENT OF EXPENSES 4.1 THE LEARNED DCIT ERRED IN HOLDING THAT THE EXPENSES REIMBURSED BY ADSIL AMOUNTING TO RS. 4,81,21,706/ - ARE PART OF BUSINESS INCOME OF THE APPELLANT AND THEREBY TAXING RS. 48,12,171/ - (I.E. 10% OF RS. 4,81,21,706/ - ). 4.2 THE LEARNED DCIT ERRED IN NOT APPRECIATING THAT THE EXPENSES REIMBURSED BY ADSIL WERE TOWARDS EXPENSES INCURRED BY THE APPELLANT ON SERVICE CHARGES, OTHER EXPENSES, AND FOREIGN TRAVEL AND IN THE NATURE OF PURE REIMBURSEMENT NOT HAVING ANY ELEMENT OF INCOME / SERVICE. 4.3 THE LEARNED DRP ERRED IN OBSERVING THAT THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE BEFORE THE DCIT TO SUBSTANTIATE ITS CLAIM THAT THE PAYMENTS ARE REIMBURSEMENT. 4.4 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED DRP / DCIT ERRED IN NOT FOLLOWING THE DECISION OF THE ITAT IN APPELLANT'S OWN CASE FOR AY 2004 - 05 WHEREIN IT IS HELD THAT EVEN IF THE REIMBURSEMENT IS CONSIDERED AS PART OF BUSINESS INCOME, THERE SHOULD NOT BE ANY INCOME CHARGEABLE TO TAX SINCE THE EXPENDITURE PAID BY THE APPELLANT (I.E. COMMISSION AND MARKETING FEES PAID TO ADSIL) IS SUFFICIENT TO ABSORB ITS INC OME. 5. TRANSFER PRICING ADJUSTMENT 5.1 THE LEARNED DCIT ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS.1,54,09,713/ - UNDER SECTION 92CA(4), IN RESPECT OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT DURING THE YEAR ENDED 31 MARCH 2010. 5.2 THE LEARNED DCIT WHILE DETERMINING THE ARM'S LENGTH INTEREST RATE ERRED IN NOT APPRECIATING THE BUSINESS AND ECONOMIC CIRCUMSTANCES PREVAILING AT THE TIME OF PROVIDING THE INTEREST FREE LOAN OF RS. 12,88,91,940/ - BY THE APPELLANT TO ADSIL IN THE PROPER PERSPE CTIVE. 5.3 THE LEARNED DCIT ERRED IN NOT APPRECIATING / CONSIDERING THAT IN RESPECT OF THE ADJUSTMENT OF RS.1,54,09,713/ - TO THE TOTAL INCOME OF THE APPELLANT REPRESENTING ALLEGED ARM'S LENGTH INTEREST ON THE INTEREST - FREE LOAN GRANTED BY THE APPELLANT TO ADSIL, NO CORRESPONDING DEDUCTION IS ALLOWED TO ADSIL IN ITS TAX RETURN OR ASSESSMENTS AND ACCORDINGLY AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. 5.4 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED DCIT ERRED BY NOT ALLOWING CORRESPONDING DEDUCTION OF THE INT EREST FREE LOAN GRANTED BY THE APPELLANT IN THE HANDS OF ADSIL. 5.5 THE LEARNED DCIT ERRED BY NOT CONSIDERING THE FACT THAT IF THE APPELLANT HAD CHARGED INTEREST INSTEAD OF THE LOAN BEING INTEREST FREE THERE WOULD BE LOSS TO REVENUE OF INDIA, CONSIDERING THE DEDUCTIBILITY OF THE INTEREST EXPENSE IN THE HANDS OF THE P A G E | 66 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 BORROWER (I.E. ADSIL) AND LOW WITHHOLDING TAX IN RESPECT OF INTEREST DUE TO THE APPELLANT. 5.6 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEARNED DCIT ERRED IN LAW BY USING PRIME LENDING RATE INSTEAD OF LIBOR FOR DETERMINING THE ARM'S LENGTH INTEREST AMOUNT. 5.7 THE LEARNED DCIT ERRED IN APPLYING THE RATE OF 40% ON THE INTEREST INCOME AS AGAINST THE RATE PRESCRIBED IN SECTION 115A OF THE ACT. 5.8 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED DRP / DCIT ERRED IN NOT APPRECIATING THAT EVEN IF THE INTEREST INCOME IS CONSIDERED AS PART OF BUSINESS INCOME, THERE SHOULD NOT BE ANY INCOME CHARGEABLE TO TAX SINCE THE EXPENDITURE PAID BY THE APPELLANT (I.E. COMMISSION AND MARKETING FEES PAID T O ADSIL) IS SUFFICIENT TO ABSORB ITS INCOME AND ACCORDINGLY THERE WILL BE NO LOSS TO THE REVENUE. 6. LEVY OF INTEREST UNDER SECTION 234B 6.1 THE LEARNED DCIT ERRED IN LEVYING INTEREST RS. 32,63,312/ - UNDER SECTION 234B OF THE ACT. 6.2 THE LEARNED DRP ERRED IN NOT ADJUDICATING THE OBJECTION RAISED BY THE APPELLANT ON THE ISSUE OF LEVY OF INTEREST UNDER 234B OF THE ACT. 6.3 THE LEARNED DCIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN APPELLANTS OWN CASE FOR LEVY OF INTEREST UNDER SECTION 234B. 7. ADJUST MENT OF REFUND 7.1 THE LEARNED DCIT ERRED IN ADJUSTING A SUM OF RS. 1,33,77,108/ - AS REFUND ALREADY ISSUED, WITHOUT APPRECIATING THE FACT THAT NO SUCH REFUND HAS BEEN ISSUED TO THE APPELLANT. 8. LEVY OF INTEREST UNDER SECTION 234D 8.1 THE LEARNED DCIT ERRED IN LEVYING INTEREST OF RS. 41,46,232/ - UNDER SECTION 234D OF THE ACT. 9. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 10. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 58 . THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE WHEREIN THE ASSESSEE HAD ASSAILED THE INCOME ASSESSED BY THE A.O AT RS. 9,31,78,208/ - , BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. THE LD. A.R ADVERTING TO THE GROUNDS OF APPEAL NO(S).2 TO 5, SUBMITTED THAT THE ISSUES AND THE FACTS REMAINED THE SAME AS WERE RAISED BY WAY OF GROUNDS OF APPEAL NO(S). 1 TO 3 AND GROUND OF APPEAL NO. 5 IN THE P A G E | 67 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO. 4882 /MUM/2015. THE AFORESAID FACTUAL POSITION SO CANVASSED BEF ORE US HAD NOT BEEN REBUTTED BY THE LD. D.R. WE HAVE PERUSED THE GROUNDS OF APPEAL NO(S). 2 TO 5 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL AND FIND THAT THE SAME PERTAIN TO THE ISSUES VIZ. (I). EXISTENCE OF THE PE/BUSINESS CONNECTION OF THE ASSESSEE IN INDIA; (II). ATTRIBUTION OF INCOME TO PE; (III). REIMBURSEMENT OF EXPENSES; AND (IV). TRANSFER PRICING ADJUSTMENT OF THE INTEREST ON LOAN ADVANCED TO ASDIL. WE ARE OF THE CONSIDERED VIEW THAT AS THE AFORESAID ISSUES HAD BEEN ADJUDICATED BY US WHILE DISPOSI NG OF THE GROUNDS OF APPEAL NO(S) 1 TO 3 AND GROUND OF APPEAL NO. 5 OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO.4882/MUM/2015, THEREFORE, THE VIEW TAKEN BY US WHILE DISPOSING OF THE AFORESAID RESPECTIVE GROUNDS OF APPEAL SHALL APPLY MUTATIS MUTANDIS FOR T HE ADJUDICATION OF THE GROUNDS OF APPEAL NO(S). 2 TO 5 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL BEFORE US. THE GROUNDS OF APPEAL NO(S). 2 TO 5 OF THE PRESENT APPEAL ARE THUS DISPOSED OF IN TERMS OF OUR AFORESAID OBSERVATIONS. 59 . THE ASSESSEE BY WAY OF GROUND OF APPEAL NO. 6 HAD ASSAILED THE LEVY OF INTEREST OF RS. 32,63,312/ - UNDER SEC. 234B. WE ARE OF THE CONSIDERED VIEW THAT AS THE ISSUE AS REGARDS LEVY OF INTEREST UNDER SEC. 234B HAD BEEN ADJUDICATED BY US IN THE AFOREMENTIONED APPEAL OF THE ASSE SSEE FOR A.Y 2005 - 06, VIZ. ITA 4882/MUM/2015, THEREFORE, OUR DIRECTIONS PASSED WHILE DISPOSING OF THE AFORESAID GROUND OF APPEAL NO. 6 IN THE CASE OF THE ASSESSEE FOR A.Y. 2005 - 06, VIZ. ITA 4882/MUM/2015 SHALL TO THE SAID EXTENT APPLY MUTATIS MUTANDIS FOR DISPOSING OF THE GROUND OF APPEAL NO. 6 RAISED BY THE ASSESSEE BEFORE US IN THE PRESENT APPEAL. THE GROUND OF APPEAL NO. 6 IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. P A G E | 68 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 60 . THE ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 7 CLAIMED THAT THE A.O HAD ER RED IN ADJUSTING A SUM OF RS. 1,33,77,108/ - AS REFUND ALREADY ISSUED, WHILE FOR THE FACT WAS THAT NO SUCH REFUND WAS ISSUED TO THE ASSESSEE. HOWEVER, THE LD. A.R DURING THE COURSE OF HEARING OF THE APPEAL SUBMITTED THAT AS THE A.O HAD VIDE HIS ORDER PASSED UNDER SEC. 154 OF THE ACT, DATED 15.02.2016 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 7 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 7 AS NOT PRESSED. 61 . THE ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 8 CLAIMED THAT THE A.O HAD ERRED IN LEVYING AN INTEREST OF RS. 41,46,232/ - UNDER SEC. 234D. HOWEVER, THE LD. A.R DURING THE COURSE OF HEARING OF THE APPEAL SUBMITTED THAT AS THE A.O HAD VIDE HIS ORDER PA S SED UNDER SEC. 154 OF THE ACT, DATED 15.02.2016 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 8 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 8 AS NOT PRESSE D. 62 . THE GROUNDS OF APPEAL NO (S) . 9 AND 1 0 BEING GENERAL IN NATURE ARE DISMISSED AS NOT PRESSED. 63 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 486/MUM/2016 AY: 2011 - 12 64 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: P A G E | 69 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THE APPELLANT OBJECTS TO THE ORDER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME - TAX ACT, 1961 [ACT] DATED 3 DECEMBER 2015 (RECEIVED ON 4 DECEMBER 2015) PASSED BY THE DEPUTY COMMISSIONER OF INCOME - TAX, (INTERNATIONAL TAXATION) - 1(1)(1), MUMBAI [DCIT] FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING AMONG OTHER GROUNDS: 1. THE LEARNED DCIT ERRED IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS. 8,96,95,213 / - . 2. BUSINESS CONNECTION / PERMANENT ESTABLISHMENT IN INDIA 2.1 THE LEARNED DCIT ERRED IN HOLDING THAT THE APPELLANT HAD A BUSINESS CONNECTION IN INDIA IN TERMS OF THE ACT AND A PERMANENT ESTABLISHMENT [PE] IN INDIA IN TERMS OF THE INDIA - SINGAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT [DTAA]. 2.2 THE LEARNED DCIT ERRED IN HOLDING THAT THE APPELLANT HAS A FIXED PLACE OF BUSINESS IN INDIA. 2.3 THE LEARNED DCIT ERRED IN HOLDING THAT THE APPELLANT MAINTAINS TELECOMMUNICATION NETWORK IN INDIA THROUGH WHICH ALL THE MESSAGES ARE TRANSMITTED. 2.4 THE LEARNED DCIT ERRED IN OBSERVING THAT THE APPELLANT CARRIES OUT ITS ACTIVITIES OF COMPUTERIZED RESERVATION SYSTEM [CRS] THRO UGH THE ABACUS COUNTRY NODE LOCATED IN INDIA WHICH IS UNDER THE MANAGEMENT AND CONTROL OF THE APPELLANT. 2.5 THE LEARNED DCIT ERRED IN OBSERVING THAT ADSIL SECURES BUSINESS FOR THE APPELLANT BY ENTERING INTO SUBSCRIPTION AGREEMENT WITH THE TRAVEL AGENTS AND TH IS ACTIVITY IS HABITUALLY, WHOLLY AND EXCLUSIVELY PERFORMED BY ADSIL FOR THE APPELLANT. THE LEARNED DCIT FURTHER ERRED IN HOLDING THAT ADSIL CONSTITUTES AGENCY PE OF THE APPELLANT IN TERMS OF INDIA - SINGAPORE DTAA. 2.6 THE LEARNED DCIT ERRED IN OBSERVING THAT ADSIL IS DEPENDENT ON THE APPELLANT FOR ITS FINANCIAL EXISTENCE AND IS PERFORMING ONLY ACTIVITIES FOR THE APPELLANT AND THAT ADSIL IS NOT AN INDEPENDENT AGENT. 3. INCOME ATTRIBUTABLE TO PE 3.1 THE LEARNED DCIT ERRED IN T REATING A SUM OF RS. 71,21,87,876 / - AS INCOME ATTRIBUTABLE TO THE PE IN INDIA AND COMPUTING THE INCOME LIABLE TO TAX IN INDIA AS RS. 7,12,18,788 / - (10% OF RS. 7 1,21,87,876 / - ). 3.2 THE LEARNED DCIT ERRED IN CALCULATING THE INCOME OF THE APPELLANT ON PRESUMPTIVE BASIS BY ESTIMATING THE PROFIT MARGIN OF THE APPELLANT AS 10% OF THE RECEIPTS FROM INDIAN OPERATIONS OF RS. 71,21,87,876 / - AND TREATING A SUM OF RS. 7,12,18,788 / - AS THE TAXAB LE INCOME OF THE APPELLANT. 3.3 THE LEARNED DCIT ERRED IN NOT DEDUCTING THE COMMISSION OF RS. 17,12,53,651 / - AND MARKETING SERVICE FEE OF RS. 33,84,80,960 / - PAID TO ADSIL IN THE ATTRIBUTION OF INCOME. P A G E | 70 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 3.4 THE LEARNED DISPUTE RESOLUTION PANEL [DRP] ERRED IN OBSERVING THAT THE ESTIMATION OF 10% OF OVERALL REVENUES FROM INDIAN OPERATIONS AS PER RULE 10 OF INCOME - TAX RULES, 1962 AS INCOME OF APPELLANT HAS BEEN UPHELD BY INCOME - TAX APPELLATE TRIBUNAL [ITAT] WITH OUT APPRECIATING THAT WHILE DECIDING THE ISSUE ON ATTRIBUTION OF INCOME, ITAT HAS NOT RELIED ON RULE 10. 3.5 THE LEARNED DCIT/DRP ERRED IN OBSERVING THAT IF ANY DEDUCTION OF COMMISSION AND MARKETING SERVICE FEES PAID TO ADSIL CAN BE CLAIMED BY THE APPELLANT, IT CAN ONLY BE CLAIMED AGAINST THE REVENUE OF RS. 71,21,87,876 / - FROM INDIAN OPERATIONS AND NOT AGAINST THE INCOME ESTIMATED BY THE DCIT AT 10% OF TOTAL REVENUE. 3.6 THE LEARNED DCIT/DRP ERRED IN NOT FOLLOWING THE ITAT DECISION IN THE APPELLANT'S OWN CASE FOR EARLIER YEARS, DELHI HIGH COURT JUDGMENT IN THE CASE OF GALILEO INTERNATIONAL INC. (336 ITR 264) AND DECISION OF THE DELHI TRIBUNAL IN CASE OF SABR E INC. (ITA NO. 2311 TO 2317/DEL /2008) DESPITE OF NO CHANGE IN FACTS. 4. REIMBURSEMENT OF EXPENSES 4.1 THE LEARNED DCIT ERRED IN HOLDING THAT THE REIMBURSEMENT OF EXPENSES FROM ADSIL AMOUNTING TO RS. 2,60,66,599 ARE PART OF BUSINESS INCOME OF THE APPELLANT AND THEREBY TAXING RS. 26,06,660 / - (I.E. 10% OF RS. 2,60,66,599 / - ). 4.2 THE LEARNED DCIT ERRED IN NOT APPRECIATING THAT THE REIMBURSEMENT OF EXPENSES WERE TOWARDS EXPENSES INCURRED BY THE APPELLANT ON AIRFARE TRANSACTION CHARGES, OTHER EXPENSES, AND FOREIGN TRAVEL AND IN THE NA TURE OF PURE REIMBURSEMENT NOT HAVING ANY ELEMENT OF INCOME/SERVICE. 4.3 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED DRP/DCIT ERRED IN NOT FOLLOWING THE DECISION OF THE ITAT IN APPELLANT'S OWN CASE FOR AY 2004 - 05 WHEREIN IT IS HELD THAT EVEN IF THE REIMBURSEM ENT IS CONSIDERED AS PART OF BUSINESS INCOME, THERE SHOULD NOT BE ANY INCOME CHARGEABLE TO TAX SINCE THE EXPENDITURE PAID BY THE APPELLANT (I.E. COMMISSION AND MARKETING FEES PAID TO ADSIL) IS SUFFICIENT TO ABSORB ITS INCOME. 5. TRANSFER PRICING ADJUSTMENT 5.1 THE LEARNED DCIT ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS.1,58,69,765 / - UNDER SECTION 92CA(4), IN RESPECT OF T HE INTERNATIONAL TRANSACTION ENTERED I NTO BY THE APPELLANT DURING THE YE AR ENDED 31 MARCH 2011. 5.2 THE LEARNED DCIT WHILE DETERMINING THE ARM'S LENGTH INTEREST RATE ERRED IN NOT APPRECIATING THE BUSINESS AND ECONOMIC CIRCUMSTANCES PREVAILING AT THE TIME OF PROVIDING THE INTEREST FREE LOAN OF RS. 12,88,91,940 / - BY THE APPELLANT TO ADSIL IN THE PROPER PERSPECTIVE. P A G E | 71 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 5.3 THE LEARNED DCIT ERRED IN NOT APPRECIATING / CONSIDERING THAT IN RESPECT OF THE ADJUSTMENT OF RS. 1,58,69,765 / - TO THE TOTAL INCOME OF THE APPELLANT REPRESENTING ALLEGED ARM'S LENGTH INTEREST ON THE INTEREST - FREE LOAN GRANTED BY THE APPELLANT TO ADSIL, NO CORRESPONDING DEDUCTION IS ALLOWED TO ADSIL IN ITS TAX RETURN OR ASSESSMENTS, AND ACCORDINGLY AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. 5.4 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED DCIT ERRED BY NOT ALLOWING CORRESPONDING DEDUCTION OF THE INTEREST FREE LOAN GRANTED BY THE APPELLANT IN THE HANDS OF ADSIL. 5.5 THE LEARNED DCIT ERRED BY NOT CONSIDERING THE FACT THAT IF THE APPELLANT HAD CHARGED INTEREST INSTEAD OF THE LOAN BEING INTEREST FREE THERE WOULD BE LOSS TO REVENUE OF INDIA, CONSIDERING THE DEDUCTIBILITY OF THE INTEREST EXPENSE IN THE HANDS OF THE BORROWER (I.E. ADSIL) AND LOW WITHHOLDING TAX IN RESPECT OF INTEREST DUE TO THE APPELLANT . 5.6 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEARNED DCIT ERRED IN LAW BY USING PRIME LENDING RATE INSTEAD OF LIBOR FOR DETERMINING THE ARM'S LENGTH INTEREST AMOUNT. 5.7 THE LEARNED DCIT ERRED IN APPLYING THE RATE OF 40% ON THE INTEREST INCOME AS AGAINST TH E RATE PRESCRIBED IN SECTION 11 5A OF THE ACT. 5.8 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED DRP / DCIT ERRED IN NOT APPRECIATING THAT EVEN IF THE INTEREST INCOME IS CONSIDERED AS PART OF BUSINESS INCOME, THERE SHOULD NOT BE ANY INCOME CHARGEABLE TO TAX SINCE THE EXPENDITURE PAID BY THE APPELLANT (I.E. C OMMISSION AND MARKETING FEES PAID TO ADSIL) IS SUFFICIENT TO ABSORB ITS INCOME AND ACCORDINGLY THERE WILL BE NO LOSS TO THE REVENUE. 6. INITIATION OF PENALTY PROCEEDINGS 6.1 THE LEARNED DCIT HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 7 SHORT GRANT OF TAX DEDUCTED AT SOURCE 7.1 THE LEARNED DCIT HAS ERRED GRANTING TDS CREDIT OF RS. 1,89,59,582 / - AS AGAINST TDS CREDIT OF RS.3, 19,47,935 / - CLAIMED BY THE APPELLANT. 8 LEVY OF INTEREST UNDER SECTION 234A 8.1 THE LEARNED DCIT ERRED IN LEVYING INTEREST OF RS. 3,78,374 / - UNDER SECTION 234A OF THE ACT. 9. LEVY OF INTEREST UNDER SECTION 234B 9.1 THE LEARNED DOT ERRED IN LEVYING INTEREST RS. 1,07,83,659 / - UNDER SECTION 234B OF THE ACT. 9.2 THE LEARNED DCIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN APPELLANTS OWN CASE FOR LEVY OF INTERES T UNDER SECTION 234B OF THE ACT. P A G E | 72 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 10. ADJUSTMENT OF REFUND AND INTEREST ON REFUND 10.1 THE LEARNED DCIT ER RED IN ADJUSTING A SUM OF RS.1 ,88,84,449 / - AS REFUND ALREADY ISSUED, WITHOUT APPRECIATING THE FACT THAT NO SUCH REFUND HAS BEEN ISSUED TO THE APPELLANT. 10.2 THE LEARNED DCIT ERRED IN ADJUSTING A SUM OF RS. 20,77,284 / - AS INTEREST ON REFUND ALREADY ISSUED, WITHOUT APPRECIATING THE FACT THAT NO SUCH REFUND OR INTERES T THEREON HAS NOT BEEN ISSUED TO THE APPELLANT. 11. LEVY OF INTEREST UNDER SECTION 234D 11.1 THE LEARNED DCIT ERRED IN LEVYING INTEREST OF RS. 35,63,495 / - UNDER SECTION 234D OF THE ACT. 12. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 13. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 65 . THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE WHEREIN THE ASSESSEE HAD ASSAILED THE INCOME ASSESSED BY THE A.O AT RS. 8,96,95,213/ - BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. THE LD. A.R ADVERTING TO THE GROUNDS OF APPEAL NO(S).2 TO 5, SUBMITTED THAT THE ISSUES AND THE FACTS REMAINED THE SAME AS WERE RAISED BY WAY OF GROUNDS OF APPEAL NO(S). 1 TO 3 AND GROUND OF APPEAL NO. 5 IN THE APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO. 4882 /MUM/2015. THE AFORESAID FACTUAL POSITION SO CANVASSED BEFORE US HAD NOT BEEN REBUTTED BY THE LD. D.R. WE HAVE PERUSED THE GROUNDS OF APPEAL NO(S). 2 TO 5 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL AND FIND THAT THE SAME PERTAIN TO THE ISSUES VIZ. (I). EXISTENCE OF THE PE/BUSINESS CONNECTION OF THE ASSESSEE IN INDIA; (II). ATTRIBUTION OF INCOME TO PE; (III). REIMBURSEMENT OF EXPENSES; AND (IV). TRANSFER PRICING ADJUSTMENT OF THE INTEREST ON LOAN ADVANCED TO ASDIL. WE ARE OF THE CONSIDERED VIEW THAT AS THE AFORESAID ISSUES HAD BEEN ADJUDICATED BY US WHILE DISPOSING OF THE GROUNDS OF APPEAL NO(S) 1 TO 3 AND GROUND OF APPEAL NO. 5 OF THE ASSESSEE FOR A.Y 2005 - 06, VIZ. ITA NO.4882/MUM/2015, P A G E | 73 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 THEREFORE, THE VIEW TA KEN BY US WHILE DISPOSING OF THE AFORESAID RESPECTIVE GROUNDS OF APPEAL SHALL APPLY MUTATIS MUTANDIS FOR THE ADJUDICATION OF THE GROUNDS OF APPEAL NO(S). 2 TO 5 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL BEFORE US. THE GROUNDS OF APPEAL NO(S). 2 TO 5 OF THE PRESENT APPEAL ARE THUS DISPOSED OF IN TERMS OF OUR AFORESAID OBSERVATIONS. 66 . THE ASSESSEE BY WAY OF GROUND OF APPEAL NO. 6 HAD ASSAILED THE INITIATION OF PENALTY PROCEEDINGS BY THE A.O UNDER SEC. 271(1)(C). WE BEING OF THE VIEW THAT THE AFORESAID CHALLENGE BY THE ASSESSEE TO THE INITIATION OF THE PENALTY PROCEEDINGS IS PREMATURE, THEREFORE, DISMISS THE GROUND OF APPEAL NO. 6. 67 . THE ASSESSEE HAD FURTHER BY WAY OF GROUND OF APPEAL NO. 7 CLAIMED THAT THE DCIT WHILE PASSING THE ORDER UNDER SEC. 143(3) R.W.S 144C(13) BY ALLOWING CREDIT OF TDS OF RS. 1,89,59,582/ - AGAINST CLAIM OF RS. 3,19,47,935/ - RAISED BY THE ASSESSEE IN ITS RETURN OF INCOME, HAD ERRED IN GIVING SHORT CREDIT OF THE SAME. WE THOUGH FIND THAT NEITHER ANY SUCH OBJECTION OF THE ASSESSEE AS REGARDS SHORT CREDIT OF TDS IS BORNE FROM THE RECORDS, NOR THE LD. A.R HAD DRAWN OUR ATTENTION TO ANY SUCH MATERIAL IN SUPPORT OF HIS AFORESAID CONTENTION, HOWEVER, IN ALL FAIRNESS DIRECT TO A.O CONSIDER THE SAID CLAIM OF THE ASSESSEE AT THE TIME OF GIVING APPEAL EFFECT TO OUR ORDER. NEEDLESS TO SAY, THE A.O WHILE GIVING EFFECT TO OUR AFORESAID DIRECTION SHALL AFFORD AN OPPORTUNITY TO T HE ASSESSEE WHO SHALL BE AT A LIBERTY TO FORTIFY ITS AFORESAID CLAIM BEFORE THE A.O. THE GROUND OF APPEAL NO. 7 IS ALLOWED FOR STATISTICAL PURPOSES. 68 . T HE ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 8 ASSAILED THE LEVY OF INTEREST OF RS. 3,78,374/ - UNDE R SEC. 234A. HOWEVER, AT THE P A G E | 7 4 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 TIME OF HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. A.R THAT AS THE A.O HAD VIDE HIS ORDER PASSED UNDER SEC. 154 OF THE ACT, DATED 15.02.2016 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 8 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 8 AS NOT PRESSED. 69 . THE ASSESSEE BY WAY OF GROUND OF APPEAL NO. 9 HAD ASSAILED THE LEVY OF INTEREST OF RS. 1,07,83,659/ - UNDER SEC. 234B. H OWEVER, AT THE TIME OF HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. A.R THAT AS THE A.O HAD VIDE HIS ORDER PASSED UNDER SEC. 154 OF THE ACT, DATED 20.03.2017 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 9 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 9 AS NOT PRESSED. 70 . THE ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 10 CLAIMED THAT THE A.O HAD ERRED IN ADJUSTING A SUM OF RS. 1,88,84,449/ AS REFUND ALRE ADY ISSUED, AND A FURTHER AMOUNT OF RS. 20,77,284/ - TOWARDS INTEREST ON REFUND, WHILE FOR THE FACT WAS THAT NO SUCH REFUND WAS ISSUED TO THE ASSESSEE. HOWEVER, THE LD. A.R DURING THE COURSE OF HEARING OF THE APPEAL SUBMITTED THAT AS THE A.O HAD VIDE HIS OR DER PA SSED UNDER SEC. 154 OF THE ACT, DATED 20.02.2017 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 10 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 10 AS NO T PRESSED. 71 . THE ASSESSEE HAD BY WAY OF GROUND OF APPEAL NO. 11 CLAIMED THAT THE A.O HAD ERRED IN LEVYING AN INTEREST OF RS. 33,63,495/ - UNDER SEC. 234D. HOWEVER, THE LD. A.R DURING THE COURSE OF HEARING OF THE P A G E | 75 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 APPEAL SUBMITTED THAT AS THE A.O HAD VIDE HIS ORDER PA SSED UNDER SEC. 154 OF THE ACT, DATED 15.02.2016 RECTIFIED THE AFORESAID MISTAKE, THEREFORE, THE GROUND OF APPEAL NO. 11 WAS NOT BEING PRESSED BY HIM. WE THUS IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R DISMISS THE GROUND OF APPEAL NO. 11 AS NOT PRESSED. 72 . THE GROUNDS OF APPEAL NO (S) . 12 AND 13 BEING GENERAL IN NATURE ARE DISMISSED AS NOT PRESSED. 73 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 74 . THE APPEALS OF THE ASSESSEE FOR A.YS 2005 - 06 TO 2011 - 12, VIZ. ITA NO. 4882/MUM/2015, ITA NO. 7367/MUM/2015, ITA NO. 8479/MUM/2011, ITA NO. 7400/MUM/2012, ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO. 486/MUM/2016, RESPECTIVELY, ARE PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. THE AP PEAL OF THE REVENUE FOR A.Y. 2005 - 06, VIZ. ITA NO. 4780/MUM/2015 IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 16 /02/20 18. SD/ SD/ - (G.S. PANNU) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 16 .02.2018 PS. ROHIT KUMAR P A G E | 76 SABRE ASIA PACIFIC LTE LTD. VS. DCIT - A.Y. 205 - 06 TO 2011 - 12 ITA NO. 4882/MUM/2015, ITA NO . 7367 /MUM/2010 , ITA NO. 8479/MUM/2011, ITA NO.7400/MUM/2012,ITA NO. 2120/MUM/2014, ITA NO. 1704/MUM/2015 AND ITA NO.486/MUM/2016 ADDL. CIT VS. SABRE ASIA PACIFIC LTE A.Y. 2005 - 06, ITA NO. 4780/MUM/2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT , MUMBAI