Ita/604/2016 Of Pr. Commissioner Of Income Tax Int. Taxation-3 v. Travelport L.p. Usa ( Formerly Worldspan L.p. Usa)

$~46&47 •. - '•... IN THE HIGH COURT OF DELHI AT NEW DELHI,+ITA 603/2016 & CM Nos.30033-34/2016.+•ITA 604/2016 & CM Nos.30035-36/20i6 . 'PR. COMMISSIONEROF INCOME TAX INT. TAXATION-3r;Appellant-Through: - Mr. R,ahuiChaudhary,Senior/^'St^ding Counsel,, .Versus'•r;Appellant-Through: - Mr. R,ahuiChaudhary,Senior/^'St^ding Counsel,, .Versus'• / TRAVELPORTL.P; USA (FORMERLYWORLDSPANL.P. USA) , . , ;Respondent^Throu^;Ajay Vohr^ Senior Advocate-with Mr. Prakash Kumar, Advocate.. -• -• -•^ . , , , -•GORA]V[:. -• -• -•HON'BLE MR. JUSTICE S. RAVINDRA BHATHbN'BLE MR. JUSTICE NAJMIWAZIRIORDER,%,20.12.i2016CM No. 30034 & 30036 of 2016 (for exemption) 1. .Allowed, .subject 'to all just exceptions.'The applications'stand'disposed off.-,; , CM Nos.30033& 30035/2016 (for delay) 2. ,; Theseapplicatiohsseekcondonationofdelay,whichisstatedto be of22 days in filing,the aforenotbdappeal. For the reasons'stated in theseapplications,the delayis condonedandthe appealsaretakenonrecord. 3. . The applicationsare disposedoff. . / ITANos. 603 & 604/2016 4..Issuenotice. Mr.'PrakashKumar,Advocateacceptsnoticeon behalf of the respondents; • ; / .~ ^ Signature Not Verified Digitally SignedBy:AMULYA 5.The Revenue urges a substantialquestionas to the teiiabilityoftheimpugnedorderofthe IncomeTax AppellateTribunal(ITAT)to, the extentit attributed 15%of the assessee's iricometo India? 6.The assessee provides online airline booking services. It is aDelaware,.USA;based limitedpartnershipconcernand atax residentoftheUSA. Its portal providesinformation,reservation,transactionprocessingand relatedservicesfor airlines,travel agenciesand the other like businessentities. In the relevantorder,premisedupon an approvalreportsubmittedby it to the IncomeTax Authoritiesand the revenuegeneratedin India,theTribunalheld that the.assesseehad a PermanentEstablishment(PE) withinthe meaningunder Article5 oifthe DoubleTaxationAvpidanceAgreement(DTAA) betweenIndia and USA.It then went on to analyze the exactincome derivedby the assesseefrom its PE. In doing so, the AssessmentOfficer based his conclusions and the information and fmdings uponmaterialsfurnished the assessee. The net taxableincome determinedtobybe USD 73,376/- upon which, after conversion,the taxable income wasdeterminedat Rs.13,24,707/-in ITA No.604/2016and in ITA No.603/2016,the net taxableincome determinedto be USD 7,14,039/-upon which, afterconversion,the taxable income was determinedat ? 3,28,45,794/-. TheCommissionerof Income Tax (Appeals) [CIT (A)], before whom theassesseehad urged its grievances,rejectedthe plea. Even the plea of theassesseeto carry out on an upwardrefund based upon additionalmaterialfurnished it underRule 46A was examinedon meritsand afteraremandbyreport,rejected., 7.In these circumstances,in the assessee'scross-appealto the ITATagainst the findings with respect to its PE, the Tribunal attributed15% income to the assessee's India operations, following the previous judgmentof this Court in DIT Fs. Galileo International Inc. (2009) 336ITR 264. 8.Mr. Vohra, SeniorAdvocate,who appearsfor the assessee, contendsthat 15% attributionby the ITATin the impugnedorderwas warranted. Hejustifies his submissions with reference to the conclusions recorded inDirector ofIncome Tax Fs. GalileoInternationalInc. (2009) 336 ITR 264and a subsequentjudgment in GalileoNederland BF Fs. AssistantDirectorofIncome-tax,Circle-1 (2), (Intl. Tax), New Delhi 367ITR 319 (2014). Areference was made to the observations of the ITAT recording that thepartieswere uibroadagreementas to the applicabilityofthe Galileorule, bothwithrespectto the PE questionaswell astheruleof.attribution. income to the assessee's India operations, following the previous judgmentof this Court in DIT Fs. Galileo International Inc. (2009) 336ITR 264. 8.Mr. Vohra, SeniorAdvocate,who appearsfor the assessee, contendsthat 15% attributionby the ITATin the impugnedorderwas warranted. Hejustifies his submissions with reference to the conclusions recorded inDirector ofIncome Tax Fs. GalileoInternationalInc. (2009) 336 ITR 264and a subsequentjudgment in GalileoNederland BF Fs. AssistantDirectorofIncome-tax,Circle-1 (2), (Intl. Tax), New Delhi 367ITR 319 (2014). Areference was made to the observations of the ITAT recording that thepartieswere uibroadagreementas to the applicabilityofthe Galileorule, bothwithrespectto the PE questionaswell astheruleof.attribution. 9.The Revenue's limited and specific case in this appeal is that the exactparticularswithrespectto the Revenue'soperationsfrom Indiawere available;attribution of 15% was not warranted.The learned counsel for the assesseeresistedthe and submittedthat the ITAT was correctinthe appeal followingdecision of Galileo International Inc 's case {supra) in the circumstances.10.It is apparent from the above discussionthat the specific and limitedchallenge by the Revenue in this appeal is to the ITAT's order, rathermechanicaladherencetotheGalileoInternationalInc'scase{supra)attribution,principallyto.the extentit followedthe 15% ratio. In the presentcase, the AOhad basedhis conclusionsand determinedthe incomebaseduponfigures furnishedby the assessee,as is apparentfrom a plain reading of theorder.In the circumstances, the ITAT, in our opinion, ought not to havedisturbed that order, without a finding. 11.This Court has also in its order dated 19.12.2016 recorded a similarconclusion in ITA No.827/2016 between the same parties. Accordingly,the present appeal is disposed off with a direction to the ITAT to render specificfindings on the questions urged after hearing both the parties.12.The earlier date fixed i.e., 04.01.2017 is cancelled.,13.The appeals are allowed in the above terms. S. RAVINDRA BHAT, J. DECEMBER 20,2016sb'- NAJMIWAZIRI,J.