Pr. Commissioner Of Income Tax Int. Taxation-3 v. Travelport L.p. Usa (Formerly Worldspan L.p. Usa

$~1 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 827/2016 & CM Nos.43373-75/2016 PR. COMMISSIONER OF INCOME TAX INT. TAXATION-3 ..... Appellant Through:Mr. Rahul Chaudhary, Advocate. Versus TRAVELPORT L.P. USA (FORMERLY WORLDSPAN L.P. USA) ..... Respondent Through:Mr. Prakash Kumar and Mr. MehvishKhan, Advocates. CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE NAJMI WAZIRIO R D E R%19.12.2016 CM No. 43374/2016 (for exemption) 1.Allowed, subject to all just exceptions. 2.The application stands disposed off. CM Nos.43375 & 43373/2016 (for delay) 3.These applications seek condonation of delay, which is stated to be of58 days in re-filing and 20 days in filing the appeal. For the reasons stated inthese applications, the delay is condoned and the appeal is taken on record.4.The applications are disposed off.ITA No. 827/2016 5.Issue notice. Mr. Prakash Kumar, Advocate accepts notice on behalfof the respondent. 6.With the consent of the parties, the appeal is taken up for final hearing. 7.The Revenue urges a substantial question as to the tenability of theimpugned order of the Income Tax Appellate Tribunal (ITAT) to the extent itattributed 15% of the assessee’s income to India? 8.The assessee provides online airline booking services.It is aDelaware, USA based limited partnership concern and a tax resident of theUSA.Its portal provides information, reservation, transaction processingand related services for airlines, travel agencies and the other like businessentities. In the relevant order, premised upon an approval report submittedby it to the Income Tax Authorities and the revenue generated in India, theTribunal held that the assessee had a Permanent Establishment (PE) withinthe meaning under Article 5 of the Double Taxation Avoidance Agreement(DTAA) between India and USA.It then went on to analyze the exactincome derived by the assessee from its PE. In doing so, the AssessmentOfficer based his conclusions and findings upon the information andmaterials furnished by the assessee. The net taxable income determined tobe US Dollar 73,376/- upon which, after conversion, the taxable income wasdetermined at Rs.13,24,707/-. The Commissioner of Income Tax (Appeals)[CIT (A)], before whom the assessee had urged its grievances, rejected theplea. Even the plea of the assessee to carry out on an upward refund basedupon additional material furnished by it under Rule 46A was examined onmerits and after a remand report, rejected. 9.In these circumstances, in the assessee’s cross-appeal to the ITATagainst the findings with respect to its PE, the Tribunal attributed 15%income to the assessee’s India operations, following the previous judgmentof this Court in DIT Vs. Galileo International Inc. (2009) 336 ITR 264. 10.The Revenue’s limited and specific argument in this appeal is that theexact particulars with respect to the assessee’s operations in respect of Indiawere available and therefore attribution of 15% was not warranted.Thelearned counsel for the assessee resisted the appeal and submitted that theITAT was correct in following the decision of Galileo International Inc’scase (supra) in the circumstances. 11.It is apparent from the above discussion that the specific and limitedchallenge by the Revenue in this appeal is to the ITAT’s order, rathermechanical adherence to the Galileo International Inc’s case (supra)attribution, principally to the extend it followed 15% rule.In the presentcase, the AO had based his conclusions and determined the income basedupon figures furnished by the assessee, as is apparent from a plain reading ofthe order. In the circumstances, the ITAT, in our opinion, ought not to havedisturbed that order, without appropriate hearing. 12.Learned counsel submits that ITA Nos. 603 & 604 of 2016 arepending and are listed on 04.01.2017. In the circumstances and with consentof the parties, the said appeals are directed to be listed for hearing tomorrowi.e. 20.12.2016. 11.It is apparent from the above discussion that the specific and limitedchallenge by the Revenue in this appeal is to the ITAT’s order, rathermechanical adherence to the Galileo International Inc’s case (supra)attribution, principally to the extend it followed 15% rule.In the presentcase, the AO had based his conclusions and determined the income basedupon figures furnished by the assessee, as is apparent from a plain reading ofthe order. In the circumstances, the ITAT, in our opinion, ought not to havedisturbed that order, without appropriate hearing. 12.Learned counsel submits that ITA Nos. 603 & 604 of 2016 arepending and are listed on 04.01.2017. In the circumstances and with consentof the parties, the said appeals are directed to be listed for hearing tomorrowi.e. 20.12.2016. 13.In view of the conclusions recorded by us, the present ITANo.827/2016 is disposed off with a direction to the ITAT to render specificfindings on the questions discussed. 14.The appeal is allowed in the above terms. S. RAVINDRA BHAT, J. DECEMBER 19, 2016/sb NAJMI WAZIRI, J.