In hearing an appeal by the Commissioner of Income Tax – International Taxation, a Division Bench of the Delhi High Court upheld the order or the Income Tax Appellate Tribunal(ITAT) and Commissioner of Income Tax (Appeals) (CIT(A)) in favour of the assessee, Travelport L P USA that, Performance of Booking does not amount to Substantial Business Activity carried out in India.
The counsel for the Appellant-Revenue states that the ITAT has erred in holding that only 15% of the revenue is attributable to the assessee’s PE in India by mechanically applying the ratio of the judgement of DIT vs. Galileo International Inc.,without appreciating that the facts of the instant case are different.
It was also contended by the revenue that the substantial activities relating to the business of the Assessee are carried out in India and accordingly entire booking fees/revenue generated from India would be taxable in India.
The bench however, could not find any submissions that differentiate the facts of this case on behalf of the revenue in regard to the differentiating facts. From the ITAT order, the bench observed that, since no guidelines are available as to how much income of the Assessee-Respondent be reasonably attributable to India, the same has to be determined on the basis of the facts and judicial precedents.
Upholding the findings of CIT(A) and ITAT as, “out of several activities, the activities of Calleo Distribution Technologies Private Limited in India were only in respect of generating requests and receiving end-result of the process. In other words, the computers at the desk of the travel agent in India were merely connected to the extent that they could perform a booking function but were not capable of processing the data of all the airlines together at once,” the bench dismissed the appeal for not having any substantial questions of law for consideration.
The ITAT also held that the Assessee has not deployed any assets in India and the attribution of 15% of the revenue to the respondent’s Permanent Establishment in India by the CIT (A) was rightly done. This was also held to be justifiable by the bench comprising of Justice Manmohan and Justice Manmeet Pritam Singh Arora, for the lack of any submissions that differentiate the facts of this case on behalf of the revenue in regard.
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