Delhi High Court Condoned 170 Days Delay in Re-filing Appeals by Commissioner of Income Tax; Refrains from Entertaining Issues Not Raised before the Statutory Authority [Read Order]

The High Court of Delhi has condoned the delay of 170 days in the re-filing of appeals by the Commissioner of Income Tax - International Taxation -1. However, the court refrained from entertaining certain issues raised in the appeals that had not been previously brought before the statutory authorities.

The appeals, related to the Assessment Years 2017-18 and 2019-20, were sought to challenge a common order issued by the Income Tax Appellate Tribunal (ITAT).

The delay in re-filing these appeals was attributed to a 170-day lapse, a matter that was addressed by the High Court.

Ms. Kavita Jha and Mr. Udit Naresh, representing the respondent, Amadeus IT Group SA, did not object to the condonation of the delay, contributing to the court’s decision to grant the concession.

While the delay was condoned, the bench turned its attention to the questions of law proposed in the appeals. These questions were primarily related to the determination of profit attributable to the Permanent Establishment (PE) of the Assessee in India, income from royalty and the taxability of booking fees.

Mr. Ruchir Bhatia, who appeared for the revenue, acknowledged that some of the proposed questions were covered by a previous decision in The Commissioner of Income Tax-International Taxation-1 v. Amadeus IT Group SA 2023: DHC: 4326-DB.

The Court concluded that no substantial questions of law arose concerning the aspects covered by the previous decision. In result, the proposed questions related to these issues were set aside.

The remaining proposed questions, which addressed the application of Functions, Assets and Risks Analysis (FAR analysis) in determining the attribution of profit.

The revenue argued that FAR analysis should not have been applied, and instead, the statutory authorities had relied on rule 10 of the Income Tax Rules, 1962.

When pressed further, the revenue conceded that this argument had not been presented before the statutory authorities during the initial proceedings. The Court, taking this into account, ruled that issues that were not raised and argued before the statutory authorities could not be entertained during the appeal process.

In conclusion, the division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia closed the appeals, leaving the questions of law related to FAR analysis unaddressed.

The bench highlighted the importance of raising and arguing all relevant issues before the appropriate authorities during the initial proceedings and failing to do so limits the scope of appeals and prevents the reconsideration of certain legal arguments at a later stage.

To Read the full text of the Order CLICK HERE

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