Facts of the Case

The present appeals were filed by the Revenue challenging the order dated 09.11.2020 passed by the Income Tax Appellate Tribunal. The Tribunal had dismissed the Revenue’s appeals primarily on the ground of limitation under Section 153 of the Income-tax Act.

The dispute relates to attribution of revenue to the Permanent Establishment (PE) of the assessee in India, specifically whether 15% of revenue generated from bookings made in India was taxable in India.

It is relevant that similar issues had already been adjudicated in earlier years (AY 2006–07), wherein the matter attained finality up to the Supreme Court, which ruled against the Revenue.

Issues Involved

  1. Whether the assessment order was barred by limitation under Section 153 of the Income-tax Act.
  2. Whether provisions of Section 144C override Section 153 in the given facts.
  3. Whether attribution of 15% of revenue to the Indian PE is sustainable.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that the Tribunal erred in dismissing the appeal on limitation.
  • It argued that Section 144C (relating to draft assessment orders) should apply and override Section 153 due to its non-obstante clause.
  • The Revenue also sought to challenge the attribution of revenue to the PE.

Respondent’s Arguments (Assessee – Travelport L.P.)

  • The assessee relied on earlier judgments, including the decision of the Supreme Court in its own case, where identical issues were decided in its favour.
  • It was argued that the assessment orders were clearly barred by limitation under Section 153.
  • The applicability of Section 144C was denied on the ground that issuance of a draft assessment order was not required in the relevant assessment years.

Court’s Findings / Order

  • The Court noted that the issue on merits had already been settled by the Supreme Court in favour of the assessee in earlier years.
  • The High Court observed that:
    • The Tribunal rightly held that the assessment was barred by limitation under Section 153.
    • Section 144C was not applicable as draft assessment procedure was not required for the relevant period.
    • Therefore, the non-obstante clause in Section 144C could not override Section 153.
  • Since the issue on merits was already settled, the Court held that no substantial question of law arose.
  • Accordingly, the appeals were closed.

Important Clarification

    • Limitation provisions under Section 153 are mandatory and cannot be bypassed unless clearly overridden.
    • Section 144C applies only when draft assessment order procedure is applicable.
    • A non-obstante clause does not automatically override other provisions unless conditions for its applicability are satisfied.
    • Once an issue is settled by the Supreme Court, subsequent appeals on identical facts may be treated as academic

Sections Involved

  • Section 153 – Time limit for completion of assessment
  • Section 144C – Reference to Dispute Resolution Panel (DRP)
  • Provisions relating to Permanent Establishment (PE) taxation under international taxation

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS07122023ITA7082023_151938.pdf

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