Facts of the Case

The appeals were filed by the Revenue against a common order dated 29.01.2021 passed by the Income Tax Appellate Tribunal concerning Assessment Years 2013-14 to 2016-17.

The dispute revolved around the taxability of income earned by Amadeus IT Group SA in India, particularly in relation to:

  • Attribution of profits to Permanent Establishment (PE)
  • Nature of booking fee income
  • Levy of interest under Section 234B

Additionally, there was a delay of 300 days in re-filing the appeals, which was condoned by the Court.

Issues Involved

  1. Whether 15% profit attribution to the PE in India was justified?
  2. Whether booking fee received by the assessee is taxable as business income or royalty?
  3. Whether interest under Section 234B is applicable where tax is deductible at source under Section 195?

Petitioner’s Arguments (Revenue)

  • The Tribunal erred in fixing profit attribution at 15% for the PE.
  • Booking fee should be treated as royalty income instead of business income.
  • Interest under Section 234B should be levied despite tax being subject to withholding under Section 195.

Respondent’s Arguments (Assessee)

  • The issues raised are already covered by binding judicial precedents.
  • Booking fee is rightly treated as business income, not royalty.
  • No interest under Section 234B is leviable since tax was deductible at source and no advance tax liability arises. 

Court Findings / Order

  • Issue of PE Attribution (15%): Covered by Supreme Court ruling in DIT vs Travelport Inc.; hence no substantial question of law arises.
  • Royalty vs Business Income: Covered by DIT vs New Skies Satellite BV; booking fee is not royalty.
  • Section 234B Interest: Not applicable where tax is deductible at source and no addition survives.

The Court concluded that all issues were already settled by precedent, and therefore:

 No substantial question of law arose for consideration
 All appeals filed by the Revenue were dismissed

Important Clarifications

  • Interest under Section 234B cannot be levied where income is subject to TDS and no advance tax liability exists.
  • Amendments under Finance Act, 2021 do not alter the outcome where additions themselves do not survive.
  • Section 209(1)(d) applies only where tax is not deducted at source.

Sections Involved

  • Section 195 – Withholding Tax
  • Section 234B – Interest for Default in Payment of Advance Tax
  • Section 209(1)(d) – Computation of Advance Tax

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS04052023ITA2542023_115152.pdf

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