Facts of the Case

The present appeals were filed by the Revenue before the Delhi High Court against a common order dated 26.10.2020 passed by the Income Tax Appellate Tribunal concerning Assessment Years 2007-08, 2008-09, 2010-11, and 2011-12.

The Revenue also filed applications seeking condonation of delay of 300 days in re-filing the appeals, which was not opposed by the assessee and accordingly condoned by the Court.

The dispute pertained to taxability of income earned by the assessee (Amadeus IT Group SA), including attribution of profits to Permanent Establishment (PE), characterization of booking fees, and levy of interest under the Income Tax Act, 1961.

Issues Involved

  1. Whether the Tribunal erred in adopting 15% as the profit attributable to the Permanent Establishment (PE) in India.
  2. Whether booking fee received by the assessee is taxable as business income or as royalty.
  3. Whether interest under Section 234B is leviable where tax is deductible at source under Section 195.

Petitioner’s Arguments (Revenue)

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

Respondent’s Arguments (Assessee)

  • The issues raised by the Revenue are already covered by binding judicial precedents.
  • The findings of the Tribunal are consistent with settled legal position and do not warrant interference.
  • No substantial question of law arises for consideration.

Court’s Findings / Order

  1. Profit Attribution to PE (15%)
    Covered by Supreme Court decision in Director of Income Tax vs Travelport Inc.
  2. Booking Fee – Business Income vs Royalty
    Covered by Delhi High Court decision in Director of Income Tax vs New Skies Satellite BV & Ors.
  3. Interest under Section 234B
    Covered by Supreme Court ruling in Director of Income Tax vs Mitsubishi Corporation (2021)

Accordingly, the Court dismissed the appeals filed by the Revenue.

Important Clarification by Court

  • When issues are already settled by binding precedents of the Supreme Court and High Courts, no fresh substantial question of law arises under Section 260A.
  • Appeals merely reiterating settled issues are liable to be dismissed at the threshold.

Sections Involved

  • Section 195 – Withholding Tax
  • Section 234B – Interest for Default in Payment of Advance Tax
  • Section 260A – Appeal to High Court
  • Concepts: Permanent Establishment (PE), Royalty vs Business Income

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS04052023ITA2582023_115448.pdf

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