Direct Taxation

HeId I:

The issue is squarely covered in favour of the assessee and against the revenue by decision of the co-ordinate bench in assessee’s own case in Amadeus IT Group SA Vaish Associates v. ACIT [2023] 155 taxmann.com 427 (Delhi – Trib.) for AY 2020-21 vide order dated 16-10-2023 has held that the booking fee received by the assessee is taxable as ‘business income’ and not as ‘royalty’. [Para 11]

• The Delhi High Court has dismissed the appeals filed by the department against the findings of the Tribunal in A. Ys 2007-08 to 2021-22. Therefore, respectfully following the orders of the High Court, this ground of the assessee is allowed. [Para 12]
• Section 9 of the Income-tax Act, 1961, read with article 13 of the Indo-Spain DTAA – Income – Deemed to accrue and arise in India (Royalties/Fees for technical services – Others) – Assessment year 2022-23 – Assessee, a tax resident of Spain, had developed a fully automated Computer Information System (CRS) which enabled display and dissemination of

information supplied by various airlines, which in turn facilitated, inter alia, reservations, communications, ticketing and related functions on a worldwide basis for travel industry – System was for facility of both travel agencies and airline offices worldwide – During year, assessee received a gross booking revenue/fees arising from India – Assessing Officer held that booking fee received by assessee from various airlines was payment for use of process and scientific equipment and, thus, was taxable as royalty both under section 9(1)(vi) and article 13 – It was noted that in assessee’s own case for earlier assessment years, it was held that booking fee received by assessee was taxable as business income and not as royalty – Whether following same, impugned booking fee received by assessee was to be taxed as business income and not as royalty – Held, yes [Paras 11 and 12]

• Section 9 of the Income-tax Act, 1961, read with article 13 of DTAA between India and Spain – Income – Deemed to accrue and arise in India (Royalties/Fees for technical services – Others) – Assessment year 2022 – 23 – Assessee, a tax resident of Spain, had developed a fully automated Computer Information System (CRS) which enabled display and dissemination of information supplied by various airlines, which in turn facilitated, inter alia, reservations, communications, ticketing and related functions on a worldwide basis for travel industry – Assessing Officer brought to tax payments received in relation to Altea System (an inventory management and hosting system developed by assessee) observing that Altea system was not merely an inventory management and hosting system, but provided key operational services to various airlines – It was noted that Altea system was installed at airports and was accessed only by airlines and not by any of assessee’s agents in India and that payment made by airlines to assessee in relation to Altea system was for services rendered by assessee and not for use of any process, or equipment, etc. since control to such inventory system was never transferred by assessee to airlines – Whether thus, payment received by assessee from airlines for Altea System was not ‘royalty’ either under section 9(1)(vi) or under article 13 – Held, yes [Para 19]

III. Section 234B of the Income-tax Act, 1961 – Interest, chargeable as – Assessment year 2022-23 – Whether where there was no liability for payment of advance tax, since tax was deductible at source on income of assessee, non-resident held liable to tax in India, levy of interest under Section 234B was not warranted – Held, yes [Para 25]

In Favour of: The Assessee