The Tax PublishersITA No. 6499/Del/2012
2020 TaxPub(DT) 5346 (Del-Trib)

INCOME TAX ACT, 1961

Section 9(1)(i) Section 5(2)

Majority of the functions were performed outside India. Even majority of assets, i.e., host computer which was having very large capacity which processed information of all the participants was situated outside India. The CRS as a whole was developed and maintained outside India. The risk in this regard entirely rested with assessee and that was at USA outside India. However, it was equally important to note that but for presence of assessee in India and configuration and connectivity being provided in India, the income would not have generated. Thus, the initial cause of generation of income was in India also. On the basis of above facts, one could reasonably attribute 15 per cent of revenue accruing to assessee in respect of bookings made in India as income accruing or arising in India and chargeable under section 5(2), read with section 9(1)(i).

Income deemed to accrue or arise in India - Fixed place of business within meaning of article 5(1) of Indo-US DTAA and Dependent Agent PE in terms of article 5(4)(a) Indo-US DTAA - Initial cause of generation of income being in india -

Assessee, based at USA, was engaged in the business of providing information, reservations, transaction processing and related services for airlines, travel agencies and other travel related entities. AO noticed that assessee had a business connection in India under section 9(1)(i), fixed place of business within meaning of article 5(1) of Indo-US DTAA and Dependent Agent PE in terms of article 5(4)(a) of DTAA. Accordingly AO held that entire revenue of assessee from India was taxable in India after allowing deduction of commission paid to Calleo Distribution Technologies (P) Ltd. being its non-exclusive representative in India. Held: Majority of the functions were performed outside India. Even majority of assets, i.e., host computer which was having very large capacity which processed information of all the participants was situated outside India. The CRS as a whole was developed and maintained outside India. The risk in this regard entirely rested with assessee and that was at USA outside India. However, it was equally important to note that but for presence of assessee in India and configuration and connectivity being provided in India, the income would not have generated. Thus, the initial cause of generation of income was in India also. On the basis of above facts, one could reasonably attribute 15 per cent of revenue accruing to assessee in respect of bookings made in India as income accruing or arising in India and chargeable under section 5(2), read with section 9(1)(i).

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com