Case Number: ITA 2/DEL/2021
Appellant: Amadeus IT Group SA, Spain
Respondent: ACIT, Circle-1(1)(1), International Taxation, New Delhi
Assessment Year: 2017-18
Case Filed On: 2021-01-04
Order Type: Final Tribunal Order
Date of Order: 2022-09-13
Pronounced On: 2022-09-13
In the case of Amadeus IT Group SA vs. ACIT, Circle-1(1)(1), International Taxation, New Delhi, the appellant, Amadeus IT Group SA, challenged the final assessment order regarding the computation of income and the determination of Permanent Establishment (PE) and royalty for the assessment year 2017-18. The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench “D” on 13th September 2022, with the final order pronounced on the same day.
The appeal arose from the final assessment order passed by the Assistant Commissioner of Income Tax (ACIT), Circle-1(1)(1), International Taxation, New Delhi, dated 3rd November 2020. The appellant was represented by Shri Neeraj Jain, Shri Anshul Sachhar, and Shri Tavish Verma, Advocates, while the respondent was represented by Ms. Sapna Bhatia, CIT (D.R.). The primary issues revolved around the income computation, PE determination, and royalty classification.
The appellant raised several grounds of appeal:
The ITAT bench, comprising Shri Shamim Yahya (Accountant Member) and Shri Yogesh Kumar U.S. (Judicial Member), addressed each issue as follows:
The bench noted that the DRP and assessing officer attributed income to a PE in India based on the use of computers, electronic hardware, and software provided by the appellant. The bench upheld the finding that the appellant had a PE in India under Article 5 of the Indo-Spain DTAA.
The bench observed that the AO attributed 75% of the income earned in India to the PE. However, following the earlier decisions in the appellant’s own case, the bench held that only 15% of the revenue relating to bookings made from India should be attributed to the PE. The bench directed the AO to recompute the income accordingly.
The bench reviewed the disallowance of expenses under various heads. The ITAT held that the disallowances were not justified, following the coordinate Bench’s decisions in the appellant’s own case for earlier years. The bench directed the AO to allow the expenses as claimed by the appellant.
The ITAT held that the booking fee received by the appellant was not in the nature of ‘royalty’ under the Act or the Treaty. The bench followed the coordinate Bench’s decision, which was affirmed by the Hon’ble Delhi High Court. The payments received from airlines for the use of the Altea system were also held not to be ‘royalty’.
The ITAT directed the AO to verify the date of return filing and grant TDS credit accordingly. The bench also held that interest under Section 234B should not be levied as the income was subject to TDS.
The ITAT’s decision emphasizes the importance of consistent and fair assessment procedures, ensuring that taxpayers are not unjustly penalized for typographical errors or incorrect attributions of income. The tribunal’s directions to the AO underscore the need for thorough verification and adherence to established precedents.
Order Pronounced: In the open court on 13th September 2022.
Bench: Shri Shamim Yahya (Accountant Member) and Shri Yogesh Kumar U.S. (Judicial Member)
Copy forwarded to:
Date of Hearing: 11th August 2022
Date of Order: 13th September 2022
The appellant, Amadeus IT Group SA, filed an application on 4th January 2021 against the order dated 3rd November 2020 by the CIT(A), challenging the final assessment order for the assessment year 2017-18 due to issues related to PE and royalty classification.
The tribunal considered the appellant’s arguments and decided to remit the issues back to the AO for verification and fresh adjudication, ensuring that the appellant is given an adequate opportunity to present their case and file a proper application for the claim under Section 10AA.
The tribunal’s decision underscores the importance of accurate and fair assessment procedures in tax matters, allowing taxpayers to correct errors and provide necessary documentation to substantiate their claims.
Overall, the ITAT’s order serves as a reminder of the need for thorough and fair consideration in tax appeals, ensuring that all parties are given a fair chance to present their case and that decisions are made based on a complete review of all relevant facts and circumstances.
Amadeus IT Group SA vs. ACIT International Taxation: PE and Royalty Dispute for AY 2017-18
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform