Income Tax Appeal Case of Travelport International Operations Limited Versus ACIT Circle-3(1)(1) International Taxation-3, New Delhi

Income Tax Appeal Case of Travelport International Operations Limited Versus ACIT Circle-3(1)(1) International Taxation-3, New Delhi

Case Number: ITA 1567/DEL/2022

Appellant: Travelport International Operations Limited

Respondent: ACIT Circle-3(1)(1) International Taxation-3, New Delhi

Assessment Year: 2019-20

Result: Partly Allowed

Judgment Summary

The appeal was filed by Travelport International Operations Limited against the final assessment orders under section 143(3) read with section 144C(13) of the Income-tax Act, 1961, for the assessment year 2019-20. The orders were issued following directions from the Dispute Resolution Panel (DRP). The appeal raised multiple grounds challenging the jurisdiction and findings of the AO and the DRP, focusing on issues such as the existence of a business connection or permanent establishment (PE) in India, income chargeability under the India-UK Double Taxation Avoidance Agreement (DTAA), and the incorrect attribution of profits to Indian operations.

The case details the appellant’s challenge against the order passed by the Assistant Commissioner of Income-tax, Circle-3(1)(1), International Taxation- 3, New Delhi under section 144C(13) / 143(3) of the Act, claiming errors in completing the assessment with a declared total income drastically higher than the ‘NIL’ income declared by the appellant. Key issues included the appellant’s status under the DTAA, the characterization of Inter-globe Technologies Quotient India Private Limited (ITQPL) as a dependent agent establishing a PE in India, and the calculation of taxable income attributed to Indian operations.

The Bench analyzed the grounds of appeal, especially focusing on the establishment of a PE in India, the attribution of profits to such PE, and the expenses allocated against these profits. Substantial emphasis was laid on the intricate relationships between the appellant, ITQPL, and the broader operational methodologies that would determine the existence of a PE and the consequent tax liabilities under the India-UK DTAA.

In its deliberation, the Tribunal examined precedents, the applicable legal framework of the Income-tax Act, and the DTAA provisions. It also considered the distribution agreements, the factual matrix of the case including business operations, the dependency of ITQPL on the appellant, and the functional and economic analysis to determine the PE status and its impact on tax obligations.

The Tribunal partly allowed the appeal, providing relief on certain grounds while upholding the assessment officer’s decision on others. This judgment sets a precedent in determining the scope of international tax obligations, the interpretation of DTAA provisions, and the criteria for establishing PE in cross-border transaction settings.

Conclusion

This case highlights the complexities involved in the interpretation and application of DTAAs, the concept of PE, and the attribution of profits to such establishments. It underscores the nuanced judicial approach needed to adjudicate disputes involving international taxation issues, demonstrating the careful consideration of legal, factual, and procedural aspects to ensure fair taxation while fostering international commerce.

Income Tax Appeal Case of Travelport International Operations Limited Versus ACIT Circle-3(1)(1) International Taxation-3, New Delhi