AMADEUS IT GROUP SA,NEW DELHI vs. ACIT, CIRCLE-1(1)(1), INTERNATIONAL TAXATION, NEW DELHI

The assessee has raised the following common grounds of appeal (except for the amounts):-

That the assessing officer erred on facts and in law in computing the income of the appellant for the relevant assessment year at Rs.661,28,11,902/- as against ‘Nil’ income returned by the appellant.

That the assessing officer erred on facts and in law in alleging that the appellant avoided furnishing specific information called for in the assessment, particularly the various agreements with the airlines.

That the Dispute Resolution Panel (‘DRP’)/ assessing officer erred on facts and in law in holding the appellant to be liable to tax in India in respect of receipts from airlines, etc. relating to segments booked from India through the appellant’s computer reservation system following the orders of earlier years, not appreciating that no income accrued or arose to the appellant in India.

That the DRP/ assessing officer erred on facts and in law in holding that computers, electronic hardware/ software, and the connectivity provided by the appellant to the travel agents through third party nodes located in India, collectively, constituted PE of the appellant in India under Article 5 of the Indo-Spain DTAA (“the Treaty”) and the income arising to the appellant from the airlines, etc. was attributable to the activities of the alleged PE in India.

That the DRP/ assessing officer erred on facts and in law in alleging that Amadeus India (P.) Ltd. (AIPL) constituted dependent agent permanent establishment (PE) of the appellant in India and the income arising to the appellant from the airlines, etc., was attributable to the activities of the alleged PE in India.

That the DRP/ assessing officer erred on facts and in law in holding that the offices of AIPL constitute PE of the appellant in India without even specifying under which paragraph of Article 5 of the Treaty such offices of Amadeus constitute PE of the appellant.

That the DRP/ assessing officer erred on facts and in law in computing the profits attributable to the alleged PE of the appellant in India at Rs. 448,41,17,951/-. 8. That the DRP/ assessing officer erred on facts and in law in not appreciating that even if it is assumed that AIPL or the computers, electronic hardware provided to the travel agents etc., constituted PE of the appellant in India, the income derived from such PE was completely consumed by distribution and other expenses attributable thereto and that no income survives for taxation. 9. That the DRP/ assessing officer erred on facts and in law in not following the order of the Delhi Bench of the Tribunal, affirmed by the Delhi High Court, in the appellant’s case for the assessment years 1996-97 to 1998-99, wherein the Tribunal had attributed 15% of the revenues relating to the bookings made from India as attributable to the appellant’s PE in India and held that no income is taxable as the payment made to dependent agent was more than the revenues so attributed, and in following the rate of attribution of 75% adopted in the order for assessment years 2007-08 to 2017-18.

That the DRP/ assessing officer erred on facts and in law in following the order for assessment year 2007-08 to allege that no remuneration was paid by the appellant to AIPL for main activity of marketing the CRS and providing the hardware support to travel agents and, therefore, profits from such functions were required to be attributed to the appellant’s dependent agency PE in India. 11. That the DRP/ assessing officer erred on facts and in law in disallowing expenditure of Euro 4,29,10,000/- incurred by the

That the DRP/ assessing officer erred on facts and in law in disallowing expenditure of Euro 1,20,96,000/- incurred by the appellant under the head ‘Development fees’, while computing the income attributable to the alleged PE, following the assessment order for assessment year 2007-08.

That the DRP/ assessing officer erred on facts and in law in disallowing expenditure of Euro 105,48,000/- incurred by the appellant under the heads ‘Marketing cost’ and ‘Central operating cost’, while computing the income attributable to the alleged PE, on the ground that the appellant has not been able to establish that the aforesaid expenditure has been incurred specifically for the Indian distribution activity and the justification of incurring such expenditure.

That without prejudicethe DRP/ assessing officer erred in facts and in law in erroneously computing the income of the alleged PE of the appellant.

That the DRP/assessingofficer erredon facts and in law in, alternatively, holding that booking fee of Euro 15,48,55,000 received by the appellant was taxable in India as ‘royalty’ both under section 9(l)(vi) of the Act and Article 13(3) of the Treaty.

That without prejudice, the DRP/assessing officer erred on facts and in not appreciating that the booking fee received from non- resident airlines was not sourced in India in terms of Article 13(6) of the Treaty and was not liable to tax in India as ‘royalty’.

Without prejudice, that the DRP/ assessing officer, having held the appellant to have permanent establishment in India, erred on facts and in law in bringing to tax the alleged ‘royalty’ income on gross basis, without appreciating that in terms of section 44DA of the Act and Article 13(5) of the Treaty, royalty income effectively connected with the PE of the non-resident is required to be taxed as business income on net basis.

That the DRP/ assessing officer erred on facts and in law in holding that payments received by the appellant from various airlines in relation to the alleged use of Altea system was taxable in India as ‘royalty’ both under section 9(l)(vi) of the Act and Article 13(3) of the Treaty.

That without prejudice, the DRP/ assessing officer erred on facts and in law in not appreciating that the payments received from various airlines in relation to the Altea System were not sourced in India in terms of Article 13(6) of the Treaty, therefore, were not liable to tax in India as ‘royalty’.

Further without prejudice, the DRP/ assessing officer erred on facts and in law in holding on adhoc basis a sum of Euro 30.7403 million as the income of the appellant liable to tax in India as ‘royalty’ for the alleged use of Altea system by various airlines, without affording an opportunity of being heard to the appellant, in gross violation of the principles of natural justice.

That the DRP/ assessing officer erred on facts and in law in levying interest of Rs. 94,71,87,472 under section 234B of the Act.

That the DRP/ assessing officer erred on facts and in not granting the TDS credit to the appellant as claimed by it in its return of income.

Briefly stated the facts necessary for adjudication of the controversy at hand are: The taxpayer, a tax resident of Spain along with its affiliated companies, has developed a fully automatic computer information system, which enables display and dissemination of information supplied by various Airlines, which in turn facilitates, inter alia, reservations, communications, ticketing and related functions on a world-wide basis (hereinafter referred to as CSR) for the travel industry. The aforesaid system is for the facility of both travel agencies and Airline offices worldwide. The taxpayer has also developed Altea system which is a three-module solution that manages reservations, inventory and departures for all involved in getting passengers on board. The taxpayer claimed to have entered into agreements with various Airlines (Participating Carrier Agreement) by providing interconnectivity between the host computer of the individual Airline and the Amadeus CRS created by the taxpayer at Erding, Germany. The taxpayer also provides connectivity to its CRS to the travel agents. After analysis of the facts and contentions raised by the taxpayer, ld. DRP reached the conclusion that the assessee is having a Fixed Place Permanent Establishment (PE) and a Dependent Agent PE in India and attribution of profit to such PE. Assessing Officer (AO) computed the profit earned by the taxpayer at Rs.597,88,23,953/- or EURO 86,339,800/- from India and computed the profit attributed to Indian PE at Rs.448,41,17,951/- taxable @ 40% plus surcharge and education cess i.e. 42.024%. AO also proceeded to conclude that the income from booking fees is also taxable on gross basis as royalty income being in the nature of royalty. AO also proceeded to hold that receipts of the taxpayer pertaining to licensing of software are taxable as royalty as per provisions of section 9(1)(vi) of the Act. So, AO computed the booking fees received by the taxpayer from CRS in the nature of royalty income taxable in India, both under the Act as well as under the Double

Aggrieved by the final assessment order dated 03-11-2020, the Assessee has preferred the present Appeal on the grounds mentioned above.

The Ld. Counsel for the assessee submitted that the issue is involved in the present appeal are recurring in nature. The Co-ordinate Bench of the Tribunal has passed the orders in favour of the assessee, which has been upheld by the Jurisdictional High Court for the Assessment Year 1996-97 to 2012-13 and 2014-15 to 2016-17. The Ld. Counsel for the assessee further submitted that the instant three appeals are in respect of Assessment Year 2017-18, 2018-19 and 2019-20. Since there is no change in the facts and circumstances, submitted that the present Appeals deserves to be decided in terms of the orders of the Co-ordinate Bench and the Hon'ble High Court of Delhi.

Per contra, the Ld. DR has neither disputed the above fact nor produced any contrary decisions/judgments referred by the Counsel for the assessee.

We have parties perused the material on record and gave our thoughtful consideration.

The AO computed the profit to PE taxed the same with surcharge and education cess which has been confirmed by the ld. DRP.

Ld. AR for the taxpayer fairly submitted that this issue has been decided by Hon'ble High Court against the taxpayer in its own case for AYs 1996-97 to 2006-07 and held that ‘computers installed at the premises of the subscriber constitute a PE of the assessee in India in terms of Article 5 (1) of Indo-Spain Treaty’. It is also held that ‘since the Amadeus India is functionally dependent upon the assessee, it also constitutes an agency PE in India in terms of Article 5 (iv) of the Indo-Spain Treaty’.

Aforesaid appeals bearing the identical facts of the taxpayer's case decided vide order dated 24.01.2011 by the Hon'ble High Court in ITA Nos.191, 192, 193/2011 in which it is held that ‘the assessee constitutes an agency PE’. By following the consistency, the additions made by the AO/DRP in the present Appeals are hereby confirmed and grounds No.3, 4, 5 & 6 of I.T.A. No. 2/DEL/2021(A.Y 2017-18),I.T.A. No. 1465/DEL/2022 (A.Y 2018-19) and I.T.A.

The computers, electronic hardware provided to the travel agents etc. constituted PE of the taxpayer in India and the income derived from such PE is taxable in India. AO by following its earlier years order attributed 75% of the income earned in India to the PE after adding development cost, distribution fees, etc.. Ld. DRP has also confirmed the findings returned by the AO.

It is brought to our notice by the ld. AR for the taxpayer that this issue has already been decided in favour of the taxpayer by the coordinate Bench of the Tribunal for AYs 1996-97 to 2006-07 and held that 15% of the revenue relating to bookings made from India being attributable to the taxpayer's PE in India after considering the nature and extent of activities in India and abroad and assets employed & risk assumed. The Order passed by the Tribunal has been affirmed by the Hon'ble Delhi High Court and the Department reported to have challenged the order of Hon'ble High Court before the Hon'ble Supreme Court.

Ld. DR has neither controverted the above facts nor controverted the fact that the grounds raised and facts and law are identical to the earlier assessment years 2006-07 and 2007-08 to 2016-17 already decided in favour of the taxpayer.

We have gone through the order passed by the coordinate Bench of the Tribunal dated 26.10.2020 in Assessee’s own case for AY 2007-08 to 2012-13 which is on identical facts and the relevant portion thereof is extracted for ready reference :-

The ld. DRP confirmed the order of the Assessing Officer.

This issue has been adjudicated over a period of time for various years and the decision of the Tribunal has been affirmed by the Hon'ble Jurisdictional High Court. The Co-ordinate Bench of the Tribunal for the assessment years 1996-97 to 1998- 99, after considering the extent of activities in India and abroad, the assets employed and risks assume d, held 15% of the revenues relating to the bookings made from India as attributable to the assessee's PE in India.

The Co-ordinate Bench of ITAT, vide order dated 16.11.2016 passed for assessment years 1999-00 and 2000-01, following the order for the assessment years 1996-97 to 1998- 99, held that 15% of the revenues earned by Amadeus from its activities in India shall be attributable to the PE. It is also pertinent to point out that the ITAT, vide order dated 24.04.2009, in MA Nos. 212 to 213/D/2008, filed by the Department against the order dated 30.11.2007 relating to AYs 1997-98 and 1998-99, categorically held that revenue s of 15% attributed by it to the PE were in relation to activity of the PE as a whole, i.e., considering the agency and as well as fixed place of business functions.

The Hon'ble Delhi High Court following its decision in the case of DIT v. Galileo International 224 CTR 251, has affirmed the orders of the Tribunal passed for assessment years 1996-97 to 2006-07.

It was brought to our notice that the Assessing Officer had, in the assessment order for assessment year 2005-06, sought to distinguish the decision of the Tribunal in assessee's own case for assessment years 1996-97 to 1998-99 on similar grounds. However, the ld. CIT (A), vide order dated 25.02.2010, allowed the appeal of the assessee holding that no more than 15% of the revenues generated from India could be attributed to the alleged PE of the assessee in India. The aforesaid order passed by the ld. CIT(A) for assessment year 2005-06 has been confirmed by the ITAT, vide order dated 29.10.2010 and the Hon'ble High Court vide order dated 31.05.2011 (Revenue appeal) and dated 13.08.2013 (Assessee appeal).

Since, the facts remained unaltered and since payment to the agent is already @33%, no further addition is warranted in the case of the assessee."

By following the orders passed by the coordinate Bench of the Tribunal in earlier years and the Judgment of the jurisdiction High Court, we are of the considered view that since there is no change in the business model and facts of the cases at hand and the extent & nature of the activities of the PE in India and abroad, and the assets employed and risk assumed is same as in the earlier years, distribution fee paid in those years approximately of the booking fee per segment, no further addition can be made during the year under assessment. Consequently, grounds No.7, 8, 9 & 10 of I.T.A. No. 2/DEL/2021(A.Y 2017-18), I.T.A. No. 1465/DEL/2022 A.Y 2018-19) and I.T.A. No. 1466/DEL/2022 (A.Y 2019-20)respectively are decided in favour of the Assessee.

Ground No. 11 to 14 are regarding disallowance of expenditure of Euro 1,20,96,000/- incurred by the assessee under the head of ‘Development fees’ and Euro 105,48,000/- incurred by the assessee under the heads of ‘Central Operating cost’while computing the income attributed to the tax payers PE in India.(the amount referees only to ITA No. 2/DEL/2021 (A.Y 2017-18 ) and for other Appeals amount differs)

The very same issue has also been decided in favour of the taxpayer by the Tribunal vide order dated 26.10.2020 for AYs 2007-08 to 2012-13. It is also not in dispute that facts of the present case and business model of the taxpayer

We have gone through the history of such expenditure and find that the addition is being made owing to confusion in the description of the services as "export of processed data/software" or "distribution fee"

This expenditure has been allowed by the Co-ordinate Bench of the Tribunal from the assessment years 1996-97 to 2006-07. Since, the facts have not been disputed, in the absence of any material change, we hereby allow the claim of distribution expenses."

By following the principle of consistency, we follow the order passed by the coordinate Bench of the Tribunal in Assessee’s own case vide order (supra), The Grounds No. 11, 12, 13 & 14 of I.T.A. No. 2/DEL/2021(A.Y 2017-18), I.T.A. No. 1465/DEL/2022 A.Y 2018-19) and I.T.A. No. 1466/DEL/2022 (A.Y 2019-20)respectively are allowed.

Again, we find that there is no change in the facts and circumstances to the earlier years decided by the coordinate Bench of the Tribunal in AYs 2006-07 & 2007-08 to 2012-13.

It is the case of the Assessee that the payment for use of software is not in the nature of royalty under DTAA and relied the decision of Hon'ble Delhi High Court in case of DIT vs. Tinto Technical Services 340 ITR 507 (Del.).

The Coordinate Bench of the Tribunal in Assessee’s own case for AYs 2007- 08 to 2012-13, which was affirmed by the Hon'ble Delhi High Court, held that booking fee received by the taxpayer is taxable as business income and not under the head 'royalty' by returning following findings :-

The AO has held that a software is also type of equipment in the facts of the case. The system comprising of equipments is used by the subscribers to book tickets and the same is source of income for the assessee . The AO held that the income of the assessee is taxable as royalty also as 'use of process'.

The ld. DRP confirmed the order of the Assessing Officer.

In the assessment framed for assessment year 2006-07, the Assessing Officer had substantively brought to tax, the booking fee as business income and protectively held the same to royalty since in that year the tax worked out in treating the income as royalty was less than the tax worked out after attributing income to the alleged PE of the assessee.

The Delhi Tribunal in assessee's own case for the assessment year 2006-07 has held that booking fee received by ITA No.3494/Del./2018 ITA No.7970/Del./2018 ITA No.7047/Del./2019 the assessee is taxable as business income and not under the head royalty. For the sake of ready reference and brevity, the relevant portion of the order of the ITAT in ITA No. 1494/Del/2011 is reproduced below:

Since, the facts have not been disputed in the absence of any material changes, we hereby hold that the booking fee received is in the nature of business income."

By following the principle of consistency and the order passed by the coordinate Bench of the Tribunal in taxpayer's own case for AYs 2006-07 & 2007-08 to 2012-13, we are of the considered view that booking fee received by the taxpayer is to be taxed as business income and not under the head 'royalty'. Accordingly, we decide grounds No.15, 16 & 17 of ITA Nos. 2/DEL/2021(A.Y 2017-18), I.T.A. No. 1465/DEL/2022 A.Y 2018-19) and I.T.A. No. 1466/DEL/2022 (A.Y 2019-20)respectively in favour of the Assessee.

Ground No. 18 to 20 is regarding holding the payments received by the assessee from various airlines in relation to the use of Altea System Taxable in India as royalty both u/s 9(1)(vi) of the Act and Article 13(3) of the Treaty.

It is contended by the ld. AR for the Assesseethat AO/DRP have erred in holding that payment received from the British Airways for alleged use of Altea system as taxable in India as 'royalty' both under section 9(1)(vi) and under Article 13 (3) of the Treaty on the ground that Altea system is not merely an inventory management and hosting system rather it provides key operational services to various airlines like accepting payment and issuance of travel documents, performing credit card validation, maintaining data security, manage customer check-ins, etc.. It is brought to our notice that this issue has also been decided by the coordinate Bench of the Tribunal in taxpayer's own case for Assessment Years 2007-08 to 2012-13 (supra) by holding that Altea system cannot be characterized as 'royalty' either under the Act or under the Treaty by returning following findings :-

The Article 7 reads as under: ARTICLE 7 BUSINESS PROFITS

The profits of an enterprise of one of the States shall be taxable only in that State unless the enterprise carries on business in the other State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of ITA No.3494/Del./2018 ITA No.7970/Del/2018 ITA No.7047/Del./2019 the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

Subject to the provisions of paragraph 3, where an enterprise of one of the States carries on business in the other State through a permanent establishment situated therein, there shall in each State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is permanent establishment. In any case where the correct amount of profits attributable to a permanent establishment is incapable of determination or the determination thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on the basis of an apportionment of the total profits of the enterprise to its various parts, provided, however, that the result shall be in accordance with the principles contained in this Article.

(a) In determining the profits of a permanent establishment, there shall be allowed as deductions, expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the taxation laws of that State. Provided that where the law of the State in which the permanent establishment is situated imposes a restriction on the amount of the executive and general administrative expenses which may be allowed, and that restriction is relaxed or overridden by any Convention between that State and a third State which enters into force after the date of entry into force of this Convention, the competent authority of that State shall notify the competent authority of the other State of the terms of the corresponding paragraph in the Convention with that third State immediately after the entry into force of that Convention and, if the competent authority of the other State or requests, the provisions of this sub-paragraph shall be amended by protocol to reflect such terms.

No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

`Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article."

Article 13 reads as under:

Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

However, such royalties and fees for technical services may also be taxed in the Contracting State in ITA No.3494/Del./2018 ITA No.7970/Del./2018 ITA No.7047/Del./2019 which they arise and according to the law of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services the tax so charged shall not exceed :

The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of or the right to use, any copyright of literary, artistic or scientific work, including cinematographic films or films or tapes used for radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for the use of or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

The term "fees for technical services" as used in t his Article means payments of any kind to any person other than payments to an employee of the person making the payments and to any individual for independent personal services mentioned in Article 15 (Independent Personal Services), in consideration for the services of a technical or consultancy nature, including the provision of services of technical or other personnel.

The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees f or technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply.

Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer in that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred , and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services paid, exceeds the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess

After going through the Article 13 and Article 7 and keeping in view the fact that the computer terminals are at Airport terminals and since the amounts have been received for utilization of ARS which is predominantly a reservation system, the same may be treated as "income from royalty". We upheld the action of the AO to this extent.

During the arguments, the ld. AR raised a point regarding the taxability of royalty income in the hands of the assessee as per DTAA. He argued that in the absence of corresponding change in the DTAA with regard to interpretation of royalty in the domestic law. He relied on the ratio law laid down by the Hon'ble Jurisdictional High Court in the case of Director of Income Tax vs New Skies Satellite Bv vide order dated 8 February, 2016. The ld. DR argued that the provisions of DTAA would have primacy over the domestic provisions.

The operative part of the said judgment is as under:

The term "royalties" as used in this article means payments of any kind received as a consideration for the alienation or the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films, phonographic records and films or tapes for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience ." (emphasis supplied) Article 12(4), Indo Netherlands Double Tax Avoidance Agreement "4. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright o f literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience." (emphasis supplied) Section 9(1)(vi), Explanation 2, Income Tax Act, 1961

The slight but apparently vital difference between the definitions under the DTAA and the domestic ITA No.3494/Del./2018 ITA No.7970/Del./2018 ITA No.7047/Del./2019 definition is the presence of a comma following the word process in the former. In the initial determinations before various ITATs across the country, much discussion took place on the implications of the presence or absence of the "comma". A lot has been said about the relevance or otherwise of punctuation in the context of statutory construction. In spoken English, it would be unwise to argue against the importance of punctuation, where the placement of commas is notorious for diametrically opposite implications. However in the realm of statutory interpretation, courts are circumspect in allowing punctuation to dictate the meaning of provisions. Judge Caldwell once famously said "The words control the punctuation marks, and not the punctuation marks the words."

It has been held in CGT v. Budur and Hindustan Const v. CIT that while punctuation may assist in arriving at the correct construction, yet it cannot control the clear meaning of a statutory provision. It is but, a minor element in the construction of a statute, Hindustan Const50.

The courts have however created an exception to the general rule that punctuation is not to be looked at to ascertain meaning. That exception operates wherever a statute is carefully punctuated. Only then should weight undoubtedly be given to punctuation; CIT v. Loyal Textile51; Sama Alana Abdulla vs. State of Gujarat52; Mohd Shabbir vs. State of Maharashtra53; Lewis Pugh Evans Pugh vs. Ashutosh Sen54; Ashwini Kumar Ghose v. Arbinda Bose55; Pope

However, the question, which the n arises, is as follows. How is the court to decide whether a provision is carefully punctuated or not? The test- to decide whether a statute is carefully (read consciously) punctuated or not- would be to see what the consequence would be had the section been punctuated otherwise. Would there be any substantial difference in the import of the section if it were not punctuated the way it actually is? While this may not be conclusive evidence of a carefully punctuated provision, the repercussions go a long way to signify intent. If the inclusion or

Nevertheless, whether or not punctuation plays an important part in statute interpretation, the construction Parliament gives to such punctuation, or in this case, the irrelevancy that it imputes to it, cannot be carried over to an international instrument where such comma may or may not have been evidence of a deliberate inclusion to influence the reading of the section. There is sufficient evidence for us to conclude that the process referred to in Article 12 must in fact be a secret process and was always meant to be such.

Much reliance was placed upon the commentary written by Klaus Vo gel on Double Taxation Conventions (3 rd Edition)'. It is recorded therein:

Klaus Vogel has also made a distinction between letting an asset and use of the asset by the owner for providing services as below:

The Tribunal has discarded the aforesaid commentary of OECD as well as Klaus Vogel only on the ground that it is not safe to rely upon the same. However, what is ignored is that when the technical terms used in the DTAA are the same which appear in Section 9(1)(vi), for better understanding all these very terms, OECD commentary can always be relied upon. The Apex Court has emphasized so in number of judgments clearly holding that the well- settled internationally accepted meaning and interpretation placed on identical or similar terms employed in various DTAAs should be followed by ITA No.3494/Del./2018 ITA No.7970/Del./2018 ITA No.7047/Del./2019 the Courts in India when it comes to construing similar terms occurring in the Indian Income Tax Act....

There are judgments of other High Courts also to the same effect.

On a final note, India's change in position to the OECD Commentary cannot be a fact that influences the interpretation of the words defining royalty as they stand today. The only manner in which such change in position can be relevant is if such change is incorporated into the agreement itself and not otherwise. A change in executive position cannot bring about a unilateral legislative amendment into a treaty concluded between two sovereign states. It is fallacious to assume that any change made to domestic law to rectify a situation of mistaken interpretation can spontaneously further their case in an international treaty. Therefore, mere amendment to Section 9(1)(vi) cannot result in a change. It is imperative that such amendment is brought about in the agreement as well. Any attempt short of this, even if it is evidence of the State's discomfort at letting data broadcast revenues slip by, will be insufficient to persuade this Court to hold that such amendments are applicable to the DTAAs.

Consequently, since we have held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word "royalty" in Asia Satellite, when the definitions were in fact parimateria (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate ITA No.3494/Del./2018 ITA No.7970/Del./2018 ITA No.7047/Del./2019 income from data transmission services as partaking of the nature of royalty, or

For the above reasons, it is held that the interpretation advanced by the Revenue cannot be accepted. The question of law framed is accordingly answered against the Revenue. The appeals fail and are dismissed, without any order as to costs."

In view of the law laid down, the revenue is here by directed not to tax the royalty in accordance with the judgment of the Hon'ble High Court."

Following the order passed by the coordinate Bench of the Tribunal in AYs 2007-08 to 2012-13, we are of the considered view that payment received by the taxpayer from British Airways in relation to alleged use of 'Altea system' cannot be characterized as 'royalty' either under the Act or under the Indo- Spain Treaty because Altea system was installed at the airport and was accessed only by the airlines and not by the Amadeus's agents viz. Resbird, Amadeus India and that during the year, the said system was available to British Airways for the aforesaid purpose and that too only at the airport counter and the said software was not available outside the Indian airport or to any of the agents of the taxpayer since the agents were booking the tickets only through the CRS of the taxpayer. Consequently, grounds No.18, 19 & 20 of I.T.A. No. 2/DEL/2021(A.Y 2017-18), I.T.A. No. 1465/DEL/2022 A.Y 2018- 19) and I.T.A. No. 1466/DEL/2022 (A.Y 2019-20) respectively are decided in favour of the Assessee.

The Ground No. 21 in ITA No. 1466/Del/2022 and 1465/Del/2022 is regarding levying of interest at Rs.2, 12,03,220/- and Rs. 2,01,63,856/- respectively by the A.O. under Section 234A of the Act. The Ld. Counsel for the assessee submitted that the A.O has fail to appreciate the return of assessee for the relevant Assessment Year was filed within the prescribed period. But the Ld. A.O has committed an error by levying interest u/s 234A of the Act. Therefore, submitted that, the Ground No. 21 deserves to be allowed.

The contention of the assessee Ld. Counsel for the assessee is that the return was filed well within the due date, if that is the fact, the question of levying interest u/s 234A does not arise. Therefore, we deem it fit to restore the said issue to the file of the A.O to verify the date of return and also the due date for filing the income tax return for the year under consideration and decide the matter afresh in accordance with law. Accordingly, we remand the issue involved in Ground No. 21 in ITA No. 1466/Del/2022 and 1465/Del/2022 to the file of the A.O for fresh consideration in accordance with law. Thus, we allow the Assessee’s Ground No. 21 in ITA No. 1466/Del/2022 and 1465/Del/2022 are allowed for statistical purpose.

Ground No. 21 in ITA No. 2/Del/2022, Ground No. 22 in ITA No. 1466/Del/2022 and ITA No. 1465/Del/2022 are regarding levying interest u/s 234B of Rs. 94,71,87,472/-, Rs.1,00,81,92,800/- and Rs. 80,57,22,360/- respectively for failing to pay the advance tax.

The Ld. Counsel for the assessee submitted that in the absence of any liability for payment of advance tax since the tax is deductable at source on the income of the assessee held liable to tax in India, the levy of interest u/s 234B of the Act is not warranted. The ld. Counsel for the assessee has drawn our attention to the assessee’s own case for AY 2013-14 to 2016-17 in ITA No. 2007/Del/2017 and connected appeals, wherein it is held as under:-

Ld. AR for the taxpayer contended that in the absences of any liability for payment of advance tax since tax is deductible at source on the income of the taxpayer held liable to tax in India, the levy of interest u/s 234B is not warranted.

Provisions contained below Section 209(1)(d) of the act introduced by Finance Act, 2012 w.e.f 01/04/2012 would apply only in a sidcution where persons responsible for tax has paid or credited such income without deduction of tax. In the instant case, since the income has been received by the taxpayer after deduction of tax at source, the proviso is not applicable as has been held by the Coordinate Bench of the Tribunal in BG International Ltd. Vs. DCIT in ITA No. 31/DDN/2020 order dated 31/12/2020. Even otherwise, when no addition sustains Section 234B would not apply. So ground No. 21 of ITA Nos. 2007/Del/2017, 3494/Del/2018, 7970/Del/2018 & 7047/Del/2019 for Assessment Years 2013-14, AY 2014-15, AY 2015-16 & AY 2016-17 respectively is determined in favour of the taxpayer.

By respectfully following the above order passed by the Coordinate Bench of this Tribunal in assessee’s own case for AY 2013-14 to 2016-17 (supra) we are of the considered opinion that since the income has been received by the assessee after deduction of tax at source the proviso is not applicable to the case of the assessee. Accordingly, Ground No. 21 in ITA No. 2/Del/2022, Ground No. 22 in ITA No. 1466/Del/2022 and ITA No. 1465/Del/2022 are allowed.

The Ground No. 22 in ITA No. 2/Del/2021 is regarding not granting of credit of the TDS claimed by the assessee. On hearing both the sides we deem

In the result, the appeals filed by the assessee in I.T.A. No. 2/DEL/2021(A.Y 2017-18), I.T.A. No. 1465/DEL/2022 (A.Y 2018-19) & I.T.A. No. 1466/DEL/2022 (A.Y 2019-20) are partly allowed for statistical purpose.