AMADEUS IT GROUP SA,VAISH ASSOCIATES ADVOCATES vs. DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI

PER RENU JAUHRI : The assessee by filing the present appeal sought to set aside the impugned assessment order dated 11.11.2025 passed by the Assessing Officer [for short, AO] u/s 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for A.Y. 2023-24 in consonance with the order dated 08.10.2025 passed by the Dispute Resolution Panel (for short, DRP) u/s 144C(5) of the Act.

IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT 2. The assessee has raised following grounds of appeal: “1. That the assessing officer erred on facts and in law in computing the income of the appellant for the relevant assessment year at Rs. 13,84,94,24,046 as against 'Nil' income returned by the appellant.

Ground 3: CRS income-Royalty

3.1 That without prejudice, the 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".

3.2 That the assessing officer erred on facts and in law in holding that source of income accruing to the assessee was located in India by alleging that the most of the airlines from which revenues were received were resident in India, which is factually incorrect.

3.3 Without prejudice, that the assessing officer, having held the assessee 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.

Ground No.: 4 Altea system

4.1. That without prejudice, the assessing officer erred on facts and in law in not appreciating that the payments received from various 2 | P a g e

IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT 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".

4.2. That the assessing officer erred on facts and in law in holding that payments received by the assessee from various airlines in relation to the use of Altea system was alternatively taxable in India as 'fees for technical services both under section 9(1)(vii) of the Act and Article 13 of the Treaty.

4.3. That without prejudice, the 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 and not liable to tax in India.

4.4. Further without prejudice, the assessing officer erred on facts and in law in holding on adhoc basis a sum of Euro 53.222008579 million as the income of the assessee 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 assessee, in gross violation of the principles of natural justice. This works out to be INR 4,75,37,89,806.

Ground No 5.: CRS Income-Permanent establishment

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

5.2. That the the assessing officer erred on facts and in law in holding that as the website of the assessee shows that it has various offices in India for performing functions like training. product development, technical support, etc., such office premises constitute fixed place PE of the assessee in India. 3 | P a g e

IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT 5.3. That the assessing officer erred on facts and in law in alleging that Amadeus India (P.) Ltd. (AIPL) constituted dependent agent permanent establishment (PE) of the assessee in India and the income arising to the assessee from the airlines, etc., was attributable to the activities of the alleged PE in India.

a. That the assessing officer erred on facts and in law in alleging that the assessee was not making any payment to AlPL towards the activities of marketing the assessee's CRS and providing the hardware support to the travel agent and therefore the distribution fee paid to AIPL was not at arm's length and consequently AIPL constituted dependent agent PE of the assessee.

b. That the assessing officer erred on facts and in law in alleging that the assessee exercised control over the subscribers travel agents through AIPL.

c. That the assessing officer erred on facts and in law in holding that AIPL constituted PE of the assessee under Article 5(4) of the Treaty on the ground that AIPL was carrying out negotiations with the subscribers/travel agents without appreciating that in terms of the said Article, PE is constituted only when such enterprise has and habitually exercises authority to conclude contracts on behalf of the foreign enterprise.

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

5.5 The assessee craves leave to add to, alter, amend or vary from the above grounds of appeal at or before the time of hearing.

The appellant craves leave to add to, alter, amend or vary the above grounds of appeal at or before the time of hearing.”

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IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT 3. Brief facts are that the assessee, a tax resident of Spain, filed its return for A.Y. 2023-24 on 27.09.2024 declaring Nil income. The assessee had developed a fully automatic computer information system for the air travel industry (CRS) along with its affiliated companies which provides connectivity to its client airlines in terms of agreements entered into with them. In addition, connectivity to the CRS is also provided to the travel agents. While the participating air lines pay the booking fee, no payment is made by the travel agents to the assessee. Instead, the participating airlines bear all expenses for the facilities provided to the travel agents. The AO noted that the issues involved regarding taxability of receipts are legacy issues which are decided in favour for the assessee by the coordinate bench of the Tribunal as well as Hon’ble jurisdictional High Court in earlier years but the Revenue had filed SLP before the Hon’ble Supreme Court and hence the issue had not attained finality. He, therefore, proposed to tax the booking fee received by the assessee from CRS as royalty income taxable in India, both under the Act and the DTAA, @ 10%. Accordingly, gross booking revenue of Rs. 909,56,34,240/- during the year under consideration was held as taxable being in respect of bookings arising from India.

3.1 Secondly, with regard to the Altea Reservation System, an amount of Euro 53.222008579 million was taken as revenue of the assessee from use of Altea system in India. In the draft assessment order, the AO proposed to tax the assessee’s income as under:

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IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT “Computation of income 1. 1. Income from royalty (from CRS systems) (to be taxed at 10%) Rs. 909,56,34,240/- 1. 1. Income from royalty (from Altea System) (to be taxed at 10%) Rs. 475,37,89,806/- Total income from royalty Rs. 13,84,94,24,046”

3.1 Aggrieved, the assessee filed objections before the DRP against the proposed additions. After considering the submissions of the assessee, the DRP issued the following directions:

“5.3 DRP Directions 5.3.1 The Panel has considered the contentions of the assessee, the draft assessment order and the litigation history of the case, as recorded in the draft order and tabulated below:

5.3.2 This case came up before the Panel for AYs 2018-19, 2019-20, 2020-21, 2021-22 and 2022-23 also, for which directions have already been issued. The factual matrix continues to be more or less the same for AY 2023-24. Therefore, the basis for directions to be issued for AY 2023-24, shall be the directions already issued. 3.3.3 The AO in the drafn order has discussed the litigation history of the issues involved, that is, Existence of PE in India and attribution of income: booking fees received by the assessee and receipts from Altea Reservation System to be taxable as royalty. 5.3.4 Without going into much detail and particulars of the case, the DRP is of the view that it shall not deviate from its earlier stand taken in the previous years. However, without deviating from the earlier directions, the Panel for the AY under consideration is of the view that the need of the next line of action is that the office of the AO must verify the assessee's claim in terms of acceptance or otherwise of the higher appellate bodies' impugned orders and to complete the assessment keeping in view the Department's stand on acceptance of the higher appellate 6 | P a g e

IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT bodies' impugned orders or preferring the litigation against higher appellate bodies impugned orders. The Panel observes that there is no requirement for interference with the draft assessment order. All the grounds are accordingly disposed off.

3.2 Thereafter, Ld. AO noted that since the Revenue has not accepted the decision of the ITAT for A.Y. 2022-23 and appeal before Hon’ble Delhi High Court has been filed, he finalized the assessment at total income from Royalty of Rs. 13,84,94,24,046/- as proposed in the draft assessment order.

3.3 Aggrieved, the assessee has filed the present appeal before the Tribunal.

Ground no. 3- CRS Income treated as Royalty (Rs. 9,09,56,34,240/-)

IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT that the same was received from various airlines for use of process and scientific equipment. Ld. AR placed reliance on the decision of the Hon’ble Apex Court in the case of Engineering Analysis Centre of Excellence (P) Ltd. vs. CIT 432 ITR 471 (SC), wherein it has been held that payment for use of software is not in the nature of Royalty. He has further submitted as under: -

“In terms of section 44DA of the Act and Article 13(5) of the Treaty, payment in the nature of royalty which is effectively connected with the PE of the non-resident is required to be taxed as business income. Such income is required to be computed on net basis, i.e., considering the expenses incurred to earn the income. The said income cannot be brought to tax in India on gross basis, and the assessing officer bringing to tax such income on gross basis has no legal sanction [Refer: DIT v. Rio Tinto Technical Services: 340 ITR 507 (Del. HC)] 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 appellant. The Hon'ble Delhi Bench of Tribunal in appellant's own case for the assessment years 2006-07 to 2022-23 has held that booking fee received by the appellant is taxable as business income and not under the head royalty. Recently, the Hon'ble High Court of Delhi vide order dated 04.05.2023, 25.05.2023, 30.05.2023, 31.08.2023 and 23.04.2025 has dismissed the appeals filed by the department against the aforesaid finding of the Hon'ble Delhi Bench of Tribunal for assessment years 2007-08 till 2021-22.”

5.1 He has also placed on record the latest order of the coordinate bench for A.Y. 2022-23 in ITA No. 1494/Del/2025 dated 04.07.2023, wherein the identical issue has been decided in favour of the assessee.

5.2 Ld. DR, on the other hand, strongly relied upon the orders of the lower authorities.

5.3 We have heard the rival submissions and perused the material available on record. We note that in the order for A.Y. 2022-23, dated 04.07.2023, the co-

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IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT ordinate bench as held that the issue stands covered in favour of the assessee by the orders of the Co-ordinate Bench in A.Y. 2020-21 and earlier years and the appeals filed by the department have been dismissed by the Hon’ble Jurisdictional High Court. Accordingly, the assessee’s appeal on this ground was allowed with the following observations: -

“11. We have heard the rival submissions and have perused the relevant material on record. We find that this issue is squarely covered in favour of the assessee and against the Revenue by decision of the co-ordinate bench [supra]. The co-ordinate bench in assessee’s own case in ITA No. 1742/DEL/2023 for AY 2020-21 vide order dated 16.10.2023 has held as under: “21. We have heard the Ld. Representative of the parties and perused the records. We find that the impugned issue is squarely covered by the decision of the Hon'ble Delhi High Court in assessee's favour wherein it has been held that the booking fee received by the assessee is taxable as 'business income' and not as 'royalty'. The Hon'ble Delhi High Court vide its order dated 04.05.2023 for AY 2013-14 to 2016-17, order dated 23.05.2023 for AY 2009-10 and order dated 30.05.2023 for AY 2012-13 (placed at pages 364 to 376 of the Paper Book-II) has dismissed the appeals filed by the Revenue by recording its common finding for all the AYs involved as under: "7. Mr Ruchir Bhatia, learned senior standing counsel, who appears on behalf of the appellant/revenue, says that the following questions have been, broadly, proposed in support of the above-captioned appeals: (a) ... (b) Whether in the facts and in circumstances of the case, the Tribunal erred in law in holding that booking fee received by the appellant/assessee is taxable as business income, and not as royalty? (c) ... 8.2 Insofar as the proposed question (b) is concerned, once again, Mr Bhatia confirms that the said question raised by the appellant/revenue is covered by a decision rendered by a coordinate bench on 08.02.2016, in ITA No.473/2012, titled Director of Income Tax vs. New Skies Satellite BV & Ors. Accordingly, this question also does not arise for our consideration, as it also stands covered by the aforesaid decision of the court. 10. Given this position, we are of the view that none of the questions of law, as proposed, arise for our consideration." 22. Respectfully following the decision(s) of the Hon'ble Delhi High Court (supra), we hereby allow ground No. 15 to 17 of the assessee.” 12. We also find that the Hon'ble Jurisdictional High Court of Delhi has dismissed the appeals filed by the department against the findings of the Tribunal in A.Ys 2007- 9 | P a g e

IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT 08 to 2021-22. We, therefore, respectfully following the orders of the Hon'ble High Court [supra], allow this ground No. 3 of the assessee. Accordingly, Ground No. 3 is allowed.”

5.4 In view of the above factual and legal position, we hold that the booking fee received by the assessee is business income and, is not taxable as ‘Royalty’ under the Act and the DTAA. Accordingly, this ground is allowed in favour of the assessee.

Ground no. 4- Payment in respect of Altea System (treated as Royalty and taxed on adhoc basis) Rs475,37,89,806/-

6.1 Before us, the Ld. AR submitted that this issue is also a legacy issue and has been decided in favour of the assessee in earlier years. His submissions in this regard are summarized below:

“The assessing officer on an ad hoc and arbitrary basis brought to tax payments received in relation to the Altea System as 'royalty', an inventory management and

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IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT hosting system developed by the appellant, for the same reasons as given hereinabove in relation to the booking fee received in respect of the CRS activity. The assessing officer observed that Altea system is not merely an inventory management and hosting system, but 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. The assessing officer failed to appreciate that the Altea system is installed at the airports and is accessed only by the airlines and not by any of Amadeus's agents viz, Resbird, Amadeus India and that during the year the said system was only available to British Airways for the aforesaid purpose and that, too, only at the airport counter. The said software was not available outside the Indian airport or to any of the agents of the appellant in India since the agents were booking the tickets only through the CRS of the appellant. It has not been appreciated that payment made by British Airways to the appellant in relation to the Altea system, is for services rendered by Amadeus and not for use of any process, or equipment, etc. since the control to such inventory system is never transferred by Amadeus to British Airways. Further, the inventory hosting takes place outside India and payment is made by non-resident airlines to another non- resident outside India. The various services like accepting payments, credit card validation, etc. are incidental to reservation, which services had not been subscribed to by British Airways during the relevant previous year. The appellant, in this regard, seeks to reiterate and rely upon the submissions, case law and legal analysis made hereinabove while dealing with the issue of taxation of income from CRS activity as 'royalty The Hon'ble Delhi Bench of Tribunal in appellant's own case for the assessment years 2007-08 to 2022-23 held that payment received by the appellant from the airlines for the Altea system cannot be characterized as "royalty" either under the Act or under the Treaty. It is further submitted that the revenue's appeal with respect to the question of taxability of Altea payments was not admitted by the High Court, hence the order of the Tribunal has attained finality.”

6.2 Ld. DR on the other hand has placed reliance on the order of the AO and the fact that the issue is being contested before the Hon’ble Apex Court.

6.3 We have heard the rival submissions and perused the material available on record. We note that this issue has been consistently decided in favour of the assessee and in the immediately preceding year, the coordinate bench has held as under:

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IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT “19. We have heard the rival submissions and have perused the relevant material on record. We find that the co-ordinate bench in assessee’s own case for the A.Ys 2007-08 to 2021-22 under similar circumstances has held that payment received by the assessee from the airlines for the Altea system cannot be characterized as "royalty" either under the Act or under the Indo-Spain Treaty. We also find that the Revenue’s appeal with respect to question of taxability of Altea Payments was not admitted by the Hon'ble High Court and hence the order of the Tribunal attained finality. Accordingly, we hold that payment received by the assessee from the airlines for the Altea System is not ‘royalty’ either under the Act or the Treaty. Accordingly, ground 4 is allowed.”

6.4 Respectfully following the decision of the coordinate bench, we hold that the payments received by assessee in respect of Altea System are not taxable as Royalty under the Act or the DTAA. Hence, this ground is also allowed in favour of the assessee.

Ground no. 5 : Permanent Establishment

7.1 At the outset, the Ld. AR pointed that this issue is also a legacy issue and has submitted as under:

“The assessing officer, following the orders passed in the earlier years held that the computers provided to the travel agents through which sales are conducted constituted fixed place PE of the appellant in India under Article 5(1) of the India- Spain Tax Treaty. Further, the assessing officer also held Amadeus India Private 12 | P a g e

IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT Limited (AIPL) to be dependent agency PE in terms of paragraph 5(4) of the India Spain Tax Treaty. In all fairness, it may be pointed out that the Delhi High Court in appellant's own case for the assessment years 1996-97 to 2021-22 has upheld the orders of the Tribunal. It is respectfully submitted that, the Hon'ble Supreme Court vide order dated 19.04.2023 and 20.07.2023 has decided the issue of attribution of profit to the alleged Permanent Establishment in India and has upheld the order of the High Court on the aspect that 15% of the revenue earned by the appellant is taxable in India. Since, the issue on attribution has attained finality the ground of existence of PE in India has become academic in nature. Accordingly, ‘Nil' return filed by the appellant has been duly accepted by the Hon'ble Supreme Court and thus the case has attained finality.”

7.2 Ld. AR has also placed on record a copy of the latest order of the coordinate bench for A.Y. 2022-23, wherein it has been held as under:

“22. We have heard the rival submissions and have perused the relevant material on record. We find that the Delhi High Court in assessee’s own case for the A.Ys 1996-97 to 2019-20 has upheld the orders of the Tribunal that the PE of the assessee exists in India. The issue of PE is no longer res-integra as the Hon'ble Supreme Court has decided this issue in favour of Revenue vide its order in Civil Appeal 8057/2011 dated 20.07.2023 and considered it as academic in nature. Further, the Hon'ble Supreme Court vide order dated 19.04.2023 has decided the issue of profit accruing/arising to the assessee attributable to the Permanent Establishment in India wherein it has upheld the order of the High Court on the aspect that 15% of the revenue earned by the assessee being taxable in India and that since the assessee pays 33% of the booking fees to the distributors, no income is attributable to tax in India. We therefore are of the considered view that the issue of attribution has attained finality. Ground No. 5 is accordingly dismissed”

7.3 We have heard the rival submissions and perused the material available on record. It is clear that the issue has attained finality as observed by the coordinate bench in its order for the immediately preceding year. As there is no change in facts and circumstances, we note that the issue regarding attribution has been settled in view of the order of the Hon’ble jurisdictional High Court, wherein it

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IT (IT)A No. 07/DEL/2026 Amadeus IT Group VS DCIT has held that since the assessee pays 33% of the booking fee to the distributers and 15% of the revenue earned is taxable in India, no income is attributable to tax in India. Respectfully, following the decision of the Hon’ble jurisdictional High Court, this ground is also allowed in favour of the assessee.

Sd/- Sd/- (VIKAS AWASTHY) (RENU JAUHRI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 25.06.2026 Pooja Mittal, Sr. PS, Pooja, Sr. PS. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi

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