TaxTMI 
TaxTMI 
2017 (10) TMI 998
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.... [hereinafter referred as the "TPO"] are bad in law and void abinitio. 1.1 Without prejudice, on facts and in law, the AO/DRP erred in not granting a proper opportunity of being heard and thereby violating the settled principals of audi alteram partem. 2. That on facts and in the law the AO/TPO/DRP erred in making/proposing/upholding an addition to total income of Rs. 81,16,72,668/- under Chapter X of the Income Tax Act, 1961 [hereinafter referred as "the Act"]. 3. That on facts and in law the AO/TPO/DRP erred in making/proposing/upholding Transfer Pricing adjustment of Rs. 80,79,61,592/- on account of Advertisement, Marketing and sales promotion expenses. 3.1 That on facts and in law the TPO/DRP erred in not appreciating that in absence of a "transaction" as envisaged under section 92F of the Act between appellant and its AE for brand promotion or for establishing a marketing intangible the TPO had no jurisdiction to propose an adjustment on account AMP expenses. 3.2 That on facts and in law the TPO erred in holding and the DRP inter alia erred in upholding/observing that the: (i) Appellant had incurred AMP expenditure of Rs. 7....
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....E was called for. 7.1 Without Prejudice, that on facts and in law the AO/TPO/DRP erred in not appreciating that the alleged transactions of AMP and notional interest are "closely linked" with the main activities carried out under the Distributorship Agreement and hence they cannot be segregated and benchmarked on a stand-alone basis. 8. That on facts and in law the DRP (without drawing any adverse inference) erred in observing that the approach adopted by the appellant and accepted by the TPO in benchmarking of main "international transactions" under the Distributorship Agreement with Amadeus Spain is erroneous. 9. That on facts and in law the AO/DRP erred in restricting allowance for deduction u/s 10A of the Act to Rs. 13,66,68,296/- as against a deduction of Rs. 37,23,15,6151- claimed by the appellant in its return of income. 9.1. That on facts and in law the AO/DRP erred in holding that Data Processing Receipts of Rs. 28,52,77,453/- pertaining to Unit-ll of the appellant are not eligible for claiming benefit of deduction u/s 10A of the Act. 9.2 That on facts and in law the AO/DRP erred in denying benefit of deduction u/s 10A of the Ac....
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....te their service product or other information. 2.1 The assessee entered into an agreement with 'Amadeus Spain' w.e.f. 01/10/2004. Under this agreement, the assessee was obliged to provide software connectivity to subscribers in the territory of India, Bangladesh & Nepal to access the 'CRS' system and other software products developed by 'Amadeus Spain' available on the host. For providing this access, the assessee performs various data processing jobs as well as modification of programs online on the host system including generation of reports for tracking problems. The assessee set up its first 100% Export Oriented Unit (EOU) unit in Software Technology Park Scheme (STPS) in July 1995 at 'Hanswala Building'. This unit was subsequently shifted to D-4/4, Vasant Vihar, New Delhi. The assessee set up an another 100% EOU at D-1, Local Shopping Centre No.-2, Vasant Vihar, New Delhi (Unit -II) in April, 2005. 2.2 Amadeus India executes contract with travel agents (hereinafter referred as "subscribers") for providing software access of Amadeus Spain's CRS. Amadeus Spain remunerates the assessee i.e. Amadeus India for the services rendered by it by spreading the net revenue received ....
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....length and no adjustment was required. The TPO examined the benchmarking process applied by the assessee and accepted the 'TNMM' as the most appropriate method for benchmarking of the international transaction of the assessee, however, he excluded/included certain comparables by applying certain filters. The mean OP/TC of the final comparable set selected by the TPO was 35.98 percent but the OP/TC of the assessee was 38.78%, which being higher than the OP/TC computed by the Ld. TPO, he did not propose any adjustment on this account. 2.5 The Ld. TPO, however, observed that the assessee had incurred more than normal sales and marketing expenses to build "Amadeus" brand in India, which is legally owned by "Amadeus Spain". According to the ld. TPO, in the instant case, incurring of such sales and marketing expenses constituted an "International transaction" between the assessee and its AE. The learned TPO held that the assessee should have been reimbursed with appropriate markup on such additional marketing expenses. In his order, the learned TPO computed the said more than normal marketing expenses (i.e. bright line) by comparing the advertisement, marketing and promotion expenses ....
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....er also proposed following addition/disallowances: (i) Disallowance u/s 10A of Rs. 23,56,47,319/- In the return of income, the assessee claimed deduction u/s 10A of the Act of Rs. 37,23,15,615/-. The said deduction was claimed vis-a-vis data processing/ITeS Activities carried on by the Unit II operated by the assessee. During the course of assessment AO examined following particulars from the segmented profit & loss account submitted by the assessee: SI. No. Income Unit-I Unit-ll Total 1 Data processing receipts / Software Export Services 172,23,63,772 27,91,48,215 200,15,11,987 2. IT Support Services 4,08,064 16,45,94,331 16,50,02,395 3. Call Centre receipt 11,13,900 - 11,13,900 4. Other Income 7,89,85,298.11 72,66,491.46 8,62,51.789.57 Total 180,28,71,034.11 45,10,09,037.46 225,38,80.07.57 It has been held by the AO in the draft assessment order that the data processing receipts/software export receipts of Rs. 27,91,48,215/- pertaining to Unit II are not eligible for claim of deduction u/s 10A of th....
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....ces Ltd. 0.14 2. Indian Railway Catering & Tourism Corporation Ltd. 1.3 3. Mukta Arts Ltd. 0.42 4. Nikmo Entertainment Ltd. 4.6 5. Odyssey Corporation Ltd. 0.00 6. Overseas Development & Employment Promotion Consultants 0.36 7. Overseas manpower Corporation ltd. 0.68 8. Rangappa Kamat Group of Hotels ltd. 3.31 9. S&T Corporation ltd. 0.97 10. S R S Ltd. 0.29 11. Sahara Infrastructure & Housing Ltd. 1.00 12. Tamil Nadu Trade Promotion Organization 0.8 13. Usha Breco Ltd. 4.97 14. Vista Entertainment Ltd. 3.16 15. Adrenalin Esystem Ltd. 6.74 16. Interworld Digital Ltd. 0.10 17. NSE IT Ltd. 0.01 18. Newgen Software Technologies Ltd. 2.03 19. Nucleus Software Exports Ltd. 1.03 20. Powersoft Global Solutions Ltd. 0.35 21. Supertech Solutions Ltd. 0.00 22. Accentia Technologies Ltd. 0.00 23. Coskmic Global Ltd. 0.17 24. Eclerx Service Ltd. 0.2 25. Fortune Infotech Ltd. 0.21 26. Igate Global Solutions Ltd. 0.28 27. Infosys BPO ltd. 0.12 28. TCS E-ser....
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.... basis points. " (c) Disallowance of deduction u/s 10A on Data Processing Activity of Unit II - The DRP uphold the action of AO in making the disallowance following the directions issued by it in assessee's own case for A.Y. 2009-10. (d) Disallowance u/s 14A - The disallowance of Rs. 7,10,677/- made by the AO invoking provision of section 14A read with Rule 8D was upheld by the DRP. (e) Addition on account of interest on Income Tax refund u/s 244A- The said addition was also upheld by the DRP. 2.8 The TPO thereafter passed an order dated 29th January, 2015 giving effect to the above directions issued by DRP. In this order the cumulative adjustments made u/s 92CA post DRP directions were computed by the TPO as under :- TP adjustment on account of AMP expenditure Rs.80,79,61,592/- TP adjustment on account of receivables Rs. 37,11,076/- Total Rs.81,16,72.668/- 2.9 The AO thereafter has passed the final assessment order dated 23rd February, 2015 assessing the total income of the assessee at Rs. 139,03,88,366/-. 2.10 Aggrieved with the additions/disallowances made in the order of the Assessing Officer dated 23/02/2015, the assessee is in appeal ....
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....ed that the assessee has not carried on any distribution functions though the agreement provided for same. The Tribunal further noted that DRP in the present case was motivated by the distribution part of the agreement which was not actually carried on by the assessee. The Tribunal also noted that the assessee renders no service to the travel agent but does render data processing services only to 'Amadeus Spain' and for this it is being remunerated on the profit sharing basis. 4.3 In view of the observations of the Tribunal, the Ld. CIT(DR) submitted that the Tribunal in assessment year 2009-10 while dealing the AMP expenses characterized the assessee as distributor, while dealing with the deduction under section 10A, held that the assessee is not a distributor. The Ld. CIT(DR) submitted that assessee is neither distributor nor manufacturer. According to the Ld. CIT(DR) the Tribunal in assessment year 2009-10 has without appreciating the facts of the case properly, relied on the decision of the jurisdictional High Court in the case of Bausch & Lomb Eyecare India Private Limited Vs. Addl. CIT (2016) 381 ITR 227 (Del.) and held that in the case of the assessee incurring of alleged....
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....a) wherein it is held as under: "Accordingly, the Court directs as under (a) The impugned order dated 8th October, 2015 passed by the IT AT in ITA No. 5090/Del/2010 for the AY 2006-07 is set aside and the said appeal is restored to the file of the ITAT; (b) The ITAT will first decide the question regarding the existence of an international transaction involving AMP expenses between the Assessee and its AE. This question will not be remanded by the ITAT to any other authority for decision. If the said question is answered in favour of the Assessee, then no other question would arise. If answered against the Assessee, then the ITAT will decide the further issues that arise in the appeal in accordance with law. " 8.1 Case records further show that both the lower authorities have categorically given a finding that there existed a "transaction" for brand promotion between appellant and its AE. This is also under challenge before us. Hence it cannot be said that necessary facts are not on record. With regard to the submissions of the Ld DR that the issue of AMP be restored back to the file of Ld. TPO, we would like to state that since facts necessary t....
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....ction and sections 92, 92C, 92D and 92E, "international transaction" means a transaction between two or more associated enterprises, either or both of whom are non-residents; in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit service or facility provided or to be provided to anyone or more of such enterprises. (2) A transaction entered into by an enterprise with a person other than an associated enterprise shall, for the purposes 'of sub-section (1), be deemed to be a transaction entered into between two associated enterprises, if there exists a prior agreement in relation to' the relevant transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined in substance between such other person and the a....
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....efines 'transaction' to include 'arrangement', 'understanding' or 'action in concert', 'whether formal or in writing', it is still incumbent on the Revenue to show the existence of an 'understanding' or an 'arrangement' or 'action in concert' between MSIL and SMC as regards AMP spend for brand promotion. In other words, for both the 'means', part and the 'includes' part of Section 928(1) what has to be definitely shown is the existence of transaction whereby MSIL has been obliged to incur AMP of a certain level for SMC for the purposes of promoting the brand of SMC." 59. In Whirlpool of India Ltd. (supra), the Court interpreted the expression "acted in concert" and in that context referred to the decision of the Supreme Court in Daiichi Sankyo Company Ltd. v. Jayaram Chigurupati 2010 (6) MANU/SC/0454/2010, which arose in the context of acquisition of shares of Zenotech Laboratory Ltd. by the Ranbaxy Group. The question that was examined was whether at the relevant time the Appellant, i.e., 'Daiichi Sankyo Company and Ranbaxy were "acting in concert" within the meaning of Regulation 20(4)(b)....
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....ming part of the function, cannot be construed as a transaction'. Further, the Revenue's attempt at re-characterising the AMP expenditure incurred as a transaction by itself when it has neither been identified as such by the Assessee or legislatively recognised in the Explanation to Section 92B runs counter to legal position explained in CIT v. EKL Appliances Ltd. (supra) which required a TPO "to examine the 'international transaction' as he actually finds the same." 62. In the present case, the mere fact that B&L, USA through B&L, South Asia, Inc holds 99.9% of the share of the Assessee will not ipso facto lead to the conclusion that the mere increasing of AMP expenditure by the Assessee involves an international transaction in that regard with B&L, USA. A similar contention by the Revenue, namely the fact that even if there is no explicit arrangement, the fact that the benefit of such AMP expenses would also encure to the AE is itself self sufficient to infer the existence of an international transaction has been negatived by the Court in Maruti Suzuki India Ltd. (supra) as under: "68. The above submissions proceed purely on surmises and conjectures and ....
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....e BLT, is excessive, thereby evidencing the existence of an international transaction involving the AE. The quantitative determination forms the very basis for the entire TP exercise in the present case. 74. The problem with the Revenue's approach is that it wants every instance of an AMP spend by an Indian entity which happens to use the brand of a foreign AE to be presumed to involve an international transaction. And this, notwithstanding that this is not one of the deemed international transactions listed under the Explanation to Section 928 of the Act. The problem does not stop here. Even if a transaction involving an AMP spend for a foreign AE is able to be located in some agreement, written (for e.g., the sample agreements produced before the Court by the Revenue) or otherwise, how should a Transfer Pricing Officer proceed to benchmark the portion of such, AMP spend that the India entity should be compensated. 63. Further, in Maruti Suzuki India Ltd. (supra) the Court further explained the absence of a 'machinery provision qua AMP expenses by the following analogy: "75. As an analogy; and for no other purpose; in the context of a domestic tr....
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....avid (supra) "the fact that somebody other than the Assessee is also benefitted by the expenditure should not come in the way of an expenditure being 'allowed by way of a deduction under Section 10(2)(xv) of the Act (Indian Income Tax Act, 1922) if it satisfies otherwise the tests laid down by the law'. " 8.2 On a careful consideration of the facts on record we are of the opinion that there is nothing on record to show that the appellant by incurring AMP expense wanted to promote its AE. The Ld TPO has failed to prove that the appellant by incurring AMP expenses wanted to benefit the AE and not to promote its own business. Submission of Ld TPO that clauses 10.02, 10.5, 11.01 and Article XVI of the agreement indicate existence of a "transaction" for brand promotion is not supported by contents of those clauses. Appellant's objections before the learned DRP, which we have quoted above, are acceptable. These clauses nowhere provide that the appellant will be incurring brand promotion expenses for and on behalf of its AE or solely for its business purposes and interests. Agreement dated 01st October 2004 between appellant and its AE is based upon revenue sharing model ....
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....yecare (India) (P.) Ltd (supra) wherein it is held that " As far as the legislative intent is concerned, it is seen that certain transactions listed in the Explanation under clauses (i)(a) to (e) to Section 92B are described as an 'International transaction'. This might be only an illustrative list, but significantly' it does not list AMP spending as one such transaction " hence amendments to section 92B by Finance Act 2012 also do not support the case of the Revenue. Lastly on the observations made by the Ld. DRP that since the appellant a Dependent Agency PE of its AE, hence all its expenses on AMP are being incurred by it for the oenefit of AE we would like to state that this is also entirely irrelevant. While alleging as above the Ld DRP has not appreciated that appellant has been held to be a Dependent Agent Permanent Establishment of Amadeus Spain for determination of Amadeus Spain's income, which is taxable in India. Moreover, we may refer here decision of Hon'ble Jurisdictional High Court in case of Whirlpool of India Ltd (supra) wherein it is held by the Hon'ble High Court as under: "37. The provisions under Chapter X do envisage a 'separate entity....
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....vant finding of the Hon'ble High Court is reproduced as under: "3. The first issue concerns the deletion of the transfer pricing adjustment of Rs. 75,40,09,515/- on account of Advertising, Marketing and Sales Promotion Expenses (AMP Expenses) relying upon the decisions of this Court including the decision in Bausch & Lomb Eyecare (India) Pvt. Ltd. Vs. Additional Commissioner of Income Tax (2016) 381 ITR 227 (Del.) 4. As far as the above issue is concerned, it is covered by the earlier decisions of this Court against the Revenue. This court is not inclined to frame any substantial question of law on this issue." 4.7 Respectfully, following the above finding of the Tribunal (supra) and Hon'ble jurisdictional High Court (supra), that abnormal expenses incurred under the head AMP cannot be termed as international transaction and thus the AO had wrongly invoked the provisions of Chapter X of the Act for the said AMP spent, thus the addition of Rs. 80,79,61,592/- is therefore directed to be deleted. The ground Nos. 3 to 3.3 are therefore allowed. In view of our conclusion above, the ground Nos. 4 to 4.2 do not require any adjudication. 5. The next issue arising ou....
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...., is found to be comparable, there cannot be a separate adjustment for interest income on delayed realization which is an integral part of the PBIT figure. [Para 12] As for the revenue's suggestion that it is to be verified whether the comparables include interest income, if any, all one can say is that the statutory provisions require the interest income, unless it is an interest income of the finance and banking companies, to be included in the other income which is taken into account for computing PBIT. The presumption, therefore, is that the accounts are drawn up as per the statutory requirements, and the exclusions from 'other income' are specifically discussed on the facts of each case, and as such constitute integral part of the transfer pricing documentation. There is nothing on record to show these exclusions. [Para 15] As regards the contention that normally all interest incomes are excluded in the computation of PBIT as such incomes rarely constitute operational income, there is no need to be guided by such hypothesis and generalities. There is nothing on the records, to show such exclusions on the facts of this case. In any event, setting o....
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....ayers to organize their affairs in a manner compliant with the norms set out in such anti-abuse legislation. An anti-abuse legislation does not trigger the levy of taxes; it only tells you what behavior is acceptable or what is not acceptable. What triggers levy of taxes is non-compliance with the manner in which the anti-abuse regulations require the taxpayers to conduct their affairs. In that sense, all anti-abuse legislations seek a certain degree of compliance with the norms set out therein. It is, therefore, only elementary that amendments in the anti-abuse legislations can only be prospective. It does not make sense that someone tells you today as to how you should have behaved yesterday, and then goes on to levy a tax because you did not behave in that manner yesterday. [Para 36] When this is put to the Department, his stock reply is that the amendment only clarifies the law, it does not expand the law. [Para 37] Well, if the 2012 amendment does not add anything or expand the scope of international transaction defined under section 92B, assuming that it indeed does not this provision has already been judicially interpreted, and the matter rests there unless....
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....on 10A of the Act amounting to Rs. 28,52,77,453/-. 6.1 The facts in respect of issue in dispute are that the assessee claimed deduction under section 10A of the Act amounting to Rs. 37,23,15,615/-, which is hundred percent deduction of the profit of Unit-II of the assessee. The total turnover of the undertaking for unit -II was shown at Rs. 45,07,29,722/- out of which turnover of Rs. 28,52,77,453/-pertain to data processing receipts and turnover of Rs. 16,54,52,269/- pertain to IT support services. The Assessing Officer proposed to allow deduction under section 10A with reference to the IT support services of Rs. 16,54,52,268/- only as against the claim of the assessee on the export turnover of Rs. 44,37,42,546/- computed in form No. 56F. After considering the submission of the assessee, the Assessing Officer rejected the exemption in respect data processing receipt holding that revenue was received by the assessee on account of distribution agreement and in not on account of any software, data processing fee etc., accordingly, he restricted the deduction to the extent of Rs. 13,66,68,296/- and disallowed the balance deduction claimed by the assessee. The Ld. DRP upheld the disa....
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.... found with the order of the Tribunal declining to make reference on the proposed question. It is true that each assessment year being independent of each other, the doctrine of res judicata does not strictly apply to the income-tax proceedings, but where an issue has been considered and decided consistently in a number of earlier assessment years in a particular manner, for the sake of consistency, the same view should continue to prevail in the subsequent years unless there is some material change in facts. In the present case, the learned counsel for the revenue has not been able to point out even a single distinguishing feature in respect of the assessment year in question which could have prompted the Assessing Officer to take a view different from the earlier assessment years in which the same income was brought to tax as income from business." 15.2 Even otherwise on merits we are unable to sustain the view adopted by Ld DRP. Ld AR is justified in submitting that the learned DRP has written factually incorrect findings in its order. Moreover the details ,filed by the appellant have also been partially taken into consideration. Ld DRP takes note of top 25 employees bu....
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.... running an office in India. That would depend upon the level of the country to which the office belongs. We have to judge the expenditure incurred from that angle and not from our angle. It is not the case of the Revenue that the expenditure incurred was so camouflaged as to cover the expenditure incurred in a trading activity to show it as expenditure incurred on liaison activity. Nor is it the case of the Revenue that the work carried on by the assessee in India which according to them amounted to trading activity produced income in India or anywhere else. Ibis expenditure incurred in India was met out of the remittances received by the Indian Branches again through the Reserve Bank of India. There was no evidence brought on record at any stage that the Indian Branches had exceeded the limits prescribed for it by the Reserve Bank of India. As long as the Indian Officers were conducting the operations within the restricted area and so long as those activities were not considered by the Reserve Bank of India, which is the concerned authority as amounting to anything other than carrying on of liaison work no inference adverse to the assessee can be drawn or is possible to draw. To ....
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....oordinate Bench of tribunal in case of Set Satellite (Singapore) (supra) as under: "11. The particular difficulty in the case of a dependent agent permanent establishment is that DAPE itself is hypothetical because there is no establishment-permanent or transient of the GE in the PE state. The hypothetical PE, therefore, must be visualized on the basis of presence of the GE as projected through the PE, which in turn depends on functions performed, assets used and risks assumed by the GE in respect of the business carried on through the PE. The DAPE and DA has to be, therefore, be treated as two distinct taxable units. The former is a hypothetical establishment, taxability of which is on the basis of revenues of the activities of the GE attributable to the PE, in turn based on the FAR analysis of the DAPE, minus the payments attributable in respect of such activities. In simple words, whatever are the revenues generated on account of functional analysis of the DAPE are to be taken into account as hypothetical income of the said DAPE, and deduction is to be provided in respect of all the expenses incurred by the GE to earn such revenues, including, of course, the remuneratio....
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....taxable in India. The same proportion has to be adopted here while computing profit attributable to the PE. We have also held that since the payment to the agent in India is more than what is the income attributable to the PE in India, it extinguish the assessment as no further income is taxable in India. It is to be noted that even in the first assessment framed by the Assessing Officer, the entire expenses in the form of remuneration paid to AIPL was held as allowable deduction and was reduced while computing the income of appellant If that be the case, the income attributable to PE in India being less than the remuneration paid to the dependent agent, it extinguishes the assessment and requires no further exercise for computation of income. We accordingly hold so and in view of the same the income of the appellant for assessment years 1997-98 and 1998-99 will be 'Nil'." 15.4 Before concluding we would like to mention over here that identical issue had also came up for the consideration of the Tribunal in case of M/s Interglobe Technology Quotient Private Limited for AYs 2007-08 to 2010-11 in ITA Nos. 419/Del/2011, 5830/Del/2011, 1463/Del/2013 and 6144/Del/2013. ....
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....ng and transmitting programs to the latter for the incorporation into the portion or "partition" in its mega - computers at Erding in Germany, so as to enable the travel agent in marketing reason drawn on the available information for their benefit. Its activities are to issue instructions to the master computer to recognize the operators, identify them and provide them excess to specific portion of the data base. There can be no doubt whatever, for the reasons discussed above that the assessee manufactures, produces and export software within the meaning of the three specified sections of the Act. It is open to it to claim exemption under any of these sections and as is well established by pertaining to interpretation of taxing statute it is entitled to choose that one which is most favourable to it in any particular assessment year, held the IT AT. The IT AT in that case also noted some material facts that assessee company submits their monthly returns for export to the competent authority which has accepted the same in discharge of export obligation. The ITAT noted further that the export of software as per the statutory requirement are also declared on exporters declaration for....
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....lusion that the assessee is very much eligible for the claimed deduction under sec. 10AA of the Act in view of the of decision of the ITAT in the case of Amadeus India (surpa). The Learned CIT(Appeals) was thus right in deleting the disallowance made by the Assessing Officer in this regard. 7.6 The above view that the assessee is eligible for claimed deduction under sec. 10AA of the Act is also strengthened by the decision of CESTAT, New Delhi Bench in the case of Acquire Service (P) Ltd. vs. Commissioner of Service tax (supra). In that case like the present assessee before us, the assessee were 100% EOUs registered with software technology park and were granted exemption under income-tax for export of computer software. The assessee therein were parts of a group of companies i.e., Amadeus or Galileo. These groups had evolved and were maintaining a computer reservation system (CRS), the requisite software and a huge database comprising a variety of information relating to several airlines and other travel services provides, for providing international travel related facilities. The core computer system/server were established at overseas locations at US, Germany or Spain a....
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....s travels related facilities by accredited travel agents, the relevant data is processed by the assessees and fed into the data overseas, employing internet facilities and activities amounting to computer data processing. For providing this service, assessees received data processing fees from the overseas entities in convertible foreing exchange, assessees however receive no fee/consideration from either the airlines, the travel agents or from hotels etc. the CESTAT has thus come to the conclusion that assessees promote/market CRS services provide by the Overseas entities (Amadeus/ Galileo) but do so through computers date processing, amounting to information technology services. 7.7 The functions of assessee have also been discussed by the ITAT in the case of Galileo International Inc. vs. DCIT (supra) deciding the issue of holding of any permanent establishment of Galileo International Inc. in India to examine its income to be taxable in India. This decision of the IT AT has been upheld by the Hon'ble High Court. 7.8 The Hon'ble Delhi High Court in the case of CIT vs. M.L. Outsourcing Services (P) Ltd. (supra) in the para No. 9 of the decision has been pleased ....
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....ispute. The relevant finding of the Hon'ble Delhi High Court is reproduced as under: "Conclusion of ITA 154 of 2017 (AIPL) 32. The Court finds that the impugned order of the ITAT in the case of AIPL for AY 2009-10 on the issue of allowing the deduction under Section 10A of the Act suffers from no legal infirmity either in its analysis of the legal provisions or in its conclusions. The Court is not inclined to frame any question of law on the issue concerning a Section 10A deduction in the appeal of the Revenue against AIPL for AY 2009-10. 6.6 Thus, Respectfully following the decision of the Tribunal and Hon'ble jurisdictional High Court, we direct the Assessing Officer to allow the deduction claimed under section 10A of the Act by the assessee. The Ground Nos. 9 to 9.3 of the appeal are accordingly allowed in favour of the assessee. 7. In ground Nos. 10 and 10.1, the assessee has challenged disallowance of Rs. 7,10,677/- under section 14A of the Act read with rule 8D of the Income Tax Rules. 7.1 Before us, the Ld. counsel of the assessee submitted that in the year under consideration no tax-free income was earned by the assessee and hence disallowance und....