TaxTMI 
TaxTMI 
2021 (3) TMI 208
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....information, reservations, transaction processing and related services for airlines, travel agencies and other travelrelated entities. It owns and operates a Global Distribution System located outside India, referred to as Computerized Reservation System (CRS) and provides subscribers with access to and use of this CRS. The assessee earns its revenue through participating in carrier agreements with airlines for which the bookings are made through the CRS. 4. The assessee entered into an agreement with Travelport Services Limited (TSL,) a limited company existing under the laws of England and which is a 100% subsidiary of the assessee to market the CRS and other services of TLP in the United Kingdom, Europe, the Middle East, Africa, and parts of Asia. 5. During the years under appeal, the UK based company was marketing and distributing the CRS of the assessee through its nonexclusive representative, Calleo Distribution Technologies Pvt. Ltd. which is an independent third-party company registered in New Delhi, India. As per the distribution agreement, it was specifically provided that Calleo Distribution Technologies Pvt. Ltd. is appointed as the distributor of CRS belonging to the....
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....r dated 09.11.2016 for Assessment Years 2006-07, 2007-08 & 2008-09 and order vide dated 01.03.2017 for Assessment Years 2009-10 & 2010-11, dismissed the appeals of the assessee. However, on the challenge of the revenue relating to attribution of 15% revenue, the Hon'ble High Court remanded back the matter to the Tribunal vide order dated 19.12.2016 for Assessment Years 2007-08 order dated 20.12.2016 for Assessment Years 2006-07 & 2008-09 and order dated 26.04.2017 for Assessment Years 2009-10 & 2010-11. 13. The relevant findings of the Hon'ble High Court of Delhi read as under: "10. It is apparent from the above discussion that the specific and limited challenge by the Revenue in this appeal is to the ITAT's order, rather mechanical adherence to the Galileo International Inc's case (supra) attribution, principally to the extent it followed the 15% ratio. In the present case, the AO had based his conclusions and determined the income based upon figures furnished by the assessee, as is apparent from a plain reading of the order. In the circumstances, the ITAT, in our opinion, ought not to have disturbed that order, without a finding. 11. This Court has also in its order ....
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....ustify the claim of the assessee: "We are therefore not in favour of granting such a primacy to the rules of procedure so as to wipe off a substantial right otherwise available to the assessee in law. We find this view of ours also reinforced by the language of Rule 11 which does not require the Tribunal to be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal provided the party who may be affected thereby had sufficient opportunity of being heard on that ground. In taking this view, we are conscious about the observations of the Madras High Court and the Calcutta High Court made in the decisions relied upon by learned counsel for the Revenue but we are, in the facts and circumstances of the case, persuaded to accept the observations of the apex court made in this regard in the case of National Thermal Power Co. Ltd. [1998] 229 ITR 383. We are therefore of the view that it is permissible on the part of the Tribunal to entertain a ground beyond those in corporated in the memorandum of appeal though the party urging the said ground had neither appealed before it nor had filed a cross-objection in the appeal filed by the other party. We m....
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....est which could not be waived, because by consent no jurisdiction could be conferred on the authority unless the conditions precedent were first fulfilled. In DasaMuni Reddy v. Appa Rao, AIR 1974 SC 2089, 2092, such a question of waiver was examined also in the context of the bar of estoppel or of res judicata. At page 2091, it was us exercise of jurisdiction. If there is want of jurisdiction the whole proceeding is coram non judice. The absence of a condition necessary to found the jurisdiction to make an order to give a decision deprives the order or decision of any conclusive effect. (See Halsbury's Laws of England, 3rd edition, volume 15, paragraph 384). Further proceeding at page 2092, it was pointed out that just as the courts normally did not permit contracting out of the Acts so there could be no contracting in. A status of control of premises under the Rent Control Acts could not be acquired either by estoppel or by res judicata. Their Lordships in terms held that the principle was that neither estoppel nor res judicata could give the court jurisdiction under the Acts which those Acts said it was not to have. Therefore, bar of res judicata or estoppel or waiver were ....
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.... writ petition was dismissed. The order of the High Court was a final judgment which terminated the independent writ proceeding. It was held at page 1186 that order having not been appealed before the Supreme Court, it had become final and it was no longer open to the parties to raise a plea of jurisdiction in appeal against the subsequent award given by the Industrial Tribunal after exercising jurisdiction which the Tribunal was permitted to exercise by the order of the High Court. These were competent proceedings and the independent writ proceeding was also finally terminated and, therefore, this final order precluded the parties from reagitating the same question before the Industrial Tribunal. Their Lordships distinguished the earlier decision in Satyadhyan Ghosal v. Smt. DeorajinDebi, AIR 1960 SC 941, where the question had arisen about the applicability of section 28 of the CalcuttaThika Tenancy Act, 1949, and the plea having been rejected by the munsif trying a suit, revision, the High Court had held that operation of section 28 of the Act was not affected by the subsequent amendment Act and the case was remanded to the munsif for disposal according to law. After the fin....
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.... got finally settled, which could not be agitated unless the assessee had come in the reference to this court at that stage. The Tribunal's view was also incorrect that in restoring the case to the file of the Income-tax Officer by the earlier order, the only point left open was in respect of addition of Rs. 19,421 on merits and that the legal or jurisdictional aspect whether the reassessment proceedings were legally initiated was not kept open. Even on the third question the Tribunal's view was erroneous that even though this point went to the root of the jurisdiction and was a pure question of law, merely because the point was initially raised and not pressed when the matter was taken up before the Appellate Assistant Commissioner, it could be waived and it could not be reagitated. Therefore, in view of the settled legal position our answers on questions Nos. 1 and 2 are in the negative, while our answer on question No. 3 is in the affirmative, that is to say, all the questions are answered against the revenue and in favour of the assessee. The reference is accordingly disposed of and the Commissioner shall pay the costs of the assessee." 23. In light of the aforesaid ju....
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....14.3. The effect of this rule is that a respondent has been entitled to support the order on the ground which has been decided against him. The underlying idea and the spirit of Rule 27 is to arm a respondent, in an appeal filed by the plaintiff, with an option to contest unfavourable decision of the CIT(A) on the aspect(s) of an issue, the final decision on which issue has been delivered in his favour. Take an instance of first appellate authority deciding the legal issue of reopening of an assessment against the assessee but deleting the addition on merits in favour of the assessee. When the Revenue files appeal against this order before the tribunal, it will naturally assail the finding of the CIT(A) qua the deletion of addition on merits. Notwithstanding the fact that the respondent assessee did not file any appeal against the order passed by the CIT(A), shall still be entitled under Rule 27 of the ITAT Rules, 1963, to support the conclusion of the order of the first appellate authority, being the deletion of addition, by challenging the finding of the CIT(A) which was delivered against him on the legal issue of reopening of assessment. 14.4. The mandate of Rule 27 is to be....
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....tive that unless the ground is not `decided against' the respondent, he cannot take recourse to this provision. However, it is of paramount importance to keep in mind the fundamental object of enshrining rule 27, being giving an opportunity to the respondent to support the impugned order in an appeal filed by the plaintiff. A pragmatic approach on consideration of the object of such Rule, in our considered opinion, necessitates the adoption of liberal interpretation that when a particular issue is decided in favour of the respondent and the plaintiff has come up in appeal against such decision on the issue, then all the relevant aspects having bearing on the overall issue, even though not specifically decided against the plaintiff, should be open for challenge by the respondent under the rule. If the respondent is debarred from raising that aspect of the issue, which was not taken up before the first appellate authority or taken up but remained undecided, and the appeal of the plaintiff is allowed, the respondent would be rendered without remedy. It has been noticed above that a respondent is not entitled to file cross objection on such aspects of the issue u/s 253(4) of the ....
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.... (supra) in the circumstances. 11. It is apparent from the above discussion that the specific and limited challenge by the Revenue in this appeal is to the ITA T's order, rather mechanical adherence to the Galileo International Inc's case (supra) attribution, principally to the extend it followed 15% rule. In the present case, the AO had based his conclusions and determined the income based upon figures furnished by the assessee, as is apparent from a plain reading of the order. In the circumstances, the ITA T, in our opinion, ought not to have disturbed that order, without appropriate hearing." 3. It flows from the above findings of the Hon"ble High Court that the case has attained finality except for the directions of remand back to Hon'ble Tribunal on specific point of reasonability of attribution of income which is the ground of appeal filed by the revenue. However, in such a remanded back case to give specific finding on the ground taken up by the revenue before Delhi High court, the appellant in the capacity of respondent has filed application under Rule 11 & 27 of ITAT Rules wherein the appellant has taken additional ground of appeal which is legal in nature.....
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....case of where V the facts of the case are that the penalty was deleted by Ld. CIT(A) and ITAT upheld the penalty on part of the additions made in this case. At this stage, the respondent, challenged the penalty ground on jurisdictional/legal ground of appeal. Hon'ble tribunal accepted the application under Rule 27 in this case. However, it is important to note that the cited case was very mush pending before Hon'ble tribunal on all scores and it was not a case of remanded back case as against the present case which has been remanded back to ITAT on specific point/issue as per the order of Hon'ble Delhi High Court. Therefore, the reliance placed by the assessee on the cited case is clearly distinguishable. 7. It is noteworthy that all case laws relied upon by the assessee were open before the Hon'ble Tribunal for adjudication. There is only one case where the facts involve a case of remand and that case is of Hon'ble Gujarat High Court in the case of P.V.Doshi. Interestingly, in the cited case of P.V.Doshi, Hon'ble Tribunal set aside the case back to the file of the AO for deciding on a specific matter. The assessee filed appeal before the Ld. CIT(A) in sec....
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.... Madras vs. Sundaram & Co. Pvt. Ltd.(1964) 52 ITR 763 (Madras) etc. Para 20 of the decision reads as under:- "If we refer to Rule 27 of ITAT Rules, 1963, a bare reading thereof manifest that a Respondent has a right to support the impugned order, without having filed any cross appeal or cross objection. This understanding emerges from the language of the said provision which begins with the words "The Respondent, though he may not have appealed, ". This means that the provision is to enable a Respondent to effectively defend the order appealed before the Appellate forum. The expression "though he may not have appealed" also indicates that the provision is to be resorted to in a situation where a Respondent may otherwise have a right to file an appeal or cross objections, but has chosen not to avail of this remedy. Thus, a party who has not availed of the option of filing an appeal, in a given situation, if arrayed as a Respondent before the Appellate Tribunal, can rely upon Rule 27, to support the order under appeal. The aforesaid expression also suggests that recourse to Rule 27 would only be available in case the remedy of appeal is otherwise available with the Respondent, and ....
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....hney [supra]. 32. We have carefully gone through the decision of the Hon'ble High Court of Delhi. We find that in the very beginning of Para 20, the Hon'ble High Court has observed as under: " If we refer to Rule 27 of ITAT Rules, 1963, a bare reading thereof manifest that a Respondent has a right to support the impugned order, without having filed any cross appeal or cross objection. This understanding emerges from the language of the said provision which begins with the words "The Respondent, though he may not have appealed,". This means that the provision is to enable a Respondent to effectively defend the order appealed before the Appellate forum. The expression "though he may not have appealed" also indicates that the provision is to be resorted to in a situation where a Respondent may otherwise have a right to file an appeal or cross objections, but has chosen not to avail of this remedy. Thus, a party who has not availed of the option of filing an appeal, in a given situation, if arrayed as a Respondent before the Appellate Tribunal, can rely upon Rule 27, to support the order under appeal. The aforesaid expression also suggests that recourse to Rule 27 would only....
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.... 2011-12 only. The relevant findings read as under: "26. Thus, where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured to the parties by virtue of the introduction of Section 144C, that, bearing in mind the settled position that the law applicable on the first day of assessment year be reckoned as the applicable law for assessment for that year, leads one to the inescapable conclusion that the provisions of Section 144C can be held to be applicable only prospectively, from AY 2011-12 only." 39. In all the A.Ys under challenge, on the proposition that they are barred by limitation, the Assessing Officer has framed draft assessment order when the provisions were not there in the statute. Therefore, the period of limitation, as prescribed u/s 153 of the Act were applicable and, therefore, the date of final assessment order makes the assessment barred by limitation. 40. Considering the facts in totality, in the light of the decision of the Hon'ble Madras High Court [supra], we have no hesitation in holding that the assessments for A.Y....
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....of India and the payment too is received outside of India * Travelport USA is responsible for the development and enhancement of products, obtaining legal protection for the developed intangibles. These activities again are carried outside of India. 42. Out of the aforesaid several activities, the activities of Calleo Distribution Technologies Pvt. Ltd. are only in respect of generating request and receiving end-result of the process carried out in India. In other words, bookings, execution and receiving of the tickets are in India. In other words, the computers at the desk of travel agent in India are merely connected or configured to the extent that it can perform a booking function but are not capable of processing the data of all the airlines together at one place. 43. We find that the assessee has not deployed any assets in India. Keeping in mind the aforesaid facts relating to the assessee, let us now consider the facts considered by the Tribunal in the case of Galileo International Inc [supra] which are as under: "9. The next question therefore, arises is whether having held that there is business connection in India, how much income is chargeable to tax in India. As ....
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....assets used and risk undertaken. On the basis of such analysis of functions performed, assets used and risk shared in two different countries, the income can be attributed. In the present case, we have found that majority of the functions are performed outside India. Even the majority of the assets i.e. host computer which is having very large capacity which processes information of all the participants is situated outside India. The CRS as a whole is developed and maintained outside India. The risk in this regard entirely rests with the appellant and that is in USA, outside India. However, it is equally important to note that but for the presence of the assessee in India and the configuration and connectivity being provided in India, the income would not have generated. Thus the initial cause of generation of income is in India also. On the basis of above facts we can reasonably attribute 15% of the revenue accruing to the assessee in respect of bookings made in India as income accruing/or arising in India and chargeable under Section 5(2) read with Section 9(1)(i) of the Act. 44. In the light of the above, we find that the facts of the present case are in parity with the facts o....
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....ermany processed various data like schedule of flights, timings, pricing, the availability, connection, meal preference, special facility, etc. and that too on the basis of neutral display real time on line took place outside India. The computers at the desk of travel Page 21 of 26 agent in India were merely connected or configured to the extent that it could perform a booking function but were not capable of processing the data of all the airlines together at one place. Such function required huge investment and huge capacity, which was not available to the computers installed at the desk of subscriber in India. The major part of the work or to say a lion's share of such activity, were processed at the host computer in Erding in Germany. The activities in India were only minuscule portion. The assessee's computer in Germany was also responsible for all other functions like keeping data of the booking made worldwide and also keeping track of all the airlines/hotels worldwide who had entered into PCA. Though no guidelines are available as to how much should be income reasonably attributable to the operations carried out in India, the same has to be determined on the factual ....