2023 (8) TMI 163

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....irector of Income Tax, New Delhi vs. Travelport Inc.) dismissed on 19.04.2023 and consequently, the reasoning given by the High Court in paragraphs 21 & 22 of the judgment in Galileo Nederland BV (supra) requires to be affirmed in these cases also. It was further submitted that having regard to the aforesaid judgment, the appeals may have to be allowed. Learned panel counsel/advocate(s) appearing for the Revenue very fairly did not dispute the aforesaid submissions. It would be useful to refer to and extract paragraphs 21 & 22 of the judgment of the High Court in Galileo Nederland BV (supra), which read as follows: "21. In these circumstances, the Sr. Standing Counsel for the Revenue made specific reference to paragraph 19 of the order o....

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....the process in India. The major functions like collecting the database of various airlines and hotels, which have entered into PCA with the appellant takes place outside India. The computer at Denver in USA processes 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 takes place outside India. 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. Such function requires huge investment and huge capacity, which is not available to the com....

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....y 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." 22. It was this reasoning, which was approved by the Delhi High Court in Director of Income Tax versus Galileo International Corporation,[IT Appeal No.851/2008, decided on 25th February, 2009 along with other ITAs, rejecting the submission of the Revenue that the Tribunal had erred in attributing only 15% of the said income as attributed to Indian operations. High Co....

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.... of the functions undertaken in India viz., the functions and assets outside India, 15% was attributed to India. (Aspect of risk has not been discussed but it has never been the case of the revenue that risk factor tilts the scale for higher attribution of income to Indian PE). This worked out to Euro 0.45 and this was less than the commission of Euro 1, which was paid by the appellant- assessee to the distributor in India. There was substantial difference between expense of Euro 1 and attribution of Euro 0.45, as an income, which left a gap of Euro 0.55 per booking." It is needless to observe that the judgment of the High Court in Galileo Nederland BV (supra) has now merged with the order of this Court in Travelport Inc., C.A. Nos.6511-6....