Case Law Details
Amadeus IT Group SA Vaish Associates Vs ACIT (ITAT Delhi)
ITAT Delhi held that the booking fee received by the assessee from non-resident airlines is taxable as ‘business income’ and not as ‘royalty’ u/s. 9(1)(vi) of the Income Tax Act and Article 13(3) of Indo-Spain DTAA.
Facts- Assessee is a tax resident of Spain. The assessee along with its affiliated companies has developed a fully automated 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 worldwide basis (‘CRS’) for the travel industry. The CRS is for the facility of both travel agencies and airline offices worldwide. The assessee has entered into agreements with various airlines by providing interconnectivity between the host computer of the individual airline and the Amadeus CRS created by the assessee at Erding, Germany. Amadeus also provides connectivity to its CRS to the travel agents.
In order to ensure that the customers’ needs in each national market/country are met, the assessee has entered into distribution agreements with various National Marketing Companies (“NMCs”), incorporated in the respective national markets/countries for distribution/marketing of the aforesaid CRS. The NMCs are required to seek subscribers (normally travel agents) and enter into agreements with them whereby the NMCs provide the subscribers with appropriate access to the CRS host. The assessee has a distribution agreement with its NMC in India viz., Amadeus India Private Ltd. (‘AIPL’) and ResBird Technologies Pvt. Ltd. (‘ResBird’). The travel agents in India, who intend to use the aforesaid CRS have entered into subscriber’s agreement with the AIPL and ResBird.
AO assessed total income of the assessee at Rs. 758,13,93,137/- and inter alia concluded that the profit attributable to PE is to be taxed at normal rate and the income from royalty is to be taxed at 10% as per provisions of Article 13 of India-Spain DTAA and interest under section 234A, 234B and 234C to be charged as per this final order. Being aggrieved, the present appeal is filed.
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