If income attributable to PE in India less than the remuneration paid to the distributor in India by the taxpayer then no further income taxable in India

The Delhi Income-tax Appellate Tribunal (the Tribunal) in the case of Sabre Inc. v. DCIT (2009-TIOL- 488-ITAT-DEL) ruled on the taxability of the income earned through Computer Reservation System (CRS) in India. The Tribunal after following the decision of the Delhi High Court in the case of Galileo International Inc. v. DCIT [2009] 180 Taxman 357 (Del) held that since the income attributable to the Permanent Establishment (PE) in India was less than the remuneration paid to the distributor in India by the taxpayer no income was taxable in hands of Sabre Inc.

Facts of the case

• The taxpayer company was incorporated in USA. It had developed, owned and operated CRS located in USA which can facilitate airline reservations for participating airlines.
• The taxpayer entered into Participating Carrier Distribution and Service Agreement with various travel agents (subscribers) for booking and reservation, sale of the carrier air services, etc. through CRS.

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