Travelport Global Distribution System BV Vs ACIT (ITAT Delhi)
Summary: The assessee, Travelport Global Distribution System BV, a Netherlands company earlier known as Galileo Nederland BV, appealed against the assessment for AY 2020-21 concerning interest received under Section 244A of the Income-tax Act, 1961. The interest of INR 1,66,05,368 arose in connection with a refund determined for AY 2015-16. The refund, including the interest component, was credited to the assessee on 22 November 2019 after TDS of INR 69,78,240 was deducted from the interest. The assessee had initially offered the interest to tax at 10% under the India-Netherlands DTAA, but subsequently claimed that the interest should be taxable at Nil under the Most Favoured Nation (MFN) clause in Protocol IV of the India-Netherlands DTAA, read with the beneficial provisions of the India-Italy or India-USA DTAA. The Assessing Officer and DRP rejected the claim and assessed the interest at 10%.
The assessee principally contended that Protocol IV requires India to extend a lower rate or a more restricted scope of source taxation granted in a later convention with an OECD member. It relied on Article 11(3)(c) of the India-USA DTAA, under which specified interest arising from Government-approved debt claims is exempt, and on Nestle SA for the interpretation of the MFN clause. The assessee also relied on Section 244A jurisprudence to contend that refund interest is interest on a debt claim, and argued that Notification No. S.O. 693(E) dated 30.08.1999 satisfied the Section 90 notification requirement.
