Income Tax Appellate Tribunal - Delhi
Galileo Nederland Bv, New Delhi vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'C' NEW DELHI)
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A. No.1306 to 1309/Del/2012
Assessment years : 2003-04 to 2006-07
Assistant Director of Income Tax, M/s Gallileo Nederland
Circle- 1 (2), (Intl. Tax), BV, C/o BSR & Co. C.As.,
New Delhi. V. Bldg. No.10, 8th Floor,
Tower-B, DLF Cyber City,
Gurgaon.
AND
C.O. No. 169 to 172/Del/2012
In I.T.A. No. 1306 to 1309/Del/2012
Assessment years: 2003-04 to 2006-07
M/s Gallileo Nederland BV, Assistant Director of Income
C/o BSR & Co. C.As. Tax, Circle-1 (2), (Intl. Tax),
Bldg. No.10, 8th Floor, New Delhi.
Tower-B, Cyber City,
Gurgaon. V.
(Appellant) (Respondent)
PAN /GIR/No.AACCG
/GIR/No.AACCG-
AACCG-2258-
2258-D
Appellant by : Shri D.K. Gupta, CIT-DR.
Respondent by : Shri Amar Dave, Advocate.
ORDER
PER TS KAPOOR, AM:
These are four appeals filed by the revenue against the order of Ld CIT(A)-XXIV, New Delhi dated 1.12.2011 for assessment years 2003- ITA No1306 2 to 1309/Del/12 & CO 169 to172/Del/12 04, 2004-05, 2005-06 & 2006-07. The assessee has filed cross objections to these appeals which are listed as C.O. Nos. 169 to 172/Del/2012. These appeals and cross objections were heard together. Therefore, for the sake of convenience, these are disposed off through a single consolidated order.
The grounds of appeal for all the four years are common which are reproduced below:-
1. On the facts and in the circumstances of the case, the ld CIT(A) has erred in restricting the attribution of the revenue attributable to the PE in India to 15% only and not appreciating the finding of the Assessing Officer that major part of the business activity of the assessee leading to generation of profits is attributable to the assessee's PE in India thereby attributing 75% of the profits to the PE of the assessee in India.
2. The appellant craves to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal.
2. The assessee has taken 14 grounds of cross objections. The grounds of cross objections filed are more or so same in each year. For the sake of convenience, the cross objections taken for the assessment year 2003-04 are reproduced below.
Invalid Assessment:
1.1. At the outset, the Respondent prays that the assumption of jurisdiction by the Assistant Commissioner of Income-tax, (International Taxation) - Circle 19(1), Bangalore ('the ld. ACIT'), 2 ITA No1306
3 to 1309/Del/12 & CO 169 to172/Del/12 under section 148 the Act, was illegal, invalid, null and void, as the jurisdictional conditions precedent for a valid assumption of jurisdiction under section 148 were not fulfilled, and the Hon'ble CIT (A) has erred in holding the said order to be valid. 1.2. The Respondent prays that the Id. ACIT has erred, and the Hon'ble CIT (A) has further erred, in not quashing the order dated 28 December 2006 passed under section 143(3), read with section 148, of the Act, by the Id. ACIT, being invalid, null and void ab initio, inter alia, as it has been passed pursuant to an invalid notice under section 143(2) of the Act, which was issued to the Respondent without service of an intimation under section 143(1) of the Act.
2. Taxability under the Act 2.1. The ld. ACIT and the Hon'ble CIT (A) ought to have held that the Respondent does not have any income taxable in India as per the provisions of the Act.
2.2. On the facts and in the circumstances of the case and in law, Hon'ble CIT (A) has erred in merely following the order passed by the Delhi Bench of the Income Tax Appellate Tribunal ("IT AT") for Assessment Year ("A Y") 1995-96 to 1998-99 in the case of Galileo International Inc ("GII") and thereby holding that the Respondent has a business connection in India. Application of Double Taxation Avoidance Agreement between India and the Netherlands ("The DT AA") 3.1. On the facts and circumstances of the case and law, the Id. ACIT has erred and the Hon'ble CIT (A) has further erred in applying the provisions of Article 5 of the DT AA by holding that the Respondent has a permanent establishment ("PE") in India. 3.2. On the facts and circumstances of the case and in law, the ld. ACLT has erred and the Hon'ble CIT (A) has further erred in 3 ITA No1306 4 to 1309/Del/12 & CO 169 to172/Del/12 holding that the computers of the travel agents in India constitute a fixed place of business under Article 5(1) of the DTAA, of the Respondent in India.
3.3. On the facts and circumstances of the case and in law, the ld. ACIT has erred and the Hon'ble CIT (A) has further erred in holding that Interglobe Enterprises Private Limited through its subsidiary, Galileo India Private Limited ('the distributor company' of the Respondent In India), constitutes a PE of the Respondent in India under Article 5(5)(a) of the DTAA. 3.4. The Id. ACIT has erred in basing his conclusion, and the Hon'ble CIT (A) has further erred in upholding, that the distributor company is a dependent agent of the Respondent by relying, inter alia, upon unsubstantiated allegations, for instance:
the Respondent operates in India through M/s Galileo India (P) Ltd;
the services of the Respondent are utilised in India by the travel agent;
the distributor of the Respondent in India has habitually exercised and is authorised to conclude contracts on behalf of the Respondent; and the distributor company of the Respondent in India habitually secures orders wholly for the Respondent.
The ld. ACIT and the Hon'ble CIT (A) ought to have held that the distributor company in India is not an agent of the Respondent. In view of the above, the ld. ACIT and the Hon'ble CIT (A) ought to have held that the Respondent did not have a PE in India, and hence was not subject to tax in India.
3.5. On the facts and in the circumstances of the case and in law, the Id. ACIT has erred and the Hon'ble CIT (A) has further 4 ITA No1306 5 to 1309/Del/12 & CO 169 to172/Del/12 erred in holding that the Respondent's income is chargeable to tax in India under the provisions of DT AA.
3.6. The Hon'ble CIT(A) has erred in holding that the Respondent has a PE in India for the reasons stated in the order of the Hon' ble IT AT in the case of Galileo International Inc ("GlI") for A Y 1995-96 to 1998-99, and the assessment order passed in case of the Respondent for previous assessment years.
4. Taxable income I Attribution of income
4.1. Without prejudice to grounds of cross - objections in point nos. I, 2 and 3 above, on the facts and in the circumstances of the case and in law, the Hon' ble CIT (A) has erred in placing reliance on the orders of Hon' ble IT AT for A Y 1995-96 to ] 998- 99 in case of GII and confirming the attribution of 15% of the India related net booking fee as profits attributable to the Respondent in respect of its operation in India.
5. Deduction of expenses 5.1. Without prejudice to grounds of cross - objections in point nos I, 2, 3 and 4 above, on the facts and in the circumstances of the case and in law, the ld. ACIT has erred in not allowing, and the Hon'ble CIT (A) has further erred in not adjudicating on, deductions for certain India related expenses to the Respondent while computing its taxable income in India. 5.2. On the facts and in the circumstances of the case and in law, the Id. ACIT has erred in allowing deduction only for expenses aggregating to USD 21,285,357 in computing the Respondent's taxable income in India and the Hon' ble CIT (A) has further erred in not adjudicating upon the allowability expenses to the Respondent 5.3. The ld. ACIT and the Hon'ble CIT (A) ought to have allowed deduction for other expenses incurred by the Respondent, and 5 ITA No1306 6 to 1309/Del/12 & CO 169 to172/Del/12 for any other amounts deductible in computing the Respondent's income.
6. Apportionment of income 6.1. The Id. ACIT and the Hon'ble CIT (A) have erred in the interpretation of the provisions of the Act, inter alia, as they ought to have held that in the absence of any operations in India, the respondent is not liable to tax in India.
6.2. The ld. ACIT and the Hon'ble CIT (A) ought to have held that no part of the Respondent's income is attributable to the Respondent's alleged PE in India.
6.3. Without prejudice to ground 6.2 above, the Id. ACIT erred in arbitrarily imputing 75% of the profits generated from the transactions under consideration as attributable to the Respondent's alleged PE in India. The Hon'ble CIT(A) has further erred in arbitrarily imputing 15% of the profits generated from the transactions under consideration as attributable to the Respondent's alleged PE in India
7. Interpretation of the Act and the relevant agreement 7.1. The Id. ACIT and the Hon'ble CIT (A) have erred in their interpretation and application of the provisions of the Act and the DT AA to the facts of the Respondent's case.
7.2. The ld. ACIT and Hon'ble CIT (A) have also erred in their interpretation of the agreement between the Respondent and the distributor company.
8. Denial of allegations 8.1. The Respondent denies each and every allegation and statement made by the Id. ACIT, in the order passed under section 143(3), read with section 148, of the Act and upheld by Hon' ble CIT (A) in order passed under section 250 of the Act, 6 ITA No1306 7 to 1309/Del/12 & CO 169 to172/Del/12 unless the same is specifically admitted by the Respondent or is otherwise borne out by the record.
8.2. Without prejudice to the generality of the above, the Respondent denies the following, amongst other, incorrect allegations of the Id. ACIT and / or the Hon'ble CrT (A):
that the Respondent has a branch in India;
that the Respondent's operations, in India, are carried out from a large computer facility located at Denver, Colorado, USA; that the computer of the travel agents becomes an extension of the Respondent's main-frame computer;
that the Respondent had undertaken to provide all computer hardware and software to the travel agents; that the contract between the passenger and the Airline is entered into in India;
that the issue of allowability of expenses has been examined at length In the Respondent's own case;
that the basic facts of taxability have remained the same and continued as earlier;
that the Respondent has a PE in India in the form of fixed place business PE and agency PE and this finding has been upheld by the Hon' ble Delhi High Court in case of the Respondent itself; that Respondent has business connection in India and is receiving income from the sources in India; that computers, configuration, connectivIty IS provided by respondent to the subscribers amounts to operating part ofCRS in India, and the same results in a fixed place PE in India;
9. On the facts and in the circumstances of the case and in law, the Id. ACIT has erred and the Hon'ble CIT (A) has further erred in not allowing / adjudicating on granting of full credit for prepaid taxes to the respondent.
7ITA No1306 8 to 1309/Del/12 & CO 169 to172/Del/12
10. On the facts and in the circumstances of the case and in law, the Id. ACIT has erred withdrawing interest under section 244A of the Act and the Hon'ble CIT (A) has further erred in not adjudicating upon the same.
11. On the facts and in the circumstances of the case and in law, the Id. ACIT has erred in initiating the penalty proceedings under section 271(1)(c) of the Act and Hon'ble CIT (A) has further erred in not adjudicating upon the said penalty proceedings u/s 271 (1)( c).
12. All the above grounds of cross-objection are independent and without prejudice to one another
13. The Respondent craves leave to supplement, to cancel, to amend, to add and/or otherwise to alter/modify any or all the ground(s) of cross objection stated herein above.
14. On the facts and in the circumstances of the case and in law, the order passed by the Id ACIT is bad in law and is liable to be quashed.
3. The brief facts of the case are that M/s Gallileo International Inc. is a U.S. Corporation incorporated in the business of providing electronic distribution services to the travel industry through Computerized Reservation System (CRS). The CRS is an automated system which processes booking data and other data to provide the following functions:-
1. The ability to display flight schedules and seat availability.
2. The ability to display and/or quote airline fare.
3. The ability to make airline seat reservation.
4. The ability to issue airline tickets.8
ITA No1306 9 to 1309/Del/12 & CO 169 to172/Del/12
5. The ability to perform any or all of the functions similar to the above functions in respect of hotel, car and other travel related services apart from air services.
4. For this purpose, the appellant maintained a large computer facility at Denver Colorado in the USA. The data regarding availability of airline seat, hotel rooms and cars and the fares/tariffs thereof is fed in to this computer. Travel Agents and other persons who wish to make airline/hotel/car bookings communicate their requirements on line to the appellant's above computer system which on the basis of data contained therein provides them with information regarding possible itineraries, availability of seats, rooms, fares etc. and ultimately enables a person to make a booking. The appellant has an exclusive distributor in India; M/s Galileo India Pvt. Ltd. (Galileo India) negotiates and enter into contracts with various India Travel Agents who wish to be connected to the appellant's computer reservation system (CRS) and provides them connectivity with the same. The appellant pays fees to Galileo India for acting as an distributor. For each completed booking, the appellant receives Euro 3 and it pays to the distributor Euro 1.
5. For assessment years 2003-04 to 2006-07, the assessee company filed return of income declaring nil income for the following reasons:-
1. No income has received or deemed to be received in India by it under the provisions of the Income Tax Act, 1961 .
2. No income accrues or arose to it In India nor could any such income be deemed to accrue or arise in India.9
ITA No1306 10to 1309/Del/12 & CO 169 to172/Del/12
6. Without prejudice to its non taxability under the Act, it was contended that it did not have any Permanent Establishment (PE) in India within the meaning of article 5 of the agreement for Avoidance of Double Taxation between India and USA and therefore, the booking fees received by the appellant from airline company outside India being business profits were not liable to tax in India under article 7 (1) of DTAA.
7. During assessment proceedings, for these years, the Assessing Officer observed that the appellant had business connection in India, because of the fact that the computers and communication equipments of the assessee were connected to the computer terminals of the travel agents and business in the form of bookings was being generated from India & therefore held that appellant had a fixed place PE in India under article 5 of DTAA. The Assessing Officer also held that the distributor in India is a dependent agent of the appellant within the meaning of article 5 (4) (a) and article 5 (4)( c) of DTAA as it used to conclude contracts on behalf of the appellant and also secured orders wholly for the appellant. On these basis, the Assessing Officer held that a major part of the business activity of the appellant is attributable to its PE in India. Accordingly, he held that 75% of profits generated from Indian operation is attributable to the alleged PE of the appellant in India. While framing assessment order for the assessment year 2003-04 the Assessing Officer took gross booking fees of 34414293 $ and allowed expenses to the extent of 20594360 $ as subscriber fees and vendor cost. Further a deduction of 5% was allowed u/s 44C of the Act and out of the balance 13128936 $ taxable income has been taken at `.98,46,702/- (being 75% of `.13128936). The same basis was taken for calculation of taxable profits for the years 2004-05, 2005-06 & 2006-07.
10ITA No1306 11to 1309/Del/12 & CO 169 to172/Del/12
8. Aggrieved, the assessee filed appeal before the Ld CIT(A) and made the following submissions:-
1. That it does not have any business connection in India and even assuming while denying that it has business connection in India no income accrues or arose through or from the business connection alleged by the Assessing Officer.
2. That no part of the operation of the business of the appellant is carried out in India and therefore no part of income is taxable in India under the provisions of the Act.
3. That it did not have a fixed place in India under DTAA as it did not satisfy three tests vis-a-vis place of business test; right to use and business activity test) required for a fixed place PE.
4. That it did not have any agency PE within India within the meaning of article 5(1) of DTAA as the distributor did not carry out any of the activities specified in clauses (a), (c) of article 5(4) of DTAA on behalf of the appellant.
5. That distributor carried on its own business in India and was not dependent on the appellant for its business in India.
6. That activities of the alleged PE if any were only of a prepatory character and the appellant did not carry on any business in India whether through the alleged PE or otherwise.
7. That appellant merely provided information for facilitating transactions of booking tickets at the request of passengers through various travel agents.
8. That in the event of it being held that the income of the appellant was attributable to the alleged PE in India. The appellant could be taxed only in respect of the amount from the assets and the activities of the alleged PE which were if any 11 ITA No1306 12to 1309/Del/12 & CO 169 to172/Del/12 negligible and in any event extinguished by the amount paid by it to the distributor.
9. Reliance was placed at Hon'ble ITAT order in assessee's own case for assessment years 1995-96 to 1998-99 wherein it was held by the Tribunal that only 15% of the appellant's revenue could be reasonably apportioned to India and the alleged income attributable to the alleged PE is exhausted by the arms length payment made by the appellant to its distributor.
10. Reliance was also placed upon the order of Hon'ble Delhi High Court dated 25.2.2009 in assessee's own case for assessment years 1995-96 to 1998-99 wherein the Hon'ble High Court had dismissed the appeals filed by Department against the above order of Hon'ble Tribunal for assessment years 1995-96 to 1998-99.
11. The Ld AR argued that facts pertaining to the appeals under consideration i.e. assessment years 2003-04 to 2006-07 are identical to those pertaining to appeals for assessment years 1995-96 to 1998-
99, therefore, he submitted that no income is taxable in India based upon the above order of the Hon'ble Tribunal and further confirmed by Hon'ble High Court. The Ld CIT(A) considering the submissions made by the Ld AR deleted the additions made by the Assessing Officer. The relevant portion of Ld CIT(A)'s order is reproduced below:-
"I have carefully considered the appellant's submission. The points raised by the Assessing Officer in the assessment order for the years under consideration, judicial pronouncements relied upon by the appellant and the ITAT Delhi order in the appellant's own case for assessment years 1995-96 to 1998-99. Admittedly 12 ITA No1306 13to 1309/Del/12 & CO 169 to172/Del/12 the facts of the case for the years under consideration are similar to the facts for the assessment years covered in the Tribunal order. Keeping in view the above facts, that the decision of Hon'ble ITAT Delhi Benches in the appellant's own case has been upheld by the Hon'ble Delhi High Court and which is binding upon the subordinated judicial authorities including the undersigned it is held as under:-
"The appellant is held to have business connection in India and hence interms of section 9(1)(i) income from booking made from India and income from such operation have deemed to accrue or arise to the appellant in India.
Keeping in view the facts of the appellant's case for the years under consideration and the FAR analysis carried out in its study by Hon'ble ITAT for assessment years 1995-96 to 1998-99, 15% of the revenue accruing or arisen to it in India is held as a reasonable attribution as income accruing or arisen to the appellant in India and chargeable u/s 5(2) read with section 9(1)(i) of the Act.
Hon'ble ITAT while holding that remuneration paid by the appellant to Galileo India for the functions performed in India being more than the income attributable to the appellant extinguished its liability to tax in India.
The computers their configuration and connectivity provided by the appellant to subscribers in India either directly or through its agents amount to operating part of 13 ITA No1306 14to 1309/Del/12 & CO 169 to172/Del/12 its CRS system and constitute the appellant's fixed placed PE within the meaning of apart from it of article 5 of DTAA.
M/s Galileo India is a dependent agent of appellant who has habitually exercise the authority to conclude contracts on behalf of the appellant and therefore constitutes the appellant dependent agent PE in terms of article 5(4) (a) of DTAA.
12. Aggrieved, the Department has filed appeals before this Tribunal for all the four years and for all four years cross objections has been filed by the assessee.
13. The Ld DR contended that each year is a separate unit of assessment and do4es not constitute res judicata for other years. Methodology adopted by the Hon'ble ITAT for the initial years of the assessee in India cannot be followed the years under reference i.e. almost after 10 years of assessee's existence including in India. He further argued that ITAT order cannot be read so as to hold that the above methodology shall have to be followed for all the time to come. If this approach of loss making formula is followed in all the subsequent years then the India PE would never make profits from the operation done in India whereas the fact remains that assessee is carrying & spreading his operations in India. The Ld DR further argued that by this proposition the PE in perpetuity would incur guaranted losses from the Indian operations which is contrary to the facts of accounts. Every assessee expects to make profits and would not tolerate losses beyond initial and reasonable period of time. Definitely not when it is assured of the losses for all times to come. The ld DR further argued that had there been any loss to the assessee from its 14 ITA No1306 15to 1309/Del/12 & CO 169 to172/Del/12 India operation it would not have been expanding its business through various travel agents in India. The Ld DR also contended that with increase in globalization international tourism particularly in India has increased manifold and this has necessitated much larger involvement of PE in India which is playing a significant role in revenue generation and therefore he argued that much larger profits are to be attributed to the PE as its performing significant function in India. In support of his claim, the Ld DR put reliance on the Hon'ble ITAT Delhi Bench decision in the case of Amadus Global Travels Distribution in I.T.A. No.,107 & 108/Del/2008 dated 27.4.2009. The Ld DR argued that on similar facts the Hon'ble ITAT had remitted the matter back to the file of assessee for fresh consideration. The Ld DR brought to our notice that Hon'ble ITAT had not considered the contention of Ld AR that it's case was covered by the case of Gallio Int. which was decided vide order dated 21.11.2008 on which Ld AR had put his reliance during appellate proceedings. Ld DR further brought to our notice that on the assessee's appeal against this order of Tribunal, the Hon'ble Delhi High Court vide judgment in I.T.A. No.1040 of 2009 dated 24.1.2011 did not interfere, therefore, order of Hon'ble Tribunal became final. He argued that since this order and further confirmation by Hon'ble High Court had come after the Hon'ble High Court judgment in assessee's case (which was on 25.2.2009) the latter should be considered.
14. The ld AR, on the other hand, argued that the matter stands settled as Hon'ble Delhi High Court had not intervened in the ITAT order relating to assessment years 1995-96 to 1998-99 relating to assessee's own case and the subject matter for the assessment years 2003-04 to 2006-07 are similar to the facts of assessment year 1995- 96 to 1998-99. Regarding contention of Ld DR that this methodology of allocating revenue to PE in India would incur guaranteed losses, the 15 ITA No1306 16to 1309/Del/12 & CO 169 to172/Del/12 Ld AR argued that this point has already been clarified vide misc. petition No,108/Del/2008 filed by the Income Tax Department in the earlier years i.e. assessment years 1995-96 to 1998-99. In the said misc. application the Hon'ble Tribunal had rejected the contention of the Income Tax Department and had held that for computing of any income, the first point is to apportion the revenue from the operation carried out in India and unless the revenue are attributed the income which is a second step cannot be attributed.
15. The Ld AR further argued that income of assessee accrues due to worldwide operation and not because of the operation carried out only in India./ However, in respect of taxability in India only such profits can be taxed which accrues or arises in India. The Ld AR further argued that even if the assessee do not earn strictly out of operation carried out in India, the assessee earns income worldwide from its global operations. He further argued that ITAT order relating to assessment years 1995-906 to 1998-99 was subsequently upheld by the Hon'ble Delhi High Court in the assessee's own case and therefore keeping in view the fact that facts of the present cases are exactly similar to the facts relating to assessment years 1995-96 to 1998-99, the appeals of the revenue be dismissed.,
16. We have heard the rival submissions of both the parties and have gone through the material available on record. The citation relied upon by the Ld DR relates to the assessment year 2001-02 & 2002-03 and was decided on 27.4.2009 i.e. after the earlier order of Hon'ble ITAT dated 21st November, 2008. similarly, the Hon'ble Delhi High Court had refused to intervene in both the cases i.e. one filed by the revenue and the other filed by the assessee. In the first case relating to assessee for the assessment years 1995-96 to 1998-99 wherein the 16 ITA No1306 17to 1309/Del/12 & CO 169 to172/Del/12 ITAT had attributed 15% as attributable to operation in India, the High Court had held as under:-
"Nothing has been urged before us either on behalf of the assessee - appellant or on behalf of the revenue-respondent to assail the finding of the Tribunal in the supplementary statement of case. The question is as to what proportion of the profit of the sale in categories (a), (b) ( c) & (d) arose or accrued in British India is essentially one of the fact depending upon the circumstances of the case. In the absence of some statutory or other fixed formula any finding on the question or proportion involves some element of guess work. The endeavour can only be a approximate and there cannot be in the very nature of things be great precision and exactness in the matter. As long as the proportion fixed by the Tribunal is based upon the relevant material it should not be disturbed."
We, therefore, are of opinion that no question of law arises in these matters which needs any further determination by this court.
17. In the other case of Amadius IT Group similar controversy has arisen and Ld AR had relied upon the ITAT order in the case of M/s Galileo International (the assessee in the present case) in I.T.A. No.,108/Del/ dated 21.11.2008. However, the Hon'ble Tribunal had rejected the claim of the assessee and had referred back the matter to the file of Assessing Officer for fresh adjudication. The relevant paragraph of Hon'ble Tribunal is reproduced below:-
"Apropos the other issue i.e. estimate about the expenditure of profits of PE in India we are unable to accept the contentions of 17 ITA No1306 18to 1309/Del/12 & CO 169 to172/Del/12 ld counsels that the issue is covered in its favour inasmuch as, the Tribunal gave above decision on the peculiar facts of that year. Looking at globalization the share of Indian travellers in terms of booking has increased considerably. Besides the extent of assessee's expenses is not known which has been informed that such expenditure cannot be apportioned . In view thereof we are inclined to set aside the issue about the estimate of taxability of India PE back to the file of Assessing Officer to consider our observations and above ITAT and High Court judgment to decide the same afresh in accordance with law and above observations after giving the assessee an opportunity of being heard."
18. On assessee's appeal to High Court, the High Court had refused to interfere in the order of ITAT.
19. From the facts of the case and from two citations of Hon'ble High Court and Hon'ble Tribunal's order in assessee's own case and in the case of Amadeous Travels (supra), we are of the opinion that an estimate of 15% ratio fixed 10 years cannot be applied now in the name of consistency especially keeping in view the increase in globalization increase in Indian passengers originating from India and the facts that assessee is not in losses. The Income tax proceedings are applicable from year to year depending upon facts of each year and principle of res judicata do not ordinarily apply to income tax proceedings and therefore facts of the case which relate to back to initial for years of setting up of business. Estimate of 10 back years cannot said to be applicable for years to come without considering the change in facts and circumstances. The estimation of profits attributable to Indian operations should ideally be based upon number of bookings originating from India viz-a-viz total bookings in a 18 ITA No1306 19to 1309/Del/12 & CO 169 to172/Del/12 particular year and consideration of global accounts. That comparison can easily lead to a fair estimation of percentage of total business attributable to Indian operations. Similarly expenditure attributable to Indian operations can be calculated on some sound commercial basis keeping in view the bookings from India or in the alternative the Assessing Officer can calculate net profits attributable to India operations by calculating proportionate net profits of the company with respect to bookings from India viz-a-viz total bookings. With these directions, we remit the matter back to the file of the Assessing Officer for fresh consideration by adopting a reasonable and commercial test for estimation of business attributable to India and net taxable income which could have been said to have accrued to appellant due to bookings from India. To determine the profits attributable to Indian operations, Assessing Officer may verify the global accounts of the assessee.
20. In the result, the appeals filed by revenue are allowed for statistical purposes.
21. Now coming to the cross objections filed by assessee in all these four years. The Ld AR did not argue the cross objections and therefore these cross objections are treated as not pressed. Therefore, the assessee's cross objections in all the four years are dismissed.
22. Order pronounced in the open court on the 29th day of June, 2012.
Sd/- Sd/-
(R.P. TOLANI) (T.S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dt. .6.2012.
HMS
19
ITA No1306
20to 1309/Del/12 & CO 169 to172/Del/12
Copy forwarded to:-
1. The appellant
2. The respondent
3. The CIT
4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
True copy.
By Order (ITAT, New Delhi).
Date of hearing 17.5.2012
Date of Dictation 4.6.2012
Date of Typing 5.6.2012
Date of order signed by 29.6.2006
both the Members &
pronouncement.
Date of order uploaded on net 29.6.2012
& sent to the Bench concerned.
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