Facts of the Case

The Revenue filed an appeal under Section 260A of the Income-tax Act, 1961 challenging the order dated 09.02.2023 passed by the Income Tax Appellate Tribunal for Assessment Year 2011–12. The assessment had been framed under Sections 144C(13) read with Sections 147 and 143(3). The assessee, Travelport LP, is a Limited Liability Partnership incorporated outside India. The Tribunal allowed the assessee’s appeal holding that the draft assessment order issued under Section 144C was without jurisdiction as the assessee was not an “eligible assessee” within the meaning of Section 144C(15)(b).

Issues Involved

Whether Travelport LP could be treated as an “eligible assessee” under Section 144C(15)(b), whether issuance of a draft assessment order under Section 144C in absence of any Transfer Pricing Officer adjustment and where the assessee is not a foreign company is valid, and whether any substantial question of law survived when issues on merits stood concluded by binding Supreme Court judgments.

Petitioner’s Arguments

The Revenue contended that the Tribunal erred in holding the assessment order to be void ab initio and sought to sustain applicability of Section 144C. It was argued that the Tribunal wrongly relied on precedents relating to non-eligible assessees and that the appeal deserved consideration on questions proposed.

Respondent’s Arguments

The assessee submitted that it is an LLP and not a foreign company, that no order under Section 92CA(3) had been passed by the Transfer Pricing Officer, and therefore Section 144C had no application. It was further argued that even on merits, the issue of attribution of income to a Permanent Establishment stood conclusively settled in favour of the assessee by judgments of the Supreme Court in the assessee’s own case.

Court Order / Findings

The Delhi High Court noted that the Tribunal had quashed the assessment on jurisdictional grounds holding that Travelport LP was not an “eligible assessee” and therefore the draft assessment order under Section 144C was invalid. The Court recorded the submission of the Revenue that the issue on merits regarding attribution of income to Permanent Establishment already stood concluded against the Revenue by the Supreme Court in DIT (International Taxation) vs. Travelport Inc., affirming earlier Delhi High Court judgments. The Court observed that in view of the settled position on merits, the questions proposed in the present appeal had become purely academic. Consequently, there was no reason to entertain the appeal under Section 260A.

Important Clarification

The Court clarified that where issues on merits stand finally concluded by binding Supreme Court judgments, appeals raising ancillary or procedural questions that do not alter the final outcome do not warrant adjudication. Judicial time ought not to be expended on academic questions.

Final Outcome

The appeal filed by the Revenue was closed. The Delhi High Court held that no substantial question of law survived for consideration, as the issues on merits stood concluded in favour of the assessee by the Supreme Court and the questions raised had become academic. The decision was rendered in favour of the assessee and against the Revenue.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769681187_THECOMMISSIONEROFINCOMETAXINTERNATIONALTAXATION3VsTRAVELPORTLP.pdf

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