India: Computer airline reservation system located in U.S. did not create permanent establishment in India
U.S. taxpayer providing airline ticket booking through its computer reservation system located in the United States did not have a fixed place PE
The Delhi bench of the Tribunal held that a U.S. taxpayer providing airline ticket booking through its computer reservation system located in the United States did not have a fixed place permanent establishment (PE) in India under the India-U.S. income tax treaty.
The court’s decision was based on the facts that access to the computer reservation system was provided to the foreign travel agencies and not directly to the Indian travel agents, and the taxpayer did not provide any equipment to the Indian travel agents at their premises in India. In addition, the court found that the taxpayer did not have an agency PE in India in the absence of any entity habitually procuring contracts for the taxpayer or binding the taxpayer for the contracts to be entered by that entity independently.
Read a February 2024 report [PDF 267 KB] prepared by the KPMG member firm in India