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TMI Blog2025 (3) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... rce participant whichever mode may be. Here in the present case, there is no iota of doubt that the CRS system is not owned by the assessee and even otherwise as per the subscriber agreement entered into by the assessee Interglobe Technology Quotient Pvt. Ltd. (ITQPL), assessee shall be provided access to the software system solely for the purpose of using the Galileo system for obtaining information about the schedules, fares, seat availability, etc. and other services and also for making bookings. It is also narrates the obligation of the assessee and specifies that the assessee cannot without prior consent modified, enhance, or make copies of old or part of the software and also categorically states that the ownership of the software is with ITQPL. It also facilitates the calculations of incentives and payments to the assessee and also restricts productivity incentive payments in case the assessee failed to achieve the target segments in any quarter. The recital of the agreement does not in any manner create the ownership right neither does it let the assessee operate or manage the CSR system. In the absence of any of these we find no justification in holding the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would qualify as an e-commerce operator." c) "On the facts and in the circumstances of the case and law, the Lá. CIT(A) has erred in citing the decision of the Hon'ble Supreme Court in the case of Rashtriya Ispat Nigam Limited the "operate and manage" means transfer of effective control of an assets without appreciating the fact that in the case of Rashtriya Ispat Nigam Limited the respondent supplied sophisticated machinery to the contractors for the purpose of being used in execution of contracted works and received charges for the same whereas in the case under consideration the assessee operates or manages the platform which is intangible and cannot be compared with the tangible asset as it was in the case cited above." d)"On the facts and in the circumstances of the case and law, the La. CIT(A) has erred in holding that the assessee cannot be treated as an e-commerce operator within the meaning of section 194-0 of the Aca without appreciating the fact that the expression used in sec. 194-0 defining the e-commerce operator is mentioned as person who owns, operates or manages the digital or electronic facility, whereas the word "owns" is separated by punctuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S system for which it has no right and does not own, operate and manage such CRS companies. Further, the ld. CIT(A) held that the entire control of the CRS system is with the respective CRS company and not with the assessee as per the agreements entered into by the assessee and the CRS companies. The ld. CIT(A) further held that since the effective right or control over the platform is not with the assessee which is merely an user of the said platform, the assessee cannot be considered as an e-commerce operator as per Section 194-O of the Act and thereby holding the assessee to be not 'an assessee in default' as it was not liable to deduct TDS as per Section 194-O of the Act. 7. Aggrieved by the said order, the revenue is in appeal before us challenging the order of the ld. CIT(A). 8. We have heard the rival submissions and perused the materials available on record. Before getting into the issue in dispute, it is relevant to understand the nature of the business of the assessee for which based on the assessee's submission the facts are culled out hereafter. The assessee is an air travel agent accredited by International Air Transport Association (IATA) which is a trade associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nth, the same is paid to BSP on 21st of the month and likewise. The sub-agents are also given such credits to make payment to RTT. The assessee claims that payment is made to BSP IATA in accordance with the statement produced by it which will remit the same to the participating airlines. It is also stated that payments are made through credit cards which option is given by some airlines to travel agents at the time of booking of the air tickets in which case, the payments are directly made to the airlines through booking platform i.e., CRS system. The BSP statement which is issued on weekly basis also contains the said transactions made through card payments. 9. The assessee contends that the assessee denies it to be an e-commerce operator and is merely a travel agent booking tickets for its clients using a digital platform (CRS) which is a computerized system which stores and retrieves information for transactions related to air travel. 10. The ld. AO observed that the assessee has more than 20,000 active agents all over the country where booking of air tickets is done through BSP for FCC (Full Cost Carriers), FCC airline tickets for domestic and foreign airlines and for LCC (Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions, the only moot issue to be adjudicated upon in this appeal is whether the assessee is entitled to deduct TDS in accordance with the Section 194-O of the Act on the bookings made through CRS system. The transaction of the assessee could be bifurcated into two segments which is transaction with BSP for FCC (Full Cost Carrier) and transaction with foreign/domestic airlines as LCC (Low-Cost Carrier) for tickets booked through mobile application/website which are similar in nature except for the mode of payment where in FCC category it is made through BSP and in LCC category it is made directly through the airlines. The ld. AO observed that the assessee has deducted tax u/s. 194-O of the Act only on the bookings made through Riya Connect Application i.e., for domestic LCC airlines but has not deducted TDS on the bookings made through BSP IATA for FCC category. The ld. AO emphasized that as both categories fall under the same operation methods except for the mode of payment, the assessee has defaulted in not deducting TDS on payments made to BSP. The ld. AO explained the definition of e-commerce operator as one who operates or manages digital or electronic facility and 'e-comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the assessee is said to be 'an assessee in default'. No doubt the same applies only to the participants who are resident of India and therefore payment made towards booking of tickets of foreign airlines which are liable to tax outside India does not come under the preview of TDS payments which are made to BSP IATA. The ld. AO substantiated this by stating that the selling of goods and providing services over digital or electronic network will come under the preview of e-commerce and therefore the assessee is to be treated as an e-commerce operator which is liable to deduct TDS u/s. 194-O of the Act. 14. The ld. CIT(A) held that the software used by the CSR companies are owned for which the assessee will not acquire any right and held that the assessee is merely an agent who books air tickets on behalf of the clients using the CRS system. Further, the CRS companies have given only limited access to the assessee to use the system for booking tickets. The ld. CIT(A) relied on the decision of the Delhi High Court in the case of Asia Satellite Telecommunication (197 taxmann 263) (Delhi) which held that mere access to broadband from the transponder to its customer cannot be said to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent Account Number or Aadhaar number to the e-commerce operator. 3) Notwithstanding anything contained in Part B of this Chapter, a transaction in respect of which tax has been deducted by the e-commerce operator under sub-section (1), or which is not liable to deduction under sub-section (2), shall not be liable to tax deduction at source under any other provision of this Chapter: Provided that the provisions of this sub-section shall not apply to any amount or aggregate of amounts received or receivable by an e-commerce operator for hosting advertisements or providing any other services which are not in connection with the sale or services referred to in sub-section (1). 4) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty. 5) Every guideline issued by the Board under sub-section (4) shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the e-commerce operator. 6) For the purposes of this section, e-commerce operator shall be deemed to be the person responsible for paying to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifies that the assessee cannot without prior consent modified, enhance, or make copies of old or part of the software and also categorically states that the ownership of the software is with ITQPL. It also facilitates the calculations of incentives and payments to the assessee and also restricts productivity incentive payments in case the assessee failed to achieve the target segments in any quarter. The recital of the agreement does not in any manner create the ownership right neither does it let the assessee operate or manage the CSR system. 18. In the absence of any of these we find no justification in holding the assessee to be e-commerce operator and resultantly Section 194-O is not applicable in assessee's case and hence the assessee is held to be not liable to deduct TDS and therefore is not 'an assessee in default'. Form the above observation, we find no infirmity in the order of the ld. CIT(A). 19. In the result, the appeal filed by the revenue is dismissed. ITA No. 4191 & 4193/Mum/2023 (Assessment Year: 2022-23) 20. The findings given in ITA No. 4192/Mum/2023, A.Y. 2021-22 shall applies mutatis mutandis to these appeals also. 21. In the result, the appeals filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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