Sabre Marketing Nederland, BV vs ACIT

Parties Involved

Facts Summary

The Assessee, Sabre Marketing Nederland, BV, is a technology solutions provider to the airline industry, providing travel-related products and services to airlines. The company markets and distributes these solutions and services, which include airline decision support applications and implementation and support services for Sabre software packages. The services are rendered using software hosted on servers located outside India. The Assessee earns fees from airlines based on activities or transactions originating in India, which are received outside India. The Assessing Officer (AO) proposed to tax these receipts as income from a Permanent Establishment (PE) in India, while the Dispute Resolution Panel (DRP) directed the AO to treat the receipts as royalty taxable under section 9(1)(vi) of the Income Tax Act, 1961. The Assessee appealed this decision, arguing that the receipts should not be taxed as royalty under either domestic law or the India-Netherlands Double Taxation Avoidance Agreement (DTAA).…

Legal Issues

• 1. Whether the amounts received from Airlines by the Assessee constitute Royalty chargeable to tax as per the provisions of section 9(1)(vi) of the Act and as per Article 12 of India Netherlands Double Taxation Avoidance Agreement (DTAA).

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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