Commission Earned by Overseas Online Platforms Not Taxable: ITAT Delhi
Booking.com B.V. v. ACIT (International Taxation) (ITA No. 2033/Del/2025)
Facts:
1. The assessee, Booking.com B.V., is a tax resident of the Netherlands and operates an online accommodation booking platform, hosted entirely outside India.
2. Indian hotels and accommodations list their rooms on the platform using a self-service tool and independently determine pricing.
3. Bookings are concluded directly between the customer and the accommodation provider. After checkout, Booking.com earns commission from the accommodation providers, based on a pre-agreed percentage.
4. The assessee has no office, employees, servers, agents, or infrastructure in India. For AY 2018-19, commission income from India amounted to ₹396.09 crore.
5. The AO initiated reassessment proceedings under sections 147 / 148, alleging, existence of Fixed Place PE and Dependent Agent PE in India, that Indian accommodations constituted PE, and attributed 100% of commission income to India.
Issues for Consideration:
1. Whether Booking.com B.V. constituted a Fixed Place PE or Agency PE in India under Article 5 of the India–Netherlands DTAA.
2. Whether commission income earned from Indian accommodations was taxable in India as business profits.
3. Whether reassessment proceedings under sections 147/148 were valid.
ITAT Delhi held as below:
1. The assessee conducts its business of online reservations of accommodations through a digital platform hosted on servers located outside India, the assessee has no place of business, agent, personnel or equipment of India during the relevant previous year, no place/accommodation was made available to the assessee by any of the hotel or guest houses.
2. Assessee does not have any dependant agent in India. The assessee transacts with the accommodation of principal to principal basis, there is no element of agency involved even if principal agent relationship is assumed between accommodation and the assessee considering the flow of funds by the accommodations to the assessee in the form of commission does constitute any agency.
3. The ld. AO failed to discharge the onus of establishing assessee having fixed place PE in India and to attribute the earning of commission income to such alleged fixed placed PE in India.
4. Hon’ble Supreme Court of India in the case of Formula One World Championship Limited Vs. CIT 394 ITR 80 (SC) has held for constituting fixed place PE (in India) the foreign enterprise must have (i) identified fixed place in India and ii) such fixed place must be at the disposal of the foreign enterprise and (iii) core business activities of the foreign enterprise must be carried out through such fixed place.
5. The final assessment order date 15.01.2025 in pursuance to DRP direction dated 31.12.2024 being illegal are set aside.
The copy of the order is as under:
