Travel Agent Not Liable to Deduct Tax Under Section 194-O for Booking Airline Tickets Through CRS System | ITAT

Case Details: Asst. Commissioner of Income-tax (TDS) vs. Riya Travel and Tours (India) (P.) Ltd. - [2025] 172 taxmann.com 652 (Mumbai-Trib.)

Judiciary and Counsel Details

• Ms Kavitha Rajagopal, Judicial Member & Om Prakash Kant, Accountant member
• Niraj Sheth for the Appellant.
• R.R. Makwana, Sr. DR for the Respondent.

Facts of the Case

Assessee was an air travel agent accredited by International Air Transport Association (IATA) and used to book airline tickets for international and domestic travel. Assessee was provided with a specific IATA code using which it used to buy airline tickets for its clients. Assessee made payments under the Billing and Settlement (BSP) Mechanism to BSP IATA for air tickets of Full Cost Carrier (FCC) airlines booked through the e-commerce platform, namely CRS System.

The Assessing Officer (AO) observed that the assessee failed to deduct TDS under section 194-O, considering the assessee as an e-commerce operator. In response, the assessee contended that it was not an e-commerce operator for the purpose of section 194-O as it did not own, operate, or manage the CRS system. The AO was not satisfied and held the assessee to be “an assessee in default”.

On appeal, the CIT(A) deleted the additions. Aggrieved by the order, the AO filed the instant appeal before the Tribunal.

ITAT Held

The Mumbai Tribunal held that the CRS system was not owned by the assessee. As per the subscriber agreement entered into by the assessee with Interglobe Technology Quotient Pvt. Ltd. (ITQPL), the assessee shall be provided access to the software system solely to use the Galileo system for obtaining information about the schedules, fares, seat availability, etc. and other services and also for making bookings. It also specifies that the Galileo system is owned and operated by the Travelport Global Distribution System B.V. and ITQPL is merely a distributor of the Galileo system in India and not an agent of Travelport Global Distribution System B.V.

The ITQPL is also entrusted with monitoring or testing the employees of the assessee, and the right to remove or recover the software from the locations in case of any breach is vested with ITQPL. It also narrates the obligation of the assessee. It specifies that the assessee cannot, without prior consent, modify, 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. Also, it restricts productivity incentive payments in case the assessee fails to achieve the target segments in any quarter.

The recital of the agreement does not create the ownership right, nor does it let the assessee operate or manage the CSR system. Without any of these, the assessee cannot be held to be an e-commerce operator. Therefore, the provisions of section 194-O were not applicable to the assessee.