February 07, 2026 : The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that commission income earned by Booking.com B.V., a Netherlands-based online accommodation booking platform, is not taxable in India for Assessment Year 2018–19, as the company does not have a Permanent Establishment (PE) in the country.

The Tribunal, comprising Judicial Member Vimal Kumar and Accountant Member M. Balaganesh, allowed the appeal filed by Booking.com and set aside the final assessment order dated 15 January 2025, which had sought to tax ₹3,960.98 crore as business income allegedly attributable to a PE in India.

The case arose after the Income Tax Department initiated reassessment proceedings under Sections 147 and 148 of the Income Tax Act, 1961, on the ground that Booking.com had not filed a return of income in India despite receiving substantial payments from Indian accommodation providers. Based on information available through AIR data and Form 26AS, the department noted receipts under various heads, including commission, professional or technical fees, and other payments.

In response to the reassessment notice, Booking.com filed a return declaring nil income, contending that its commission income was not chargeable to tax in India under the India–Netherlands Double Taxation Avoidance Agreement (DTAA). The Assessing Officer, however, passed a draft assessment order holding that the company had both a fixed place PE and a dependent agent PE in India through Indian hotels and accommodation providers, and attributed the entire commission income to such alleged PE.

The Dispute Resolution Panel upheld the draft order, leading to the final assessment order taxing the full commission income.

Before the Tribunal, the assessee argued that it operates a digital platform hosted on servers located outside India and merely acts as an intermediary between travellers and accommodation providers. Bookings are concluded directly between customers and hotels, with Booking.com earning commission only after the guest completes the stay. It was emphasized that the company has no office, employees, servers, agents, or equipment in India, and that Indian hotels operate on a principal-to-principal basis.

The Tribunal noted that for a fixed place PE to exist, there must be a clearly identified place in India, such place must be at the disposal of the foreign enterprise, and core business activities must be carried out through it. Relying on settled legal principles and Supreme Court precedents, the Bench held that the Revenue had failed to bring any cogent evidence to establish the existence of either a fixed place PE or a dependent agent PE in India.

It further observed that Indian accommodation providers merely list their rooms and set prices independently on the platform, and that no agency relationship could be inferred from such arrangements. The Tribunal also rejected the department’s attempt to recharacterise the commission income as royalty or fees for technical services.

Accordingly, the ITAT held that the commission income earned by Booking.com from Indian accommodations was not taxable in India for the relevant assessment year and allowed the appeal in favour of the assessee.