Treaty-based non-taxability of loyalty-program receipts upheld by following binding High Court precedent on fees for technical services.

Centralised services fee and receipts from the Frequent Flier and Starwood Preferred Guest programs were considered for taxability as Fees for Technical Services under section 9 of the Income-tax Act and Article 12 of the India-US DTAA. The Tribunal followed the jurisdictional High Court's earlier ruling on similar receipts in group concerns and held that this binding precedent governed the present matter. It noted that pending special leave petitions before the Supreme Court did not displace the High Court decision for the appeal before it. The receipts were therefore not taxable as Fees for Technical Services, and the Revenue's appeal failed.

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Issues: Whether the centralized services fee and the receipts under the Frequent Flier and Starwood Preferred Guest programs were taxable as Fees for Technical Services under section 9 of the Income-tax Act, 1961 and Article 12 of the India-US Double Taxation Avoidance Agreement.

Analysis: The receipts in question were held to be covered by the earlier decision of the jurisdictional High Court in the group concerns. The Tribunal followed that binding decision and noted that the pendency of special leave petitions before the Supreme Court did not alter the position for the present appeal.

Conclusion: The amounts were not taxable as Fees for Technical Services, and the Revenue's appeal failed.

Ratio Decidendi: Where the jurisdictional High Court has already decided the taxability of similar receipts under the treaty, the Tribunal must follow that decision and treat the receipts as not taxable as Fees for Technical Services.

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