2023 (5) TMI 1313 - HC - Income Tax

Delay Excused: Appeal Dismissed for Lack of Substantial Question of Law; Outcome Tied to Pending Supreme Court Case.

THE COMMISSIONER OF INCOME TAX – INTERNATIONAL TAXATION -3 Versus STARWOOD (M) INTERNATIONAL INC

The appellant's application for condonation of a 300-day delay in re-filing the appeal was granted without opposition from the respondent. The ITAT's ... Taxability of centralized services fee earned by assessee - Tribunal held it not taxable as fee concerns various aspects, such as sales and marketing, loyalty programs, reservation service, technological service, operational service and training programs/human resources - HELD THAT:- Tribunal has noted, that the issue stands covered by the judgment of the coordinate bench in the case of Sheraton International Inc [2023 (4) TMI 1310 - DELHI HIGH COURT] As in the assessee’s case for other AYs, the coordinate bench has followed the same approach i.e., accepted the ratio of the judgment in Sheraton International Inc. No substantial question of law arises for our consideration. The appellant/revenue has preferred an appeal qua the judgment rendered by the Division Bench of this Court in Sheraton International Inc., it is made clear, that if the appellant/revenue were to succeed in the said matter, parties will abide by the final decision rendered by the Supreme Court. Issues involved: Condonation of delay in re-filing the appeal, Challenge to the order of the Income Tax Appellate Tribunal regarding taxation of centralized services fee earned by the respondent/assessee.Condonation of Delay Issue:The appellant filed an application seeking condonation of delay in re-filing the appeal, citing a delay of 300 days. The respondent did not oppose the request for condonation, and the delay was accordingly condoned. The application was disposed of in the terms mentioned.Taxation of Centralized Services Fee Issue:The appeal pertained to the Assessment Year 2014-15, with the appellant challenging the order of the Income Tax Appellate Tribunal (ITAT) dated 30.07.2021. It was noted that the issue raised in the appeal was covered in the respondent's own case in other Assessment Years. The Tribunal held that the centralized services fee earned by the respondent was not taxable, encompassing various services such as sales and marketing, loyalty programs, reservation service, technological service, operational service, and training programs/human resources. The Tribunal relied on the judgment in the case of Director of Income Tax v. Sheraton International Inc (2009) 178 taxmann 84 (Del), which had been followed in the respondent's case for other Assessment Years. As no substantial question of law arose for consideration, the appeal was closed. It was clarified that if the appellant succeeded in a related matter before the Supreme Court, the parties would abide by the final decision rendered by the Supreme Court.