Centralised hotel marketing and reservation receipts not taxable as royalty or technical services under the India-USA treaty.

Receipts from centralised marketing, reservation, priority club and holidex services provided to Indian hotels were held not taxable as royalty, fees for technical services, or fees for included services under the Income-tax Act, 1961 and the India-USA DTAA. The Court followed earlier decisions already decided in favour of the assessee and noted that the same position had been consistently accepted in prior assessment years. On that basis, the Revenue's challenge failed and the receipts remained outside taxability under the invoked provisions.

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Issues: Whether receipts from centralised marketing, reservation, priority club and holidex services received from Indian hotels were taxable as royalty or as fees for technical services or fees for included services under the Income-tax Act, 1961 and the India-USA Double Taxation Avoidance Treaty.

Analysis: The dispute concerned the character of the receipts from centralised hotel-related services, including marketing and reservation functions. The issue was whether such receipts could be brought to tax as royalty under the domestic law or treaty, or alternatively as fees for technical services under Section 9(1)(vii) of the Income-tax Act, 1961, or as fees for included services under Article 12(4)(a) and Article 12(4)(b) of the DTAA. The Court noted that the controversy was already covered by earlier decisions in favour of the assessee and against the Revenue, and that the same view had been consistently accepted in prior assessment years.

Conclusion: The receipts were not taxable as royalty or as fees for technical services or fees for included services, and the appeal failed.

Ratio Decidendi: Receipts for centralised marketing and reservation services in the hotel business are not taxable as royalty or fees for technical or included services when the issue is already covered by binding precedent in favour of the assessee.

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