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Issues: (i) Whether receipts from marketing, distribution marketing, frequency marketing programme and SCHI facility charges were taxable as fees for technical services, fees for included services, or royalty. (ii) Whether travel agent commission recovered as TACP from third-party Indian hotels was taxable as fees for technical services.
Issue (i): Whether receipts from marketing, distribution marketing, frequency marketing programme and SCHI facility charges were taxable as fees for technical services, fees for included services, or royalty.
Analysis: The issue had been consistently decided in the assessee's own case for earlier years. The same receipts had been held not to constitute royalty, fees for technical services, or fees for included services, and the Revenue had not shown any change in facts for the year under appeal. In these circumstances, the principle of consistency applied, and the earlier view was followed.
Conclusion: The addition on this issue was unsustainable and was deleted in favour of the assessee.
Issue (ii): Whether travel agent commission recovered as TACP from third-party Indian hotels was taxable as fees for technical services.
Analysis: The receipt was found to arise from services rendered by travel agents to the hotels, while the assessee merely facilitated bookings and recovered costs on a cost-to-cost basis. Such receipts did not involve managerial, technical, or consultancy services rendered by the assessee to the hotels, and the issue was already settled in the assessee's favour in earlier years. The receipt therefore did not fall within the scope of fees for technical services under the Act.
Conclusion: The addition on this issue was also deleted in favour of the assessee.
Final Conclusion: Both additions were set aside, and the assessee succeeded on the entire appeal.
Ratio Decidendi: Where identical receipts have been consistently held in earlier years to be outside the scope of royalty or fees for technical services and no material change in facts is shown, the rule of consistency warrants the same treatment; a mere cost recovery for facilitation of bookings does not constitute managerial, technical, or consultancy services for section 9(1)(vii).
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