TaxTMI 
TaxTMI 
2011 (5) TMI 577
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat arises for consideration is as to whether the marketing and reservation contribution received by the assessee from Indian hotel owners is "Fee for Included Services('FIS') under Article 12(4) of the Indo-US Double Taxation Avoidance Agreement('DTAA') and therefore taxable in India. 3. The facts and circumstances under which the above issue arises for consideration are as follows: The assessee is a non-resident, being a company incorporated in USA and is the owner of certain trademarks and service marks and operates and licenses the same under the name 'Holiday Inn'. During the relevant assessment years, various Indian hotels were licensee to the trademark 'Holiday Inn' and were operating as per the standards and terms of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered from the hotels by way of 'marketing contribution'. The advantage of such common marketing campaigns is that there is no duplication of expenses and efforts, global standards are maintained, there is economy of scale and need for marketing and advertisement expense at individual level is eliminated. 5. Reservation System provides online centralized link to all the franchisee hotels and customers and helps the hotels and the customers to avail benefit of faster bookings. According to the assessee, this facility that is offered to the customers increases the customer base of all franchisee hotels under the Holiday Inn chain worldwide. The assessee incurs all related cost to maintain and operate the reservation system and recovers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the order of AO. We have perused the records and considered the matter carefully. We find that the identical issue of taxability of marketing and reservation contribution fees received by the assessee from the Indian hotels has already been considered by the Tribunal in assessee's own case in A.Y.1997-98 and the Tribunal vide order dated 12-5-2006 in ITA No. 4341/M/2002 held that marketing and reservation fees received by the assessee was with a corresponding obligation to use it for the agreed purposes and it was not an unfettered receipt in the hands of the assessee. The Tribunal accordingly held that the receipts could not be viewed as income of the assessee. The Tribunal also held that the receipts could also not be charged as busines....