2015 (6) TMI 380

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.... assessee:- "1. On the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the Assessing Officer's order, computing the tax liability of the appellant, by applying a tax rate of 15 percent on royalty income received from Today Hotels Private Limited as against a beneficial tax rate of 11.33% under section 115A of the Act. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in observing that royalty received by the appellant from Today Hotels Private Limited was not in pursuance to the agreement dated 17 January 2006 entered with Today Hotels Private Limited. 3. On the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the action of the AO of lev....

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....03 Prior to 1^st June, 2005 22.66% 15% 15% 6. Hotel Marina 27,92,174 Prior to 1^st June, 2005 22.66% 15% 15% 7. Today Hotels Pvt.Ltd. 1,08,60,173 17th January 2006 11.33% 15% 15%   Total Royalty Income 3,38,85,436            2.1 The assessee's returned income of Rs. 3,38,85,436 has been accepted by the Assessing Officer u/s 143(3) vide order dated 15.12.2011. However, the only dispute is with regard to application of tax rate of 15% on the royalty income from Today Hotels Private Limited instead of 11.33% shown by the assessee. This has resulted in increase of tax liability of Rs. 4,31,017. 3. Before the CIT(A), the assesse....

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....June, 2005, as stipulated in section 115A(b)(AA). Accordingly, he confirmed the action of the Assessing Officer. 4. Before us, the learned Counsel submitted that it is an undisputed fact that the assessee is a brand owner and its income has accrued from Today Hotels Private Limited for giving the license to use the brand "Crowne Plaza'. He pointed out that in the `Management Agreement'dated 17th January, 2006, clauses 9.2, 9.5, 10.1 and 10.2 make it quite clear that there is a provision for payment of royalty to the assessee. Thus, it cannot be held that there is no mention in the agreement regarding the payment of royalty. Without prejudice, he submitted that, even though the assessee is not direct party to the agreement, however, in su....

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....d agreement. Thus, the order of the CIT(A) should be confirmed. 6. We have heard the rival submissions and perused the relevant material placed on record. The sole dispute before us is, whether the royalty income should be taxed at the rate of 11.33% or at the rate of 15%, as per the DTAA. Section 115A(b)(AA) as it stood prior to 01.04.2014 read as under:- "The amount of income-tax calculated on the income by way of royalty, if any, included in the total income, at the rate of ten per cent if such royalty is received in pursuance of an agreement made on or after the 1st day of June, 2005." 6.1 Thus, the beneficial rate of 10% of income tax is to be calculated on the income of royalty, if such royalty is received in pursuance of an ....