TaxTMI 
TaxTMI 
2022 (12) TMI 245
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and is, therefore, bad in law. 2. That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the addition to income amounting to Rs, 39,28,87,342 made by Ld. Assessing Officer (hereinafter referred to as 'Ld. AO'), towards Centralized Services fees received by the Appellant primarily in the nature of Sales & Marketing charges, Reservation charges, Loyalty programs and fees for other centralized services rendered outside India. 3. That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the fees of Rs. 39,28,87,342 received for rendering various Centralized Services taxable as Fees for Technical Services (hereinafter referred as 'FTS') under Section 9(1)(vii) of the Act or Fee for Included Services ('FIS') under of India- USA Double Taxation Avoidance Agreement ("DTAA"). 4. That on the facts and the circumstances of the case and in law, the Ld. CIT (A) has erred in not abiding by the Principle of Stare Decisis by not following the decisions of Jurisdictional Hon'ble Delhi Tribunal and Hon'ble Delhi High Court in cases Of group entities of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o or alter, by deletion, substitution or otherwise, any or all of the foregoing grounds of appeal at or before the hearing, and to submit Such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 3. At the very outset, the counsel for the assessee stated that the substantive issues raised in the grounds of appeal has been considered and decided by this Tribunal in favour of the assessee and against the revenue. 4. The DR fairly conceded to this. 5. We have carefully perused the orders of the authorities below and have duly considered the decision of this Tribunal in ITA No.2013/Del/2019 order dated 29.04.2022. 6. Briefly stated that the facts of the case are that the appellant assessee is a firm incorporated under the laws of United States of America and resident thereof. It is engaged in the business of providing hotel related services in several countries around the world. The assessee is group entity of Starwood. 7. In India the assessee has entered into agreements with various Indian hotels for provision of hotel related services interalia worldwide publicity, marketing and advertising services through its system....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der section 9 of the Income Tax Act as explained above, The case of the assessee is not covered and distinguishable from the case of the Jurisdictional High Court in Sheraton International since the said case had only considered the taxability under the payments in question received by the assessee company from the Indian hotels/ clients as "fees for included services" within the meaning of paragraph 4(a) of Article 12 . 12. This quarrel was considered by this Tribunal in assessee's own case in ITA No. 2013/Del/2019 for A.Y.2015-16 vide order dated 29.04.2022. The relevant findings of the coordinate Bench read as under :- 24. Thus, on a reading of the aforesaid observations of the Coordinate Bench, it becomes very much clear that not only the Tribunal has examined the applicability of Article 12(4)(a) of the Treaty qua the payment received but has categorically held that it cannot be treated as FIS under Article 12(4)(a) of the Treaty. Undisputedly, the aforesaid observations of the Coordinate Bench have been upheld by the Hon'ble Jurisdictional High Court in case of DIT Vs. Sheraton International Inc (supra). In view of the aforesaid, the observations of learned Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he appellant did not have a permanent establishment in India, and hence the business income could not be brought to tax under Article 7 of the India- USA DTAA, Moreover, no question of taw had arisen for their consideration, as these are findings of fact by the Tribunal. Therefore, respectfully following the orders of the higher judicial authorities, the bringing to tax of the business receipts of the appellant in India, is deleted Thus, the appellant succeeds in grounds 1 to 4. 8. The issue in controversy has also been set at rest by the Hon'ble Delhi High Court in case cited as Director of Income-tax vs, Sheraton International Inc. - (2009) 313 ITR 267 (Del) as under: "Double taxation relief-Agreement between India and USA- Payment for advertising, publicity and sales promotion services-Tribunal found as a final fact finding authority that main services rendered by assessee, a company incorporated and tax resident in USA, to Indian company, was advertisement, publicity and sates promotion keeping, in mind their mutual interests and in that context, the use of trademark, trade name etc, and other enumerated services referred to in the agreement With the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le 12(4)(a) or 12(4)(b) of the India-US Tax Treaty. As a natural corollary, it can only be treated as business income of the assessee. Hence, in absence of a PE in India, it will not be taxable. 28. For the sake of completeness, we must observe, in course of hearing, learned Departmental Representative has relied upon some judicial precedents to drive home the point that the payment received towards centralized services fee is in the nature of FIS under Article 12(4)(a) of the Treaty In this context, we must observe, after carefully examining the decisions of the Coordinate Bench in case of Marriott Hotel (supra), we are of the view that it is clearly distinguishable on facts. On a reading of the decision, it is very much clear that after examining the agreements entered into with the recorded a finding of fact interrelated/ interlinked in essence Indian hotels, the Bench has that the agreements are that they refer to each other. Further, the Bench has observed that for all practical purposes, the clients (Indian hotels) have construed all the agreements as a single agreement for the purpose to promote brand. Thus, in this factual context, the Bench has concluded that the ....