Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2018 (3) TMI 2036

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... not in the nature of income at all. HELD THAT:- The action of the CIT(A) in directing the Assessing Officer to apply the order of the Tribunal [ 2015 (1) TMI 659 - ITAT MUMBAI] is justified to the extent it deals with the nature of the payments received by the assessee from the two hotels stated aforesaid. So, however, the point which is sought to be raised is the non-consideration of the defence set-up by the assessee based on the principles of mutuality. The order of the Tribunal (supra) has not addressed that issue and so far as the instant year is concerned, the same was very much raised by the assessee before the lower authorities, which has also remained to be addressed. Considering the entirety of circumstances, we, therefore, deem i .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... efore himself, namely, whether the Appellant could be subject to tax in respect of the amounts received under the International Sales and Marketing Agreement ('ISMA'); 2. In holding that the amounts received by the Appellant under the ISMA are taxable as royalty under section 9(1)(vi) of the Act as well as Article 12(3) of the Double Taxation Avoidance Agreement between India and the United States of America ('India-US tax treaty'); 3. In holding that the amounts received under the ISMA were a part and parcel of the royalty received for the use of the 'Marriott' brand and that the amounts receivable by the owner of the 'Marriott' brand, i.e. Marriott Worldwide Corporation ('MWC') were split-up by sign .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ved under the ISMA are governed by the principle of mutuality and hence, cannot be regarded as the Appellant's income; 10. In not appreciating that the amounts received by the Appellant are with a corresponding obligation to be spent for agreed purposes and hence, cannot be regarded as income in the hands of the Appellant; 11. In not considering that the amounts received by the Appellant under the ISMA are in the nature of business profits as per Article 7 of the India-US tax treaty and in the absence of a permanent establishment in India as per Article 5 of the India-US tax treaty, the same cannot be taxed in the hands of the Appellant; 12. In restoring the matter to the assessing officer to examine whether the Appellant could be asses .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ravelled to the Tribunal vide ITA Nos. 1996 1997/Mum/2011 1270, 1451 1452/Mum/2013 dated 14.01.2015. So, however, the plea of learned representative for the assessee is that the Assessing Officer as well as the CIT(A) have not taken into consideration one of the pertinent points raised by the assessee which was based on the principle of mutuality and, therefore, according to her, the appeal could not be disposed off summarily merely in the light of earlier precedent. In order to appreciate the points sought to be raised, and to impart completeness to the order, the following discussion is relevant. 4. The appellant before us is a foreign company, which is a tax resident of U.S.A. It transpires that the assessee has entered into internationa .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... he MHR Fund ). It was asserted that there was a complete identity between the contributors to the MHR Fund and the participants in the surplus, i.e. excess of amounts received in the fund over the expenditure incurred for undertaking the ISM activities. It was also asserted that the ISM contributions, being reimbursement of expenses was not in the nature of income at all. 5. A perusal of the orders of the Assessing Officer as well as that of CIT(A) reveal that the impugned sums have been held to be taxable as Royalty income. In fact, the CIT(A) has noted in para 5 of the impugned order that similar issues have been decided by the Tribunal in assessee s own case vide order dated 14.01.2015 (supra) and directed the Assessing Officer to follow .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates