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2021 (6) TMI 479 - AAR - Income TaxAdvance ruling application u/s 245R - Income taxable in India - Services under SFS - System fund support services agreement and RSF - Reservation system facility agreement - amounts received by the applicant from ABC India pursuant to system fund support service agreement for provision of marketing, frequency marketing programme ("ABC Rewards"), distribution marketing and pursuant to reservation system facility agreement for reservation system facility - applicant was providing various services to Indian hotels relating to hotel management, marketing and reservation related services under the hotel management agreement and the consideration received in respect of such services were held taxable in India as royalty/fee for included services - HELD THAT:- The payment for all these services was in the form of contribution to systems fund which the owner was obliged to discharge. Clause 10.1 of the agreement stipulated that "For the duration of the term, owner shall pay the licensor, or if directed by licensor, its affiliates, the system contribution". As stated by the applicant the services in respect of system funds were provided by the applicant directly to the respective Indian hotels. It was also mentioned in the agreement that manager, licensor and their affiliates derive neither income nor profit from the system fund contributions. In view of the above facts, it is crystal clear that the nature of services rendered by the applicant to Indian hotels under earlier tripartite hotel management agreement was identical with the nature of services as contemplated in the SFS and RSF agreements with ABC India. It is relevant to consider that the applicant was not a signatory to the tripartite agreements entered into prior to April 1, 2019 and the applicant was also not a signatory to the bipartite agreement between ABC India and Indian hotel owner entered into after April 1, 2019. Prior to April 1, 2019 the applicant was providing the services to Indian hotels as an affiliate for which it was receiving the payments directly. The same arrangement continued even after April 1, 2019 and the applicant was providing services to Indian hotels as an affiliate/sub-contractor. The only difference was in the mode of payment of fee for these services. While the payment was being received by the applicant from the hotel owner directly under the previous arrangement, the payment after SFS and RSF was to be routed through ABC India. The precise reason for the change of this model was to attribute the intragroup costs associated with such intra-group profits as mentioned in clause (H) of SFS. As informed by the Revenue the additions made by the Assessing Officer were confirmed by the Commissioner of Income-tax (Appeals) and the issues are now pending before the learned Income-tax Appellate Tribunal and this fact has not been disputed by the applicant. It is found that the questions raised in the present application are in respect of the issues which were already pending before the Income-tax authority in different years. Therefore, the bar under clause (i) of the proviso to section 245R(2) is found squarely attracted in this case. In the present case, the issues pending before the Department were not in respect of different entity, but in respect of the applicant's own case in the earlier years. Further, the issue to be considered here is not in respect of any transaction but about the nature of services rendered. As already mentioned earlier the nature of services rendered by the applicant prior to April 1, 2019 were identical with the services contemplated in SFS and RSF, which is also evident from the questions as raised by the applicant before the appellate authorities. It is found that the issues involved in the questions raised in the present application filed before us were already pending before the Income-tax authority and the bar in terms of clause (i) of the proviso to section 245R(2) is found attracted in this case. Therefore, the application is not admitted and consequently rejected.
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