2023 (5) TMI 1435 - HC - Income Tax

Taxability of centralized fee earned by the respondent/assessee - ITAT held it to be not taxable and fee concerns various aspects such as sales and marketing charges loyalty programs reservation charges technological services operational services and training programs/human resources. Tribunal has noted that the issue stands covered by the judgment of Sheraton International Inc 2009 (1) TMI 27 - DELHI HIGH COURT HELD THAT - As in the respondent/assessee s case for other AY the coordinate bench has followed the same approach i.e. accepted the ratio of the judgment in Sheraton International Inc. According to us no substantial question of law arises for our consideration. Accordingly the above-captioned appeal is closed. In view of the fact that the appellant/revenue has preferred an appeal qua the judgment rendered by the Division Bench of this court in Sheraton International Inc. it is made clear that if the appellant/revenue were to succeed in the said matter parties will abide by the final decision rendered by the Supreme Court.

Summary

The Delhi High Court, through Hon'ble Justices Rajiv Shakdher and Girish Kathpalia, addressed an appeal (ITA 271/2023) concerning AY 2013-14, challenging the Income Tax Appellate Tribunal's (Tribunal) common order dated 23.09.2022 in favor of the respondent/assessee. The Tribunal held that the "centralized fee"-comprising sales and marketing charges, loyalty programs, reservation charges, technological services, operational services, and training/human resources-is not taxable. This ruling aligns with the coordinate bench decision in Director of Income Tax v. Sheraton International Inc (2009) 178 Taxman 84 (Del), which the Tribunal and coordinate benches have consistently followed.The Court found that "no substantial question of law arises for our consideration" and thus closed the appeal. The appellant/revenue's application for condonation of delay in re-filing (45 days) was allowed with no opposition from the respondent. The Court clarified that should the appellant succeed in a related appeal against the Sheraton International Inc. judgment, parties will abide by the Supreme Court's final decision. The order is to be acted upon via digitally signed copies.