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Commissioner of Income Tax, Bangalore and Income Tax (TDS) I Bangalore Versus M/s ITC Hotels Ltd (Since Amalgamated with ITC) (M/s Windsor Manor Sheraton & Towers)

2015 (8) TMI 987 - KARNATAKA HIGH COURT

Liability for deduction of TDS u/s 195 r/w S.197 - assessee did not have a permanent establishing in India as per S.9 r/w its explanation - Held that:- Revenue itself had given No Objection Certificates consistently for several years and allowed the respondent assessee to make payment to Sheraton without deducting tax at source and it was only after the decision of the Assessing Officer at Delhi in the case of Sheraton [2009 (1) TMI 27 - DELHI HIGH COURT] holding that payment made to it would be .....

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income earned by M/s Sheraton International, USA in India was not liable for deduction of TDS u/s 195 r/w S.197 of the Act, in respect of payments made by the assessee as they did not have a permanent establishing in India as per S.9 r/w its explanation and consequently provisions of Ss.201(1) and 201(1A) of the Act was not attracted - Decided in favour of assessee. - Income Tax Appeals 477 c/w 478 / 2009 - Dated:- 15-6-2015 - MR VINEET SARAN & MR ARAVIND KUMAR, JJ. For the Appellant :Sri K .....

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ational marketing, publicity and sales / reservation related services provided by it) without deducting tax at source under Section 195 of the Income Tax Act. Prior to that also, for the earlier assessment years, no such deduction was made and the assessee had applied to the Assessing Officer for issuance of No Objection Certificates for making remittances for marketing, publicity and reservation, without deduction of tax at source for the reason that Sheraton had n o permanent establishment in .....

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assessed to tax in Delhi. It was only after the Assessing Officer at Delhi h ad assessed Sheraton by holding that it is liable to pay tax on such income, that proceedings for non-deduction of tax at source was initiated against the respondent/assesee and, by order dated 31.7.2001 passed by the Assessing Officer, it came to be held that respondent/assessee is an assessee in default and held that amount paid by respondent/assesee to Sheraton (which is a Non Resident) as royalty payment and as such .....

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s are filed by the Revenue. ITA 477/200 9 was admitted on 14.7.2010 and ITA 478/2009 was admitted on 30.6.201 0 on the following substantial questions of law: 1 Whether the Tribunal was correct in holding that the income earned by M/s Sheraton International, USA in India was not liable for deduction of TDS u/s 195 r/w S.197 of the Act, in respect of payments made by the assessee as they did not have a permanent establishing in India as per S.9 r/w its explanation and consequently provisions of S .....

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K V Aravind Kumar, learned counsel for the appellant as well as Sri Rupesh Jain along with Sri Prashant Kumar learned counsel for the respondent assessee and have perused the record. The undisputed facts of these appeals are that though the Assessing Officer of Sheraton at Delhi had held that such payments which were made by the assessee/respondent to Sheraton were liable to payment of tax on the basis of which proceedings were initiated against the respondent/assessee, the said order of the As .....

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income or royalty or fee for technical service and said issue has been settled by the Delhi High Court in the case of Director of Income Tax Vs Sheraton International Inc - (2009) 313 ITR 267 and it has been held that such income would be business income not liable for payment of tax under the Double Taxation Avoidance Agreement ( DTAA). Since the recipient (Sheraton) of payment made by the respondent/assessee itself has been held not liable for payment of tax, then question of holding that resp .....

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Sheraton would be chargeable to tax at the hands of Sheraton as it amounts to royalty. It is submitted by Sri K V Aravind, learned counsel for the appellant that amount paid by the respondent/assessee to Sheraton would be royalty under the provisions of S.9(1)(vi) of the Income Tax Act as has been held by this Court in the case of Synopis International (supra) and as such, respondent/assessee was required to de duct tax at source before making payment to Sheraton. Be that as it m ay, we are not .....

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