TMI Blog2022 (7) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Paras Salva a / w Shri Pratik Poddar Revenue by : Shri Milind Chavan ORDER PER SANDEEP SINGH KARHAIL , J. M. The present appeal has been filed by the assessee challenging the impugned order dated 28/02/2019 passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals) 56, Mumbai [ learned CIT(A)‟], for the assessment year 2009 10. 2. In its appeal, assessee has raised following grounds: Based on the facts and circumstances of the case, International Hotel Licensing Company SARL (hereinafter referred to as THLC or the Appellant) respectfully craves leave to prefer an appeal under section 253(1) of the Income-tax Act, 1961 (the Act) against the order passed by the Commissioner of Income-tax (Appeals) 35 CIT(A) dated February 28, 2019 under section 250 of the Act on the following grounds, which are independent and without prejudice to each other 1. On the facts and circumstances of the case and in law, the CIT(A) erred in determining the total income of the Appellant at Rs 9,63,05,200. 2. On the facts and circumstances of the case and in law, the CIT(A) erred in holding that the marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PA‟). 3. The brief facts of the case, as emanating from the record, are: The the assessee‟s attacks resident of Luxembourg. For the year under consideration assessee filed its return of income on 31/03/2009 declaring total taxable income at Rs. 9,63,05,202. During the year, the assessee has received sales and marketing fees from Palm Grove Beach Hotels Pvt. Ltd., Chatel Hotels Ltd. and Viceroy Hotel Ltd., as per the agreement is entered there with. 4. The Assessing Officer vide order dated 21/12/2011 passed under section 143(3) of the Act observed that Marriott is a leading worldwide hospitality group. Under the IMPPA, assessee is to provide for advertising space in magazines, newspapers and other printing media, advertising slots on radio, television, and other electronic media. Further, the marketing and business promotion expenditure is intended not only for the benefit of Indian Hotel, but for the Marriott group as a whole. The assessee is in the business of promoting enterprises and is conducting international advertising, marketing and sales programme for Marriott chain of hotels to promote them in foreign markets. Further, the Assessing Officer noted that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directories and material; Advertising, marketing, promotional, public relations, revenue management and sales campaigns; Market research, customer surveys; Conducting frequent traveler program. The services include Purchase of advertising space in magazines, newspapers and other similar media; Purchase of advertising and publication of pamphlets, brochures, directories and other materials; Printing and publication of pamphlets, brochures, directories and other materials; Marketing, promotional and public relations campaigns; Market research and development and marketing products; Conducting frequent traveler program. 3. Nature of receipts Receipts from hotel owners: Contribution for undertaking international marketing activities as a percentage of gross revenue of the respective hotels; and Reimbursements of cost in relation to other services on a fair and reasonable basis. Receipts from hotel owners: Contribution for undertaking international marketing activities as a percentage of gross revenue of the respective hotels; and Reimbursement of cost in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir hands but on a different person. This is not discharged, Both the owner of Marriot Brand and appellant receives sums as a lined percentage of turnover and they are related parties It therefore is imperative on part of appellant to establish any alternate person in whose hands income is to be assessed. 22. The appellant in para E states that owner of trade mark Marriot is brand owner and hence can be assessed in their hands. In letter dated 13.08.2018 addressed to appellant the following were stated. 2. Please produce (a) agreement, if any, between you (wholly owned indirect subsidiary of Marriot International Inc.) and Marriot International Inc. at time of hearing. 3. You can, if you desire, produce details concerning Marriot International Inc. like there Indian Income Tax Rules return of income, any commission or other payment by you to M/s. Marriot International Inc etc. 4. Decision of our Hon ITAT in ITA No. 1996 1997/Mum./2011 dated 14.11.2015 in case of M/s Marriot International Inc. (PAN: AAECM8040K) will be discussed at time of hearing. It is keeping in view the decision of Hon. ITAT dated 14.11.2015 the posers were made in response, the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon by Appellant are ones that has lost relevance. 25. In paragraph C2 Appellant states about approval al Government of India for making payment. The matter before me is not relating to approval but decision whether the ms are table in hands of Appellant. The argument is held as not valid. 26. The payment to Appellant is tagged with the payment of royalty for licensed use of Marriot Brands. In submission filed on 22.06.2016, paragraph 1.2 reads as under: 1.2 At a global level, IHLC inter alia undertakes advertising, marketing and promotion activities of a central/group basis. Such activities are undertaken on behalf of, and for the benefit of the hotel which have been licensed the use of Marriot brands. Thus the receipt in hands of Appellant is tagged with receipt for use of Marriot brand, the owner of which in this case is a different entity. In hands of owner of Marriot brand, the same is taxable as Royalty. There is no logic or reason to hold the receipt distinct and separate, especially when both are paid as a fixed percentage of turnover. 27. Another point emphasized by appellant is that IMPPA is non-profit making exercise. According to Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manner of what is received/receivable by the brand owner le a fixed percentage of turnover. This absorbs aspect of mutuality also, since the entwining of the transactions takes matter out of realm of mutuality. Thus the additional ground of appeal is dismissed. 30. The recipient cannot unbundle this integrated receipt and hold that certain parts of same are not taxable. All have same character and hence same treatment. Thus the argument of the appellant fails. The receipts by Appellant, unless Appellant establish that the same belongs to another person, which they have nut, is royalty to be assessed in their hands. 31. The points discussed above are in addition to reasons recorded by CIT (Appeals) in appellate order for A.Y. 2006 07 and 2008 09 (the Hon. ITAT did not get into decision of CIT(Appeals) for there two A.Ys, but straight dealt with additional ground of appeal) while dismissing the appeal. This is also relied upon. 32. Coming to judicial precedence we have AAR ruling in case of appellant itself with decision of jurisdictional ITAT on identical facts and circumstances. Section 245S of Income Tax Act 1961 reads as under: Applicability of advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not made for the use of any copyright, patent, trademark, etc rendering any services in connection with the use of any patent, trademark, etc. Further, the payment also does not qualify as a consideration for information concerning industrial, commercial scientific experience. 7. On the other hand, learned Departmental Representative by vehemently relying upon the orders passed by the lower authorities submitted that recently coordinate bench of the Tribunal in Marriott International Inc. Vs DCIT, in ITAs No. 3232/Mum./2015 to 3235/Mum./ 2015, vide order dated 06/05/2022, has adjudicated on similar issue. 8. In a short rebuttal, learned AR submitted that even if the aforesaid decision rendered by coordinate bench of the Tribunal is applied to the present case, the payment received would not be taxable in the hands of the assessee as Royalty, since the assessee is not the owner of the Marriott brand. 9. We have considered the rival submissions and perused the material available on record. We find that coordinate bench of the Tribunal in Marriott International Inc. (supra), observed as under: 013. We have carefully considered the rival contention and perused the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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