TMI Blog2022 (10) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... ments received were thus, rightly held by the Tribunal, to be in the nature of business income. And since the assessee admittedly does not have a permanent establishment under the article 7 of the D TAA 'business income' received by the assessee cannot be brought to tax in India. The findings of the Tribunal on this account cannot be faulted. Appeal of assessee allowed. - ITA No. 4772/Del./2019 ITA No. 4773/Del./2019 ITA No. 4774/Del./2019 - - - Dated:- 23-9-2022 - SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER And SHRI KUL BHARAT , JUDICIAL MEMBER ASSESSEE BY : Shri Amit Arora , CA Shri Vishal Misra , CA REVENUE BY : Shri Sanjay Kumar , Sr. DR ORDER PER SHAMIM YAHYA , ACCOUNTANT MEMBER : These are appeals by the assessee against the respective orders of the ld. CIT (Appeals) for the concerned assessment years. 2. Since the issues are common and connected and the appeals were heard together, these are being disposed off by this common order. 3. For the sake of reference, we are referring to grounds of appeal for AY 2013-14 :- The Appellant prefers the present appeal on the below mentioned grounds which are mutually exclusive and without prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs as well as that of Hon ble jurisdictional High Court. In this regard, ld. Counsel pointed out that in para 27 of the order of AO, AO himself was recognizing this aspect and claiming that this has been so assessed by him as the matter is pending before Hon ble Supreme Court. Para 27 of the AO s order reads as under :- 2.7 It is however, pertinent to mention that the afore cited judgment of the Hon'ble Delhi High Court has not been accepted by the Department and SLPs have been filed before the Hon'ble Supreme Court for all the Assessment Years 1995-96 to 2000-01. Further, the matter is already pending before the Hon'ble Supreme Court by way of Special Leave Petitions in case of Sheraton International Inc. In order to keep the issue alive, it is held that revenue received by the assessee for providing centralized services is liable to tax as FTS both under the Act and under the Treaty. Therefore the payments received by assessee in respect of such services are covered under the provisions of Article 12 of the double taxation Avoidance Agreement. 5. Thus, it is patently clear that this issue is squarely covered in favour of the assessee by ITAT decision in ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und as a matter of fact that the payments received by the assessee were neither in the nature of royalty under section 9(1)(vi) read with Explanation 2 or article 12(3) of the DTAA nor fee for technical services or fee for included services under section 9(1)(vii) read with Explanation 2 or article 12(4) of the DTAA. See observations in paragraph 85 of the impugned judgment. The relevant portion of the finding is extracted below : As such, considering all the facts of the case, the relevant provisions of the Income-tax Act, 1961, as well as that of the DTAA between India and the USA and keeping in view the legal position emanating from various judicial pronouncements discussed above, we are of the opinion that the amount received by the assessee from the Indian hotels/clients for the services rendered under the relevant agreements was not in the nature of ` royalties` within the meaning given in section 9(1)(vi) read with Explanation 2 thereto of the Income-tax Act, 1961, or as given in article 12(3) of the Indo-American DTAA. The same was also not ` fees for technical services` or ` fees for included services` as defined in section 9(1)(vi) read with Explanation 2 thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical and consultancy nature making technology available whereas the services rendered by the assessee in the present case are in the field of hotel industries and such services are in relation to advertisement, publicity and sales promotion which are not in the nature of technical and consultancy services involving making of technology available. Secondly, the interface between the computerized reservation system of the assessee and the computerized reservation system of the Indian hotels/ clients was provided to facilitate the reservation of hotel rooms by the customers worldwide as an integral part of the integrated business arrangement between the assessee and the Indian hotels/clients. This interface thus was not separable from and independent of the main integrated job undertaken by the assessee-company of rendering services in relation to marketing, publicity and sales promotion and the same, in any case, was not in the nature of technical and consultancy services making any technology available to the Indian hotels/clients in the field/area of communication through satellite or otherwise. Moreover, as pointed out by the learned counsel for the assessee before us, no communic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were not independent or separate from the main job undertaken by the assessee and since the entire amount towards the service had been held by the Tribunal as business income, the contributions received by the assessee towards the said programmes, i.e., SCI and FFP were also in the nature of business income. It thus rejected the contention of the Revenue that these contributions were in the nature of included services under article 12(4)(a) of the DTAA (see paragraph 114). 13. In view of the aforesaid findings of the Tribunal that the main service rendered by the assessee to its clients-hotels was advertisement, publicity and sales promotion keeping in mind their mutual interest and, in that context, the use of trade mark, trade name or the stylized S or other enumerated services referred to in the agreement with the assessee were incidental to the said main service, it rightly concluded, in our view, that the payments received were neither in the nature of royalty under section 9(1)(vi) read with Explanation 2 or in the nature of fee for technical services under section 9(1)(vii) read with Explanation 2 or taxable under article 12 of the DTAA. The payments received were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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