RADISSON HOTELS INTERNATIONAL INCORPORATED,UNITED STATE OF AMERICA vs. ASSISTANT/ DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI

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ITITA 1790/DEL/2025Status: DisposedITAT Delhi31 October 2025AY 2022-236 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the solitary issue for consideration was the taxability of amounts received by the assessee towards marketing fee, Radisson Rewards, Reservation Charges, IT/Technology Fee, etc., from Indian Hotels as FTS/FIS. The Tribunal noted this was a legacy issue that had been consistently decided in favor of the assessee in its own case for preceding assessment years. It referred to its earlier decision in ITA No. 9265/Del/2019 (AY 2016-17), which was upheld by the Hon'ble Delhi High Court. Subsequent decisions for AY 2018-19, 2019-20, and 2021-22 also ruled in favor of the assessee, with the Delhi High Court dismissing Revenue's appeals. The Tribunal observed that the centralized service income significantly exceeded royalty income, reversing the Revenue's contention that the former was ancillary to the latter. Finding no contrary material from the Revenue and no reason to deviate from the consistent view, the Tribunal directed the deletion of the addition of Rs. 7,48,70,639/- for parity of reasons. The impugned order was set aside.

What were the facts?

The assessee, Radisson Hotels International Inc., a US-based company, appealed against an assessment order for AY 2022-23. The Assessing Officer (AO) and Dispute Resolution Panel (DRP) treated receipts of Rs. 7,48,70,639/- from Indian hotels as Fee for Technical Services (FTS) or Fee for Included Services (FIS) under Section 9(1)(vii) of the Income Tax Act and Article 12 of the India-US DTAA. The assessee claimed these receipts for marketing, reservations, and IT services were business receipts not taxable in India due to the absence of a Permanent Establishment. The DRP's directions were based on its findings for AY 2018-19, stating the facts were identical. The assessee's appeal hinges on previous ITAT and Delhi High Court rulings in its own case for prior assessment years.

What were the issues?

1. Whether the receipts of Rs. 7,48,70,639/- by the assessee from Indian hotels, categorized as Marketing contribution/Fees, Radisson Rewards, Reservation Charges/Fees, 3rd Party Reservations Fees, and IT/Technology Fee, are taxable in India as Fee for Technical Services (FTS) or Fee for Included Services (FIS) under Section 9(1)(vii) of the Income Tax Act, 1961, and Article 12 of the India-USA DTAA, for Assessment Year 2022-23? Assessee's contentions: The assessee argued that the AO and DRP erred in treating the receipts as FTS/FIS. They relied on the Tribunal's decisions in ITA Nos. 2222 & 2223/Del/2022 (AY 2018-19 & 2019-20) and ITA No. 3839/Del/2023 (AY 2021-22), which held similar receipts as non-taxable FTS/FIS. These Tribunal orders were upheld by the Hon'ble Delhi High Court in appeals filed by the Revenue. The assessee highlighted that the issue is identical to those decided in its favor in preceding assessment years. Revenue's contentions: The Revenue supported the impugned assessment order. However, the CIT-DR fairly conceded that the issue had been considered by the Tribunal and the Hon'ble Delhi High Court in the assessee's own case for preceding assessment years.

Which sections of the Income-tax Act were involved?

Section 9(1)(vii),Section 143(3),Section 144C(13)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “D”, DELHI

Hearing: 05/08/2025Pronounced: 31/10/2025

आयकर अपीलीय अिधकरण िद�ी पीठ “डी”, िद�ी �ी िवकास अव�थी, �ाियक सद� एवं �ी �जेश कुमार िसंह, लेखाकार सद� के सम� IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER आअसं.1790/िद�ी/2025(िन.व. 2022-23) IT(IT)A No.1790/DEL/2025 (A.Y.2022-23) Radisson Hotels International Incorporated, 1601, Utica Avenue South, Suite 700, St. Louis Park, MN-55416, United State of America, USA 999999 ...... अपीलाथ�/Appellant PAN: AAECR-7546-M बनाम Vs. Assistant/Deputy Commissioner of Income-Tax, International Taxation 3(1)(1), Civic Centre, .....�ितवादी/Respondent Minto Road, New Delhi 110002 अपीलाथ� �ारा/ Appellant by: Shri Ravi Kumar & Ms. Parul Garg, Chartered Accountants �ितवादी�ारा/Respondent by: Shri M.S Nethrapal, CIT-DR सुनवाई क� ितिथ/ Date of hearing : 05/08/2025 घोषणा क� ितिथ/ Date of pronouncement : 31/10/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the assessment order dated 27.01.2025 passed u/s. 143(3) r.w.s 144C(13) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), for assessment year 2022-23. 2. Brief facts of the case as emanating from records are: Radisson Hotels International Inc. is a company incorporated in the United States of America (USA) and is a tax resident of USA. It operates, manages and franchises hotels and

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resorts in North America, Latin America, the Asia-Pacific, Europe, the Middle East, and Africa. During the previous year relevant to AY 2022-23, the assessee received payments of Rs.7,48,70,639/- on account of Marketing contribution/ Fees, Radisson Rewards (FKA Club Carlson), Reservation Charges/Fees, 3rd Party Reservations Fees, IT/Technology Fee and Others (Fee look to Book, Miscellaneous including Info security Program Support, and Learning Link, etc.), which was claimed as non- taxable as the same are business receipt. In absence of Permanent Establish (PE) in India, these receipts were not offered to tax in the Return of Income. In the draft assessment order, the AO held that the receipts of the assessee are for services ancillary and subsidiary to granting licenses of its brand name to the Indian Hotels. Therefore, such income is in the nature of Fee for technical Services (FTS) and thus taxable in India under Section 9(1)(vii) of the Act and Fees for Included Services (FIS) as per the provisions of Article 12 of India- US DTAA. The DRP vide its directions dated 17.12.2024 dismissed objections of the assessee following directions of Panel for AY 2018-19. The DRP records that the legal and factual matrix of the case in the impugned assessment year is same as that of in AY 2018-19. 3. Shri Ravi Kumar, AR of the assessee submits that the Assessing Officer (AO) and Dispute Resolution Panel (DRP) have erred in making addition of Rs.7,48,70,639/- holding the amount received by the assessee on account of Marketing Fee Reservation Charges etc. is in nature of as Fee for Technical Services/ Fee for Included Services in light of Article 12 of India-USA DTAA. He pointed that the similar additions were made in the preceding assessment years. The Tribunal in appeal of the assessee in ITA No.2222 & 2223/Del/2022 for AY

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2018-19 and 2019-20 decided on 31.05.2023 while dealing with identical issue held that the receipts from the centralized services are not taxable as FTS/FIS under Article 12(4)(A) of India-USA DTAA. Thereafter, the Revenue assailed the said order of Tribunal in appeal before the Hon’ble Delhi High Court, the Hon’ble High Court dismissed appeal of the Revenue holding that no substantial question of law arises for consideration. Thereafter, in AY 2020-21 similar addition was made by the AO, the Tribunal in ITA No. 2382/Del/2023 for AY 2020-21 decided on 03.05.2019 following earlier order of the Coordinate Bench and the judgment of Hon’ble Delhi High Court for AY 2018-19 and 2019-20 allowed appeal of the assessee. The Revenue again carried the issue in appeal before the Hon’ble High Court assailing the order of Tribunal in ITA No.566 of 2024. The Hon’ble Delhi High Court vide order dated 11.12.2024 dismissed appeal of the Revenue for AY 2020- 21. Again, in AY 2021-22 the Revenue made the addition holding that the amounts received by the assessee are in the nature of FTS/FIS. The Tribunal in ITA No. 3839/Del/2023 for AY 2021-22 decided on 22.08.2024 reversed findings of the AO and decided the issue in favour of the assessee. Thus, the issue in present appeal is identical to the one adjudicated by the Tribunal and Hon’ble Delhi High Court in the preceding assessment years in assessee’s own case have consistently decided the issue in favour of assessee. 4. Shri M.S Nethrapal, representing the department supported the impugned assessment order. However, the ld. DR fairly stated that the solitary issue raised in appeal by the assessee has been considered by the Tribunal and the Hon’ble Delhi High Court in assessee’s own case in the preceding assessment years.

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5.

Both sides heard, orders of the authorities below examined. The solitary issue for consideration in the present appeal by the assessee is taxability of the amount received by the assessee towards marketing fee, Radisson Rewards, Reservation Charges, IT/Technology Fee, etc. from the Indian Hotels as FTS/FIS. We find this is a legacy issue and was first examined by the Tribunal in assessee’s own case in ITA No.9265/Del/2019 for AY 2016-17. The Tribunal after examining the issue threadbare held that the service fee received by the assessee is not in the nature of FTS/FIS under Article 12(4)(a), hence, is not taxable in India and deleted the additions. The said order of the Tribunal was assailed by the Revenue in appeal before the Hon’ble High Court in ITA No.441 of 2022 in the case titled CIT vs. Radisson Hotel Interaction Incorporated. The Hon’ble High Court vide judgment 10.11.2022 dismissed appeal of the Revenue, as there was no substantial question of law for consideration. 6. Thereafter, identical issue cropped up in AY 2018-19 and 2019-20, the assessee assailed additions before the Tribunal in ITA No.2222 and 2223/Del/2022 (supra). Following earlier order of Tribunal dated 29.09.2022in assessee’s own case for AY 2016-17 the addition was deleted. The relevant excerpts from the order of the Tribunal in ITA No. 2222 & 2223/Del/2022 (supra) reads as under:- “9. It is observed, the aforesaid decision of the Tribunal has been upheld by the Hon’ble jurisdictional High Court while dismissing the appeals filed by the Revenue. In fact, in case of Country Inn and Suits, one of the appellants before us, the Tribunal in assessment year 2018-19 has decided the issue in ITA No. 1001/Del/2022 dated 31.10.2022 in favour of the assessee by following its earlier order passed for the assessment year 2016-17. Thus, in our considered opinion, the issue stands squarely settled in favour of the assessees by various decisions of

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the Tribunal and Hon’ble jurisdictional High Court, not only in case of present assessees, but in respect of various other assessees. 10. At this stage, we must observe, the Revenue Authorities have treated the fees received from provision of centralised services as FTS/FIS under Article 12(4)(a) of India-USA treaty on the reasoning that the services rendered are ancillary and incidental to license to use brand name/trademark, resulting in royalty income. If we examine the relevant facts, it will be demonstrable that the income earned from centralised services far exceeds the royalty income. For ease of reference, the income earned from two sources in different assessment years are reproduced hereunder: Assessment Year Name of the Royalty Income Centralized service assessee (Rs.) income (Rs.) 2018-19 Radisson 11,93,23,993 17,14,36,352 2019-20 Radisson 12,03,86,875 22,94,72,647 2019-20 Country Inn 2,00,00,261 3,52,77,122

11.

Thus, the aforesaid facts and figures clearly indicate that the centralised services income, by a reasonable measure, outstrips the royalty income. Thus, rather than centralised service income being ancillary and incidental to royalty income, in reality, it is a reverse situation. In such a scenario, it cannot be said that centralised service income, being ancillary and incidental to royalty income, would fall under Article 12(4)(a) of the Tax Treaty. 12. In view of our detailed analysis above, we hold that the receipts from centralised service income are not taxable as FTS/FIS under Article 12(4)(a) of India-USA DTAA. Accordingly, we direct the Assessing Officer to delete the additions. 13. In the results, appeals are allowed as indicated above.” [Emphasized by us] 7. The said order of the Tribunal was upheld by the Hon’ble Delhi High Court in ITA No.5654 of 2024 vide order dated 11.12.2024. In the subsequent

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assessment years the Tribunal and the Hon’ble High Court have taken consistent view holding that the service fee received by the assessee is not in the nature of FTS/FIS. No contrary material has been brought before us by the Revenue. We see no reason to take a different view in the impugned assessment year. Accordingly, the addition of Rs.7,48,70,639/- is directed to be deleted for parity of reasons. 8. In the result, impugned order is set aside and appeal of the assessee is allowed. Order pronounced in the open court on Friday the 31st day of October, 2025. Sd/- Sd/- (BRAJESH KUMAR SINGH) (VIKAS AWASTHY) लेखाकार सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER िद�ी / Delhi, �दनांक/Dated 31/10/2025 NV/- �ितिलिप अ�ेिषतCopy of the Order forwarded to : अपीलाथ�/The Appellant , 1. 2. �ितवादी/ The Respondent. 3. The PCIT िवभागीय �ितिनिध, आय.अपी.अिध., िद�ी /DR, ITAT, िद�ी 4. गाड� फाइल/Guard file. 5. BY ORDER,

//True Copy// (Asstt. Registrar) ITAT, DELHI

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