DCIT (INTERNATIONAL TAXATION),CIRCLE-3(1)(2), NEW DELHI vs. M/S. STARWOOD HOTELS & RESORTS WORLDWIDE INC.,, NOIDA

ORDER

PER SUCHITRA KAMBLE, JM

M/s Starwood Hotels and Resorts Worldwide Inc. i.e. the assessee 3.

Company is incorporated in USA and carries on the business of providing various centralized services to the hotels in several countries across the world. During the year under consideration, the appellant had provided worldwide marketing and advertising services of the hotels through Starwood’s worldwide system of sales, advertising, promotion, public relations and reservations in the usual course of its business to some hotels owned/managed by the Indian companies, all such services are provided from outside India. The assessee company has agreed to provide the following services to various hotels operating in India. The range of these services have been broadly classified as under:- � Sales & Marketing � Loyalty Programs � Reservations Service � Technological Services � Operational Services � Training Programs/Human Resource The above services, according to the assessee company, were provided by the assessee company outside India and the income was received in the form of marketing fees, and fees for 'Frequent Flier Program (FTP), and 'Starwood Preferred Guest' (SPG). The assessee company does not have a P.E. in India. The said fact has not been disputed by the Assessing officer. As per the contentions of the assessee company before the Assessing Officer, the assessee company submitted that the revenue derived by it is in the nature of business profits as defined in Article 7 of the Double Taxation Avoidance Agreement between India and the USA. The Assessing Officer held that the assessee company had received income from fees from technical services as per provision of both DTAA and section 115A of the Income Tax Act, 1961. The Assessing Officer relying on the assessment order of group concern i.e. M/s Sheraton International Inc. wherein the similar payments were also held to be covered by the definition of 'fees for technical services' as DTAA and as per Explanation 2 of section 9(l)(vii)of the Act, being a consideration for the rendering of technical, managerial and consultancy services. The revenues received from rendering services of advertisement, networking and promotion was also held to be taxable as fees for technical services.

6. The Ld. DR submitted that there are no distinguishing facts in the present Assessment Year from the decision of the Hon’ble Delhi High Court and the Tribunal’s decision in assessee’s case. The Ld. DR relied upon the assessment order.

7. We have heard both the parties and perused the material available on record. It is pertinent to note that Revenue does not dispute the facts of the present assessment year is different that the facts discussed in assessee’s own case by the Hon'ble High Court as well as by the Tribunal in A.Y. 2013-14 (ITA No. 5142/Del/2016 order dated 18.11.2019). The Tribunal held as under:-

5. Revenue does not dispute the fact of the Hon'ble jurisdictional High Court in assessee's own case reported in Director of Income Tax vs.

Sheraton International Inc (2009) 313 ITR 267 (Delhi) took the view that the payments for advertising, publicity and the sales promotion services rendered by the assessee, a company incorporated and tax resident in USA to Indian company, was advisement, publicity and sales promotion keeping in mind the mutual interests and in the context, the use of trademark, trade name etc. and other enumerated services referred to in the agreement with the assessee were incidental to main services and, therefore, the payments received were neither in the nature of royalty under section 9(1)(vi) of the Act, Explanation 2, nor in the nature of 'Fee for Technical Services' (FTS) under section 9(1)(vii) of the Act, Explanation 2, but business income and assessee not having any PE in India such business income was not taxable in India.

Since, the Ld. DR did not distinguish the facts of the case for the present assessment year from that of the earlier assessment year, there is no need to interfere with the findings of the CIT(A). The appeal of the Revenue is dismissed.