Facts of the Case

The present appeal pertains to Assessment Year 2012–13, wherein the Revenue challenged the order dated 17.10.2019 passed by the Income Tax Appellate Tribunal.

The core issue revolved around payments received by the respondent/assessee, Sheraton International LLC, for rendering “centralized services” to its Indian customers. The Revenue contended that such receipts should be taxed in India.

Additionally, there was a delay of 300 days in re-filing the appeal, which was condoned by the Court as the respondent did not oppose the application.

Issues Involved

  1. Whether the consideration received for centralized services is taxable as:
    • Fee for Technical Services (FTS), or
    • Fee for Included Services (FIS)
  2. Applicability of provisions under the Indo-US Double Taxation Avoidance Agreement (DTAA).
  3. Whether any substantial question of law arises for consideration by the High Court.

Petitioner’s Arguments (Revenue)

  • The Revenue argued that payments received by the assessee for centralized services rendered to Indian entities should be treated as taxable income in India.
  • Such services fall within the ambit of FTS/FIS, thereby attracting taxation under the Income Tax Act as well as the DTAA.

Respondent’s Arguments (Assessee)

  • The assessee relied on earlier decisions in its own case for Assessment Year 2015–16, where identical issues were adjudicated.
  • It was submitted that the Delhi High Court had already dismissed similar appeals filed by the Revenue in ITA Nos. 434/2022 and 435/2022.
  • Therefore, the issue stood covered in favour of the assessee, and no fresh question of law arose.

Court’s Findings / Order

  • The Court noted that the same issue had already been decided in favour of the assessee in earlier years.
  • It held that no substantial question of law arises for consideration in the present appeal.
  • Accordingly, the appeal filed by the Revenue was dismissed/closed.

Important Clarification

  • The judgment reinforces that where an issue is consistently decided in earlier years, and no distinguishing facts are presented, the Court may decline to re-examine the matter.

It highlights the importance of judicial consistency in tax litigation, especially in international taxation matters involving DTAA interpretation.

Sections Involved

  • Section 9(1)(vii) of the Income Tax Act, 1961 – Income deemed to accrue or arise in India (FTS)
  • Article 12 of Indo-US DTAA – Fees for Included Services (FIS)
  • Principles governing taxability of cross-border service income       

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60808052023ITA2652023_163016.pdf

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