Receipts from Indian Hotel Owners towards Centralized Services provided by Westin Hotel Management are not taxable in India as FTS/FIS: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi bench held that receipts from Indian Hotel Owners towards the centralized services provided by Westin Hotel Management  are not taxable in India as Fee for Technical Service.

Assessee, Westin Hotel Management  is a non-resident Limited Liability Partnership (‘LLP’) incorporated in the United States of America (‘USA’) and is a resident of that country.  assessee is engaged in the business of providing various services to hotels in different countries across the world, including India. During the assessment proceedings AO did not assesee claim for excluding tax for receipts from Indian Hotel Owners towards the centralized services are not taxable in India as Fee for Technical Service.

Aggrieved by the order assesee filed an appeal  before the CIT(A), who allowed  the appeal of the assessee  and held that the receipts from provisions of centralized services are not taxable in India as FTS/FIS. Thereafter the revenue filed an appeal against the CIT(A) order before the tribunal.

Amit Arora, counsel for assessee during the proceedings argued that receipts from Indian Hotel owners towards centralized services, are in the nature of business profit and in absence of Permanent Establishment (‘PE’) in India .

Vizay B. Vasanta, Counsel for revenue supported the decision of the assessing officer.

It was observed by the tribunal that  assessee’s own case in  for assessment year 2015-16, the Tribunalheld that they cannot be treated as FTS/FIS, either under the provisions of the Act or under the treaty provisions.

After reviewing the facts and circumstances  the two member bench of Dr. B.R.R. Kumar (Accountant Member) and   Saktijit Dey (Vice-President) relied upon the decision of Delhi High Court in case of Director of Income-tax vs. Sheraton International Inc. and observed that revenue received by the assessee for providing centralized services is not in the nature of  Fee for Technical Services (FTS) under Section 9(I)(vi) Explanation  of Income Tax Act,  but it is a business income. Since the assessee is not having any PE in India, its business income earned is not taxable in India.

Therefore the bench dismissed the appeal filed by the revenue.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates