2022 (11) TMI 1509 - HC - Income Tax

Accrual of income in India - Payments received by the Assessee from its Indian Customers on account of Centralized Services viz. sales and marketing, loyalty programs, reservation service, technological service, operational services and training programs/human resources do not constitute Fee for Technical Services as defined u/s 9(1)(vii) or 'Fee for included services as defined under Articles 12(4) (a) of the Indo-US DTAA. HELD THAT - ITAT has allowed the appeals of the Assessees following the judgement of this Court in Sheraton International Inc 2009 (1) TMI 27 - DELHI HIGH COURT He, however, states that the said decision of this Court has not been accepted by the Revenue and an appeal has been preferred against the same, which is pending adjudication before the Supreme Court. Revenue has not brought anything on record to distinguish the facts of present case with the facts involved in Sheraton International Inc. (supra). Admittedly, this Court in Sheraton International Inc. (supra) has decided the issue involved in the present appeals in favour of the Assessee. Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed and Others vs. State of Kerala and Another 2000 (7) TMI 67 - SUPREME COURT (LB) and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras 1992 (4) TMI 183 - SUPREME COURT the present appeals are dismissed being covered by the judgment passed by the learned predecessor Division Bench in Sheraton International Inc. (supra). However, it is clarified that the order passed in the present appeals shall abide by the final decision of the Supreme Court in SHERATON INTERNATIONAL INC. 2010 (4) TMI 1234 - SC ORDER

Summary

The High Court allowed exemption in CM APPL. 47203/2022 in ITA 435/2022. The Income Tax Appeals challenge the ITAT's order on payments received by the Assessee from Indian Customers. The ITAT's decision was based on a previous judgment in Director of Income Tax v. Sheraton International Inc. The Revenue failed to distinguish the present case from the Sheraton International Inc. case. The Court dismissed the appeals in favor of the Assessee, citing the pending Supreme Court adjudication. The order in the present appeals will abide by the final decision of the Supreme Court in Civil Appeal No. 3094/2010.