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TMI Blog2015 (6) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... ’. The title of the said agreement is for management of the hotels and the terms and conditions under which the manager on behalf of owner will manage the hotel. Here, neither the owner nor the manager has any reference to the assessee. Even clause 9.5, it is seen that the same only provides that the owner will pay to SC Hotels & Resorts (India) Pte. Ltd. the license fees. Here again, there is no reference of the assessee. Further nothing has been brought on record that there was any kind of correspondence or a letter between the assessee and Today Hotels Private Limited, setting out the terms and conditions for the payment of royalty. Under these facts, it cannot be held that the payment of royalty has been made “in pursuance of an agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t royalty received by the appellant from Today Hotels Private Limited was not in pursuance to the agreement dated 17 January 2006 entered with Today Hotels Private Limited. 3. On the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the action of the AO of levying interest under section 234D of the Income Tax Act, 1961 ( the Act ). 2. The brief facts of the case are that, the assessee is a company incorporated in United States and is a tax resident of USA. It holds registered trade mark of `Holiday Inn and `Crowne Plaza and had entered into license agreements with various Indian hotels, allowing them to use of these trademarks in their business. Apart from that, these hotels are provided with various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational Resorts Limited 68,28,703 Prior to 1 st June, 2005 22.66% 15% 15% 6. Hotel Marina 27,92,174 Prior to 1 st June, 2005 22.66% 15% 15% 7. Today Hotels Pvt.Ltd. 1,08,60,173 17th January 2006 11.33% 15% 15% Total Royalty Income 3,38,85,436 2.1 The assessee s returned income of ₹ 3,38,85, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the contentions of the Assessing Officer and held that, firstly, the assessee is not able to produce any agreement between itself and Today Hotels Private Limited; secondly, the assessee is not a party to the agreement, and; lastly, the assessee has not demonstrated that income from royalty was in pursuance of an agreement entered into subsequent to 1st June, 2005, as stipulated in section 115A(b)(AA). Accordingly, he confirmed the action of the Assessing Officer. 4. Before us, the learned Counsel submitted that it is an undisputed fact that the assessee is a brand owner and its income has accrued from Today Hotels Private Limited for giving the license to use the brand Crowne Plaza . He pointed out that in the `Management Agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinite terms and conditions in the form of a written agreement. Admittedly, in the `Management Agreement dated 17th January, 2006, the assessee is not a party to such an agreement as the same is between SC Hotels Resorts (India) Pte. Ltd., Inter Continental Hotels Group and Today Hotels Private Limited. There is no reference of the assessee at all in the said agreement. Thus, the order of the CIT(A) should be confirmed. 6. We have heard the rival submissions and perused the relevant material placed on record. The sole dispute before us is, whether the royalty income should be taxed at the rate of 11.33% or at the rate of 15%, as per the DTAA. Section 115A(b)(AA) as it stood prior to 01.04.2014 read as under:- The amount of income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has any reference to the assessee. Even clause 9.5, as referred to by the learned Counsel, it is seen that the same only provides that the owner will pay to SC Hotels Resorts (India) Pte. Ltd. the license fees. Here again, there is no reference of the assessee. Further nothing has been brought on record that there was any kind of correspondence or a letter between the assessee and Today Hotels Private Limited, setting out the terms and conditions for the payment of royalty. Under these facts, it cannot be held that the payment of royalty has been made in pursuance of an agreement . Once there is a clear cut provision under the statute, which mandates certain terms and conditions for applying a beneficial rate, then the same has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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