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TMI Blog2015 (8) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... n India, the proceedings in question had been initiated against the respondent assessee herein. However, once the said order of the Assessing Officer itself has been set aside by the Delhi High Court, the very foundation of initiating proceedings against the respondent asses see disappears and once the foundation goes, the structure cannot remain, i.e., proceedings against the respondent assessee cannot go on. Tribunal was correct in holding that the income earned by M/s Sheraton International, USA in India was not liable for deduction of TDS u/s 195 r/w S.197 of the Act, in respect of payments made by the assessee as they did not have a permanent establishing in India as per S.9 r/w its explanation and consequently provisions of Ss.201( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out deduction of tax at source. This position was accepted by the Department consistently for over nine years and the re-after also, the assessee was never required to deduct tax at source . The said Sheraton International Inc., was assessed to tax in Delhi. It was only after the Assessing Officer at Delhi h ad assessed Sheraton by holding that it is liable to pay tax on such income, that proceedings for non-deduction of tax at source was initiated against the respondent/assesee and, by order dated 31.7.2001 passed by the Assessing Officer, it came to be held that respondent/assessee is an assessee in default and held that amount paid by respondent/assesee to Sheraton (which is a Non Resident) as royalty payment and as such held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aravind Kumar, learned counsel for the appellant as well as Sri Rupesh Jain along with Sri Prashant Kumar learned counsel for the respondent assessee and have perused the record. The undisputed facts of these appeals are that though the Assessing Officer of Sheraton at Delhi had held that such payments which were made by the assessee/respondent to Sheraton were liable to payment of tax on the basis of which proceedings were initiated against the respondent/assessee, the said order of the Assessing Officer was set aside by the Tribunal and affirmed by the Delhi High Court, meaning thereby that the said Sheraton was not liable for payment of tax. It cannot be disputed that under law, it is the recipient which would be chargeable to tax an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of S.9(1)(vi) of the Income Tax Act as has been held by this Court in the case of Synopis International (supra) and as such, respondent/assessee was required to de duct tax at source before making payment to Sheraton. Be that as it m ay, we are not going into the question as to in the facts and circumstances, whether such payment made would amount to royalty or not, as in this particular case, the jurisdiction to decide the said issue in the case of recipient i.e., Sheraton would be the Assessing Officer at Delhi and the Delhi High Court has already held in favour of recipient Sheraton that Sheraton would not be liable to pay tax since it is a business income and on account of Sheraton not having permanent establishment in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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