Assessment Year: 2019-20
Date of Order: 31-May-2023
The case involves Radisson Hotels International Incorporated, headquartered in the USA, challenging the taxability of fees received from Indian franchise hotels for centralized services under the India-USA Double Taxation Avoidance Agreement (DTAA). The central issue was whether these fees can be considered as fees for technical services (FTS) or fees for included services (FIS) under Article 12(4)(a) of the DTAA.
The appellant, represented by Sh. Pradeep Dinodia, CA, and Ms. Deepika, CA, argued that previous judgments in similar cases should apply, which treated such fees as business income, not subject to taxation in India in the absence of a Permanent Establishment (PE). The respondent, represented by Sh. Bhuvnesh Kulshrestha, CIT-DR, supported the taxability under the DTAA.
The tribunal, after reviewing submissions and relevant case law, sided with the appellant, stating that the fees in question are not taxable under the provisions of the DTAA as FIS. The tribunal referenced the decision in the case of Sheraton International Inc, where similar fees were treated as business income.
This judgment sets a precedent for similar cases involving the taxability of fees under the DTAA, emphasizing the need for a clear demarcation of business income versus royalties or FIS.
This detailed documentation covers all aspects of the case, including background, arguments, decision, and implications, adhering to a comprehensive understanding of international tax law as applied in this significant tribunal decision.
Radisson Hotels International vs. ACIT, International Taxation, Delhi – ITA 2223/DEL/2022
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform