Case Number: ITA 1599/DEL/2020
Appellant: Starwood Development Consulting Services (AP) Pte Ltd, Noida
Respondent: ACIT Circle-3(1)(2) International Taxation, New Delhi
Assessment Year: 2016-17
Case Filed On: 2020-09-16
Order Type: Final Tribunal Order
Date of Order: 2022-06-24
Pronounced On: 2022-06-24
In this case, Starwood Development Consulting Services (AP) Pte Ltd (the appellant) filed an appeal against the addition made by the Assistant Commissioner of Income Tax (ACIT) Circle-3(1)(2) International Taxation, New Delhi under Section 69A of the Income Tax Act, 1961. The addition pertained to the assessment year 2016-17, where the appellant was taxed for the fees received for hotel design-related consultancy services rendered in India.
The appellant raised the following grounds of appeal:
The case was heard by Shri Sanjay Garg, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member of the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘D’ on 21.06.2022. The order was pronounced on 24.06.2022.
The learned counsel for the appellant, Shri Amit Arora and Shri Vishal Misra, argued that the services rendered do not qualify as FTS under Article 12 of the DTAA between India and Singapore. They also contended that the CIT(A) based the decision on incorrect facts by confusing the nature of services provided by the appellant with those of its affiliates, leading to an erroneous taxability assessment.
On the other hand, the Revenue, represented by Ms. Naina Soin Kapil, CIT-DR, supported the orders of the lower authorities.
After hearing the submissions and perusing the material on record, the Tribunal found merit in the appellant’s arguments. The Tribunal observed that the CIT(A) adjudicated the appeal based on incorrect facts, confusing the nature of services provided by the appellant with those of its affiliates. This led to an erroneous conclusion regarding the taxability of the fees under Article 12 of the DTAA between India and Singapore.
The Tribunal held that the incorrect assessment of the nature of services had a material impact on the taxability determination. Therefore, the Tribunal remitted the matter back to the CIT(A) for fresh adjudication based on the correct facts and in accordance with the law.
The Tribunal directed the CIT(A) to give proper opportunity to the appellant to present all relevant facts, evidences, and explanations necessary for the objective determination of the issue.
The appeal of the appellant was allowed for statistical purposes.
This case highlights the importance of correctly assessing the nature of services rendered by non-resident entities under DTAA provisions. The judgment underscores the need for accurate facts to determine the taxability of fees for technical services under Article 12 of the DTAA between India and Singapore.
The case serves as a reminder for taxpayers and tax authorities to ensure that assessments are based on precise and relevant facts to avoid erroneous conclusions.
Order pronounced in the open court on this the 24th day of June, 2022.
Judicial Member: (Sanjay Garg)
Accountant Member: (Pradip Kumar Kedia)
Dated: 24/06/2022
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