Case Law Details
Shangri-La International Hotel Management Pte Vs ACIT (ITAT Delhi)
The next common issue arising for consideration is taxability of reimbursement of expenses as FTS both under the provisions of the Act as well as India-Singapore DTAA. As could be seen from the draft assessment order, alleging that the assessee did not provide the break up of reimbursement and copy of bank statement the Assessing Officer treated the reimbursement of expenses as FTS. Though, the assessee raised objection before learned Dispute Resolution Panel against the aforesaid decision of the Assessing Officer, however, without giving any independent finding, learned Dispute Resolution Panel has rejected the objection of the assessee by applying the same reasoning on which the addition of marketing and reservation receipts was upheld.
We have considered rival submissions and perused material on record.
As could be seen from the facts on record, the reimbursement of cost, frequent flyer program and other miscellaneous expenses, such as, courier charges, media monitoring charges, e-mail campaign charges and translation of web site to local language of hotels etc. As could be seen from the nature of services, these are routine services without involving any technical or strategic expertise or involvement of any advisory services. Further, these services are neither ancillary and subsidiary to royalty nor there is anything on record to demonstrate that while rendering such services, the assessee had made available any technical knowledge, know-how, skill etc. to the third party Indian hotels. It is further observed that the recipients are receiving such services on a continuous basis from year to year, which shows that the recipients are not capable of independently performing such services without the aid and assistance of the assessee.
Thus, in our considered opinion, the reimbursement of cost received by the assessee, cannot be treated as FTS under Article 12(4) of the India-Singapore DTAA, at least, based on the facts involved in the impugned assessment years. Therefore, we direct the Assessing Officer to delete the additions.
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