Six Continents Hotels Vs DCIT (ITAT Delhi)
ITAT Delhi Deletes ₹25.70 Cr FTS/FIS Additions- Marketing & Reservation Receipts Not FTS: Tribunal Follows Consistency – Travel Agent Commission is Not Technical Service:
Assessee, a tax resident of USA & part of the InterContinental Hotel Group (IHG), had provided marketing, distribution marketing, frequency marketing programme (IHG Rewards) & SCHI facility services to IHG India. It also received travel agent commission from Indian hotels. AO, while framing assessment u/s 143(3) r.w.s. 144C(13) dated 26.11.2024, treated ₹24,07,02,009/- received from IHG India as Fee for Technical Services (FTS) u/s 9(1)(vii) & Fee for Included Services (FIS) under Article 12(4)(a) of the India-USA DTAA. In addition, the AO treated ₹1,63,44,518/- earned as TACP as FTS/FIS.
On appeal, Tribunal observed that the issue of taxability of marketing & reservation receipts is a recurring matter in Assessee’s own case since AY 1997-98. Tribunal orders for AYs 1997-98, 2003-04, 2004-05, 2005-06, 2012-13 to 2015-16, 2016-17, 2020-21 & 2021-22 have consistently held that such receipts are not taxable as royalty/FTS/FIS either under domestic provisions or under Article 12 of India-USA DTAA. The Revenue accepted many of these decisions & failed to bring any material change in facts for the impugned year. Applying the principle of consistency, Tribunal deleted the addition of ₹24.07 crores.
