CIT Vs Shangri-La International Hotel Management Pte Ltd. (Delhi High Court)
Delhi High Court has dismissed appeals filed by the Commissioner of Income Tax (CIT) against Shangri-La International Hotel Management Pte Ltd., pertaining to Assessment Years 2018-19 and 2019-20. The court upheld the Income Tax Appellate Tribunal’s (Tribunal) order, which ruled that reimbursements received by the hotel management company for marketing fees, frequent flyer programmes, frequent guest programmes, and reservation fees should not be categorized as “fees for technical services.”
The appeals, identified as ITA 532/2023 and ITA 535/2023, challenged the Tribunal’s decision dated February 28, 2023. The core contention of the revenue was that these reimbursements fell under the definition of fees for technical services as outlined in Article 12(4) of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore, as well as Section 9(1)(vii) of the Income Tax Act, 1961.
However, the Delhi High Court bench noted that the issue raised by the revenue was already settled by previous judgments of the same court. The court specifically referred to the following judicial precedents:
- DIT vs. Sheraton International Inc. (2009), 178 Taxmann 84 (Del.): This case established a precedent regarding the treatment of similar reimbursements in the context of hotel management agreements.
- CIT vs. Sheraton International Inc. (ITA 271/2023, decided on May 11, 2023): This recent ruling by the Delhi High Court reiterated the position taken in the earlier Sheraton International Inc. case.
- CIT vs. Starwood Hotels & Resorts Worldwide Inc. 2022:DHC:004730: This judgment further reinforced the view that such reimbursements do not constitute fees for technical services.
Based on these consistent judicial pronouncements, the Delhi High Court concluded that no substantial question of law arose for its consideration in the present appeals. Consequently, the court proceeded to dismiss the revenue’s appeals.
