Hyatt International Southwest Asia Ltd. Vs Additional Director of Income Tax (Supreme Court of India)
Supreme Court held that Hyatt International has a fixed place Permanent Establishment in India within the meaning of Article 5(1) of the DTAA, and hence income received under Strategic Oversight Services Agreement [SOSA] attributable to such PE and is taxable in India.
Facts- The appellant is a company incorporated under the Companies Law, Dubai International Financial Centre Law No.3 of 2006, in the United Arab Emirates. It is a tax resident of the UAE under Article 4 of the Agreement between the Government of India and the UAE for the avoidance of Double Taxation.
On 04.09.2008, the appellant entered into two Strategic Oversight Services Agreements. Under the SOSA, the appellant agreed to provide strategic planning services and “know-how” to ensure that the hotel was developed and operated as an efficient and a high-quality international full-service hotel.
For A.Y. 2009-10, the appellant filed its return of income declaring ‘Nil’ income and claiming a refund of Rs.87,99,091/-. After scrutiny, AO concluded that the appellant’s activities constituted a business connection under Section 9(1)(i) of the Act; a PE under Article 5 of the DTAA; royalties and fees for technical services under Section 9(1)(vi)/(vii) of the Act; and royalties under Article 12 of the DTAA.
