Case Law Details
Asst. CIT Vs Renaissance Services BV (ITAT Mumbai)
Held that the receipts of the assessee from training services and computer reservation services including reimbursements shall not be chargeable to tax both under the Act as well as under the Treaty.
Facts- The assessee is a company incorporated in the Netherlands and is tax resident of Netherlands. The assessee is part of the Marriott Group. It is engaged in conducting training programs and providing access to various ‘Computer Systems such as Centralised Reservation Systems (CRS) to Marriott Chain of Hotels located worldwide. The cost and expense incurred by the assessee for rendering the aforesaid services are allocated amongst hotels, on a fair and reasonable basis and no separate fee was ever charged for such services.
The assessee filed its ROI declaring total income of Rs 21,70,771/-. AO treated the payment received for providing training services as Fees for Technical Services (FTS) u/s 9(1)(vii) of the Act as well as under DTAA between Indian and Netherlands as per Article 12(5) .Further AO treated the payment received for providing CRS facility as royalty as well as FTS. With regard to reimbursement of expenses, AO held that the reimbursements will partake the character of the amounts received from rendering services under the Training and Computer Systems Agreement (TCSA) which will be taxable. The CIT(A) had deleted the additions made by the AO.
Conclusion- Held that as providing of access to CRS, Property Management Services and Other services could neither be held to be technical services nor the same could have been characterized as “ancillary and subsidiary” services under Article 12(5)(a) hence the consideration received by the assessee for rendering the said services/facility could not be held as FTS.
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