Starwood Development Consulting Services (AP) Pte Ltd., Noida V. ACIT, Circle- 3(1)(2), International Taxation, New Delhi

ITA 2014/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3889 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 06-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 6; 144; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER I.T.A. No. 2014/DEL/2019 Assessment Year 2015-16 Starwood Development Consulting Services (AP) Pte Ltd., C/o Nangia & Co. LLP, A-109, Sector-136, Noida. v. Assistant Commissioner of Income Tax, Circle-3(1)(2), Intl. Taxation, New Delhi. TAN/PAN: AANCS3847B (Appellant) (Respondent) Appellant by: Shri Tarandeep Singh, Adv. Respondent by: Shri Sukesh Kumar Jain, CIT-DR Date of hearing: 20 06 2022 Date of pronouncement: 24 06 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The c apt io ne d ap p eal ha s be en f i le d at th e i ns ta nc e o f the ass es se e a ga in st t he or der of t he Co mmi s si on er of Inc o me Ta x (Ap pe al s) -X LI II, N ew De lh i (‘C IT (A )’ in s ho rt ) d at ed 04 .1 2. 20 1 8 ari si ng f ro m t he a sse ss me nt or der da ted 06 .0 2. 20 18 p as sed b y th e As ses si ng Of f icer (AO ) un de r S ect io n 14 3( 3) r . w. S ec tio n 14 4C (3) (a ) of t he Inc o me T ax A ct, 1 96 1 (t he A ct) conc ern in g A Y 20 15- 16 . 2. As p er t he g ro un ds of appea l, t he a ss ess ee h as cha ll en ge d the add it io n of i nc o me a mo unt in g t o Rs .1, 65 ,3 8, 33 4/ - t ow ard s f ee rec ei ve d b y n on -r es ide nt as se ss ee co m pan y f ro m ho tel d e sig n rel at ed con su lt an c y se rv ic e s r en de re d i n In di a. I.T.A. No.2014/Del/2019 2 3. Bri ef l y s ta te d, t he ass es se e is a ta x re sid en t of Si ng ap ore and con se qu en tl y cl ai m s tha t it i s e nti tl e d to t ake be nef it a s ava il ab le un der th e pr ov is i on s of Do ub le T a xat io n A vo id an ce Agr ee me nt bet we en I nd ia a nd Sin ga po re [ DT AA ]. T he a ss es see is eng ag ed i n the bu sin es s of pr o vid in g h ote l de si gn rela te d co nsul ta nc y s er vi ce s to v ar io us h ot el s acr os s th e w or ld. Du ri ng t he ye a r u nd er con si de ra tio n, co ns ult an c y s er vi ce s we re pr o vid ed by t he ass es se e to var io us ho te l p ro pe rti es /h ot el ow ne rs i n I nd ia. T he as se ss me nt of th e ret ur n of in co me f i led b y t h e as ses se e wa s co mp le ted un der S ec ti on 14 3(3 ) r. w. Se ct io n 144 C( 3) (A ) of the Act an d th e Ass es si ng Of f ice r int er a li a ma de a n add it io n of Rs. 1 ,65 ,3 8, 33 4/ - ho ld in g tha t th e pa yme nt r ec ei ve d b y th e as se sse e f or rend er in g H otel re la ted ser vi ce s to va ri ou s cus to me rs i n I nd i a we re t ax ab le a s a ‘F ee s f or Tec hn ic al Se rv ice s ’ [ FT S] on bo th te r ms of Se ct io n 9 of the A ct as wel l as A rti cl e 12 o f Ind ia -S in gap or e DT AA . 4. Ag gri ev ed , th e a ss ess ee p ref er re d ap pea l bef o re th e CI T( A) and c hal le ng ed th e act io n of the A ss ess in g Of f icer on the gr ou nd tha t t he se rvi ce s r e nde re d b y t he as se s see do es no t q ua lif y as F TS in ter ms of Art icl e 1 2 of the DT A A be tw een I nd ia a nd Si ng apo re . Th e CI T( A) ho we ve r d i d n ot f ind a n y me r it in th e pl ea of th e a ss es see and c onf i r med th e a cti on of t he A ss es si ng Of f ice r. 5. Fu rth er a gg rie ve d, th e as se ss ee pr ef err ed a ppe al b ef or e t he Tri bu na l. 6. W h en th e mat te r w as cal le d f or h ear in g, th e l d. co un se l f or th e ass es se e, at th e out se t, su b mit te d th at the n at ure of se rv ice s pro vi de d b y t he a ss ess ee do es n ot f a ll wit hi n t he pur vi ew of FTS as def in ed i n Art ic le 12 of I nd ia -S in gap ore D TA A an d se c on dl y s uc h ser vi ce s re nde re d do no t pa ss t h e tes ts of ex pr es sio n ‘ mak e ava il ab le’ a s d el i nea te d b y v ar io us Co ur ts an d t he Co -or di na te I.T.A. No.2014/Del/2019 3 Be nch es . It w as n ext c on te nd ed t hat th e CI T( A) h as p roc ee de d to adj ud ic at e the ap pe al of the a ss es se e bas ed o n t otall y in cor re ct s et of f acts /n at ure of s erv ic es b y wr on gl y ad op tin g servi ce s pro vi de d b y af f iliat es of t he a p pel la nt /s erv ic es w h ich a re n ot t he sa me a s wh at has r en de red b y t he as se ss ee he re in . T he L d. co un sel ref er re d to par ag ra ph 5 .3 .6 a n d 5. 3.7 of the f irs t app el la te o rde r an d cont en de d tha t t he C IT (A ) ha s inc orr ec tl y no te d t hat th e as sess ee h a s pr ov id ed ser vi ce s to I ndi an Hote ls i n th e na tur e of sal es and mark et in g, res er va tio n s up po rt , ro ya l t y pr og ra mm e, h u man r es ourc es and oth er cen tr ali ze s erv ic es wh ich f act h as be e n w ro ng l y i mport e d f ro m t he cas e of gr ou p c o mpan ie s w hi le d ec id i ng t he ap pea l of th e ca pt io ned ass es se e. I t w as su b mitt ed th at t he as ses se e i s ac tu al l y eng ag ed in the bu sin es s of pr o vid in g h ote l de si gn rela te d co nsul ta nc y s er vi ce s wh ich is n ot a ki n t o sa les an d ma rk eti ng, res er va tion s up por t, e tc . It was s ub mi tt ed th at th e C IT (A ) h as d eci de d t he ap pe al and p as sed ord er on a w ro ng s et of s er vi ces , i .e ., ot her th an se rv ice s th at ha ve bee n ac tu al l y p erf o r me d b y th e as se ss ee. T he ld. coun sel sub mi tt ed tha t t he in co rr ec t f act s i n nat ur e of se rvi ce s r en de red h as a mat er ial i mpac t o n ta xa bil it y of ser vic es q ua A rt icl e 1 2 of the I nd ia - Si nga po re T rea t y. I t w as th us s ub mi tt e d t ha t af o re sai d f ir s t a pp ell at e ord er suf f ers f r o m f ou nda ti on al def ec ts and is t hu s n ot su s tai na bl e in law a nd r eq uir es t o be ap pr op ria te l y d e alt w it h. 7. The ld . D R, o n t he oth er han d, pl ace d rel ian ce up on the ord er of th e CI T( A). 8. W e hav e c ar ef ull y con si de re d t he r iv a l su b mis si on s. W e hav e per su ad ed b y th e p lea r ai se d on b eh al f of the asse ss ee . On a b are rea di ng of t he f i rs t app el la te or de r a nd pa ra gra ph s 5. 3. 6 a nd 5. 3. 7 i n par ti cu lar , w e o b ser ve th at CI T( A ) ha s a dj ud ica te d the f i rs t app el la te p roc ee di n gs o n th e pre mi se t hat t he a ss esse e is eng ag ed i n I.T.A. No.2014/Del/2019 4 ren de ri ng ma rk et in g s er vi ces , us e of r ese rv at io n p la tf or m an d ot her ser vi ce s in st ea d of hot el de sig n r ela te d con su lt ancy s er vic es a ctu al l y pro vi de d b y t he as s ess ee . T hi s b ei ng t he c as e, the co nc lu sio n d ra wn b y th e CIT (A ) is ba se d o n f ac ts wh ich a re pr e mis e d o n wr on g tan ge nt . It is w el l set tl ed t hat w he re the a dj ud icati ng a u tho ri t y h as pro ce ed ed to d ete r mi ne th e i ss ue on f act s wh ich a re pa rt l y rel ev an t and par tl y ir rel ev a nt, i t is d if f icul t to asce rt ai n the e xt en t of i mpa ct of ir rel ev an t co ns i der at io n or f a ct s i n d et er mi ni ng t he iss ue . Th is bei ng s o, w e c on si der i t e xp ed ie nt to re mi t the matte r bac k to t he f ile of the f ir st a p pel la te a ut hor it y f or de no vo a dj ud ic a tio n of the iss ue i n the l ig ht of co rr ect f ac ts an d i n a cc or da nce w it h l aw. 9. It s hal l b e op en to the a ss es se e to ap pra is e th e f irs t a pp ell at e aut ho ri t y wit h a l l re lev an t f act s as ma y be n e ces sar y f or det er mi na ti on of th e is su e. Th e a ss es s ee s ha ll al so be at lib er t y to add uc e su ch e vi den ce s an d f urn ish s uc h inf o r mati on a nd exp la na ti on s as ma y be c on si de r ed n ece ss ar y f or objec tiv e det er mi na ti on of t h e i ss ue . 10. Acc or di ng l y, t he m att er is se t a si de t o t he f ile of CIT ( A) f or f resh ad ju di cat io n in a cc or da nce w ith la w af t er givi ng pro pe r op por tu ni t y t o t he a sse ss ee . 11. In t he re su lt , th e app eal of the a sse ss ee i s allo we d f or sta ti st ica l pu rp os es . Order pronounced in the open Court on 24/06/2022. Sd/- Sd/- [ANUBHAV SHARMA] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24/06/2022 Prabhat