RADISSON HOTELS INTERNATIONAL INCORPORATED,UNITED STATE OF AMERICA V. ASSISTANT/ DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI

ITITA 1790/DEL/2025

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The case involves Radisson Hotels International Incorporated, a US-based company, appealing against an assessment order that taxed certain receipts as Fees for Technical Services (FTS) and Fees for Included Services (FIS) under the India-USA DTAA. The receipts in question amounted to Rs.7,48,70,639/- and were related to various services provided to Indian Hotels. The Tribunal examined the issue in light of previous rulings and the consistent judicial interpretation that such receipts do not qualify as FTS/FIS under the applicable tax treaty provisions. The Tribunal's decision to allow the appeal was influenced by the lack of substantial question of law as affirmed by the Delhi High Court in earlier related cases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786255 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Appeal Filed On: 24-03-2025
• Other Referred Cases: ITA No.2222 & 2223/Del/2022, ITA No.2382/Del/2023, ITA No.3839/Del/2023, ITA No.9265/Del/2019, ITA No.441 of 2022, ITA No.1001/Del/2022, ITA No.5654 of 2024
• Laws Referred To: Income Tax Act, 1961, India-US DTAA
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M.S NETHRAPAL
• Assessee Lawyers: RAVI KUMAR; PARUL GARG; FOLLOWING ITS EARLIER
• Keywords: Set aside; Business income; Question of law; Double taxation relief
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “डी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी Űजेश क ुमार िसंह, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER आअसं.1790/िदʟी/2025(िन.व. 2022-23) IT(IT)A No.1790/DEL/2025 (A.Y.2022-23) Radisson Hotels International Incorporated, 1601, Utica Avenue South, Suite 700, St. Louis Park, MN-55416, United State of America, USA 999999 PAN: AAECR-7546-M ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant/Deputy Commissioner of Income-Tax, International Taxation 3(1)(1), Civic Centre, Minto Road, New Delhi 110002 .....ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by: Shri Ravi Kumar & Ms. Parul Garg, Chartered Accountants ŮितवादीȪारा/Respondent by: Shri M.S Nethrapal, CIT-DR सुनवाई कᳱ ितिथ/ Date of hearing : 05/08/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : 31/10/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the assessment order dated 27.01.2025 passed u/s. 143(3) r.w.s 144C(13) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), for assessment year 2022-23. 2. Brief facts of the case as emanating from records are: Radisson Hotels International Inc. is a company incorporated in the United States of America (USA) and is a tax resident of USA. It operates, manages and franchises hotels and Printed from counselvise.com 2 IT(IT)A No.1790/DEL/2025 (A.Y.2022-23) resorts in North America, Latin America, the Asia-Pacific, Europe, the Middle East, and Africa. During the previous year relevant to AY 2022-23, the assessee received payments of Rs.7,48,70,639/- on account of Marketing contribution/ Fees, Radisson Rewards (FKA Club Carlson), Reservation Charges/Fees, 3rd Party Reservations Fees, IT/Technology Fee and Others (Fee look to Book, Miscellaneous including Info security Program Support, and Learning Link, etc.), which was claimed as non- taxable as the same are business receipt. In absence of Permanent Establish (PE) in India, these receipts were not offered to tax in the Return of Income. In the draft assessment order, the AO held that the receipts of the assessee are for services ancillary and subsidiary to granting licenses of its brand name to the Indian Hotels. Therefore, such income is in the nature of Fee for technical Services (FTS) and thus taxable in India under Section 9(1)(vii) of the Act and Fees for Included Services (FIS) as per the provisions of Article 12 of India- US DTAA. The DRP vide its directions dated 17.12.2024 dismissed objections of the assessee following directions of Panel for AY 2018-19. The DRP records that the legal and factual matrix of the case in the impugned assessment year is same as that of in AY 2018-19. 3. Shri Ravi Kumar, AR of the assessee submits that the Assessing Officer (AO) and Dispute Resolution Panel (DRP) have erred in making addition of Rs.7,48,70,639/- holding the amount received by the assessee on account of Marketing Fee Reservation Charges etc. is in nature of as Fee for Technical Services/ Fee for Included Services in light of Article 12 of India-USA DTAA. He pointed that the similar additions were made in the preceding assessment years. The Tribunal in appeal of the assessee in ITA No.2222 & 2223/Del/2022 for AY Printed from counselvise.com 3 IT(IT)A No.1790/DEL/2025 (A.Y.2022-23) 2018-19 and 2019-20 decided on 31.05.2023 while dealing with identical issue held that the receipts from the centralized services are not taxable as FTS/FIS under Article 12(4)(A) of India-USA DTAA. Thereafter, the Revenue assailed the said order of Tribunal in appeal before the Hon’ble Delhi High Court, the Hon’ble High Court dismissed appeal of the Revenue holding that no substantial question of law arises for consideration. Thereafter, in AY 2020-21 similar addition was made by the AO, the Tribunal in ITA No. 2382/Del/2023 for AY 2020-21 decided on 03.05.2019 following earlier order of the Coordinate Bench and the judgment of Hon’ble Delhi High Court for AY 2018-19 and 2019-20 allowed appeal of the assessee. The Revenue again carried the issue in appeal before the Hon’ble High Court assailing the order of Tribunal in ITA No.566 of 2024. The Hon’ble Delhi High Court vide order dated 11.12.2024 dismissed appeal of the Revenue for AY 2020- 21. Again, in AY 2021-22 the Revenue made the addition holding that the amounts received by the assessee are in the nature of FTS/FIS. The Tribunal in ITA No. 3839/Del/2023 for AY 2021-22 decided on 22.08.2024 reversed findings of the AO and decided the issue in favour of the assessee. Thus, the issue in present appeal is identical to the one adjudicated by the Tribunal and Hon’ble Delhi High Court in the preceding assessment years in assessee’s own case have consistently decided the issue in favour of assessee. 4. Shri M.S Nethrapal, representing the department supported the impugned assessment order. However, the ld. DR fairly stated that the solitary issue raised in appeal by the assessee has been considered by the Tribunal and the Hon’ble Delhi High Court in assessee’s own case in the preceding assessment years. Printed from counselvise.com 4 IT(IT)A No.1790/DEL/2025 (A.Y.2022-23) 5. Both sides heard, orders of the authorities below examined. The solitary issue for consideration in the present appeal by the assessee is taxability of the amount received by the assessee towards marketing fee, Radisson Rewards, Reservation Charges, IT/Technology Fee, etc. from the Indian Hotels as FTS/FIS. We find this is a legacy issue and was first examined by the Tribunal in assessee’s own case in ITA No.9265/Del/2019 for AY 2016-17. The Tribunal after examining the issue threadbare held that the service fee received by the assessee is not in the nature of FTS/FIS under Article 12(4)(a), hence, is not taxable in India and deleted the additions. The said order of the Tribunal was assailed by the Revenue in appeal before the Hon’ble High Court in ITA No.441 of 2022 in the case titled CIT vs. Radisson Hotel Interaction Incorporated. The Hon’ble High Court vide judgment 10.11.2022 dismissed appeal of the Revenue, as there was no substantial question of law for consideration. 6. Thereafter, identical issue cropped up in AY 2018-19 and 2019-20, the assessee assailed additions before the Tribunal in ITA No.2222 and 2223/Del/2022 (supra). Following earlier order of Tribunal dated 29.09.2022in assessee’s own case for AY 2016-17 the addition was deleted. The relevant excerpts from the order of the Tribunal in ITA No. 2222 & 2223/Del/2022 (supra) reads as under:- “9. It is observed, the aforesaid decision of the Tribunal has been upheld by the Hon’ble jurisdictional High Court while dismissing the appeals filed by the Revenue. In fact, in case of Country Inn and Suits, one of the appellants before us, the Tribunal in assessment year 2018-19 has decided the issue in ITA No. 1001/Del/2022 dated 31.10.2022 in favour of the assessee by following its earlier order passed for the assessment year 2016-17. Thus, in our considered opinion, the issue stands squarely settled in favour of the assessees by various decisions of Printed from counselvise.com 5 IT(IT)A No.1790/DEL/2025 (A.Y.2022-23) the Tribunal and Hon’ble jurisdictional High Court, not only in case of present assessees, but in respect of various other assessees. 10. At this stage, we must observe, the Revenue Authorities have treated the fees received from provision of centralised services as FTS/FIS under Article 12(4)(a) of India-USA treaty on the reasoning that the services rendered are ancillary and incidental to license to use brand name/trademark, resulting in royalty income. If we examine the relevant facts, it will be demonstrable that the income earned from centralised services far exceeds the royalty income. For ease of reference, the income earned from two sources in different assessment years are reproduced hereunder: Assessment Year Name of the assessee Royalty Income (Rs.) Centralized service income (Rs.) 2018-19 Radisson 11,93,23,993 17,14,36,352 2019-20 Radisson 12,03,86,875 22,94,72,647 2019-20 Country Inn 2,00,00,261 3,52,77,122 11. Thus, the aforesaid facts and figures clearly indicate that the centralised services income, by a reasonable measure, outstrips the royalty income. Thus, rather than centralised service income being ancillary and incidental to royalty income, in reality, it is a reverse situation. In such a scenario, it cannot be said that centralised service income, being ancillary and incidental to royalty income, would fall under Article 12(4)(a) of the Tax Treaty. 12. In view of our detailed analysis above, we hold that the receipts from centralised service income are not taxable as FTS/FIS under Article 12(4)(a) of India-USA DTAA. Accordingly, we direct the Assessing Officer to delete the additions. 13. In the results, appeals are allowed as indicated above.” [Emphasized by us] 7. The said order of the Tribunal was upheld by the Hon’ble Delhi High Court in ITA No.5654 of 2024 vide order dated 11.12.2024. In the subsequent Printed from counselvise.com 6 IT(IT)A No.1790/DEL/2025 (A.Y.2022-23) assessment years the Tribunal and the Hon’ble High Court have taken consistent view holding that the service fee received by the assessee is not in the nature of FTS/FIS. No contrary material has been brought before us by the Revenue. We see no reason to take a different view in the impugned assessment year. Accordingly, the addition of Rs.7,48,70,639/- is directed to be deleted for parity of reasons. 8. In the result, impugned order is set aside and appeal of the assessee is allowed. Order pronounced in the open court on Friday the 31st day of October, 2025. Sd/- Sd/- (BRAJESH KUMAR SINGH) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी / Delhi, ᳰदनांक/Dated 31/10/2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com "