In ITA No. 645/DEL/2020 -ITAT- ITAT (Delhi) rules amount received by InterContinental Hotels Group (Asia Pacific) from InterContinental Hotels Group (India) for ‘Management Support Services’ not in the nature of ‘Fees for Technical Services’ under India-Singapore DTAA
Members N.K. Billaiya (Accountant) & Challa Nagendra Prasad (Judicial) [23-06-2023]

Read Order: Inter Continental Hotels Group [Asia Pacific] PTE Ltd v. The Dy. C.I.T. Intt. Taxation Circle

Chahat Varma

New Delhi, June 28, 2023: The Delhi bench of the Income Tax Appellate Tribunal has held that the amount received by InterContinental Hotels Group (Asia Pacific) Pvt. Ltd. (IHGAP) from InterContinental Hotels Group (India) Private Limited (IHG India) for the provision of Management Support Services cannot be considered as Fees for Technical Services (FTS) under Article 12(4)(b) of the India-Singapore Double Taxation Avoidance Agreement (DTAA).

Brief issue involved was that, IHGAP (assessee), a Singapore-based company and part of the InterContinental Hotels Group, franchised and licensed hotels under various brands in the Asia Pacific region. IHGAP received management support costs from its Indian group company, IHG India, for services such as operational support, accounting, legal support, and information technology. IHGAP claimed these amounts as exempt in its income tax return, stating that they did not qualify as FTS under the DTAA. However, the Assessing Officer (AO) disagreed and added the management services costs to the assessee's income, treating them as FTS.

The coram of N.K. Billaiya (Accountant) and Challa Nagendra Prasad (Judicial) observed that the Co-ordinate bench had clearly stated that the services rendered by the assessee did not provide any technical knowledge, skill, or know-how to InterContinental Hotels Group India Pvt. Ltd, the recipient of the services.

Further, the bench noted that Co-ordinate bench had also ruled that the amount received by the assessee cannot be considered as FTS under Article 12(4)(b) of India-Singapore DTAA.

Accordingly, the bench held that since no distinguishing facts were presented, they would follow the decisions of the Co-ordinate benches and directed the AO to delete the addition.

The bench further directed the AO to grant credit of TDS to the assessee in accordance with the provisions of Section 199 of the Income Tax Act read with Rule 37BA (2) of the Income Tax Rules.