Starwood Hotels & Resorts v. Cit

H.S Sidhu, J.M:— These Stay Applications u/R 35A of the Income-tax Appellate Tribunal Rules, 1963 have been preferred by the assessee, seeking stay of balance outstanding demand in dispute in all the Stay Applications. Ld. Counsel of the assessee has stated that all the aforesaid applicants have been rendering similar services and similar litigation history involving same issue on similar facts, and such factual similarity has been acknowledged by both the AO as well as Ld. CIT(A). Since common issues are involved in these Stay Applications, the Stay Applications were heard together and are being disposed of by this common order for the sake of convenience, by dealing with Stay Application No. 408.Del/2019 (in ITA No. 2011.Del/2019) (AY 2015-16), therefore, decision thereof will apply mutatis mutandis to other 03 Stay Applications. It was further submitted by the Ld. Counsel for the assessee that the assessee filed its return of income declaring NIL income and claiming a refund of Rs. 3,228,879/-. However, the AO/CIT(A) has raised a demand of Rs. 12,914,557/- taxing the revenues earned by the assessee from providing various Centralized Services as FTS, both under the Act as well as relevant DTAA. It was further submitted that assessee has succeeded to obtain favourable orders from the Ld. CIT(A) for previous years i.e AY 2012-13, AY 2013-14 and AY 2014-15 wherein the Ld. CIT(A) has held that the consideration received by the assessee is not taxable as the payments received were in the nature of business income and not in the nature of royalty or FIS/FTS. It was further submitted that assessee is yet to be received refund of Rs. 6,446,219/- for AY 2010-11; Rs. 7,053,658/- (AY 2011-12); Rs. 6,924,910/- (AY 2012-13); Rs. 7,5000,020/- (AY 2013-14) and Rs. 5,841,430/- (AY 2014-15). It was further submitted that in all the aforesaid years, the assessee was subject to scrutiny and disallowance was made by the AO. However, the relief has been granted to the assessee at the first appellate authority. The appeals filed by the revenue before the Hon'ble High Court and Hon'ble Tribunal for AY 2010-11 and AY 2011-12 respectively have also been dismissed. The order granting the effect of the order of the Ld. CIT(A) for the aforesaid assessment years is yet to be passed by the AO and the consequential refunds are yet to be granted by the AO. He further submitted that the orders are passed by the AO, no demand shall stand payable by the assessee. Therefore, the pressing for the payment of demand shall cause undue hardship for the appellant. It was further submitted that the assessee is yet to receive the funds for the succeeding assessment years i.e AY 2016-17 Rs. 3,.769,497/-; AY 2017-18 Rs. 4,737,860/- and AY 2018-19 Rs. 4,393,880/-. Hence, it was submitted that since the assessee is yet to receive the aforesaid refunds from the revenue authorities, no demand shall stand due from the assessee once the demand is adjusted with the refunds due to the assessee. He further submitted that Ld. CIT(A) has failed to follow the orders pronounced by jurisdictional Tribunal, Hon'ble Delhi High Court and his predecessor in assessee's own case for the earlier years. It was further submitted that relating to issue of taxability of Fees for Centralized Services rendered by the Assessee has been duly examined in detail and held to be not taxable in India, both under provisions of Section 9 of the Act as well as under Article 12 of India-USA DTAA in its own case by the Jurisdictional Tribunal for AY 2010-11 in DCIT v. Starwood Hotels and Resorts Worldwide Inc. (ITA No. 202.Del/2016), which was subsequently affirmed by the Hon'ble High Court in CIT (Int. Taxation-3) v. Starwood Hotels and Resorts Worldwide Inc. (ITA No. 467/2018) and further followed by the ITAT, Delhi in assessee's own case for AY 2011-12 in DCIT v. Starwood Hotels and Resorts Worldwide Inc. (ITA No. 203.Del/2016). It was further submitted that the Delhi Tribunal in the case of a group entity of the assessee namely, Sheraton International Inc. v. DDIT, (2007) 107 ITD 120 (Delhi) has decided the same issue of the assessee's income from hotel related services, which was subsequently upheld by the Hon'ble Delhi High Court in the case of DIT v. Sheraton International Inc., (2009) 313 ITR 267 (Delhi). It was further submitted that Ld. CIT(A) while not following earlier decisions favourable to the assessee and seeking to distinguish those decision, is perverse and is factually incorrect. In view of above, he requested that balance outstanding demand in dispute in all the aforesaid Stay Applications may kindly be stayed and early hearing in the main appeals may also be granted.

2. On the contrary, Ld. DR opposed the request of the Ld. Counsel for the stay of balance outstanding demand. He further submitted that these stay applications involved multiple issues and the decision of the Hon'ble High Court in the case of Sheraton International Inc. has been contested before the Hon'ble Supreme Court, wherein an SLP is pending.

3. We have heard both the parties and perused the records available with me, especially the orders of the authorities below. Keeping in view of the facts and circumstances of the case, we are of the considered view that the assessee has established the prima facie case in its favour and also balance of convenience is in its favour for grant of stay on the balance outstanding demand in dispute. Accordingly, in the interest of justice, we grant the Stay on the outstanding demand in dispute for the period of 180 days or till the disposal of the aforesaid main appeal, whichever occurs first, from the date of order and also grant the early hearing in the main appeal and accordingly, the Registry is directed to fix the main appeals for hearing on 22.05.2019 The copy of this Order be given to both the parties DASTI.

4. In the result, all the four Stay Applications of the Assessees are allowed.

5. Order pronounced on 01-04-2019.