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Tax Publishers Issue of alleged masking of royalty income as International Sales and Marketing Arrangement fees (ISMA) with no identity of the original owner of the Marriott brand/trademark - case remanded to AO - miscellaneous application alleging order was passed with demand notice with no draft assessment order as per Section 144C. *Facts:* This was a Miscellaneous application for the said assessment years on the same case. The original case goes thus. The original brand/trademark owner of Marriott/Renaissance was not known and the assessee was a group company in the USA. They had collected ISMA fees and other reimbursements for promotional of the said sales/marketing support offered internationally - in this case the collections were from Indian hotel establishments who decided to use the Marriott brand and leverage their sales. The royalty was paid separately by these entities. It was alleged by the revenue that these ISMA etc. were all masked royalty rolled into such descriptions to evade taxes and vide Indo-US DTAA the same was taxable in India and the assessee was held to be a representative assessee (in the absence of the actual brand/trademark owner's name) thus liable to pay tax on the entire sums. The lifting of corporate veil was required to be done in this case thus held the ITAT and remanded the case to the AO in the original ITAT orders. The AO made a draft order and then passed a demand notice as well alongside the same which was what under question in the original ITAT appeal. The question here in the MA petition was that since assessee was a non-resident revenue ought to have passed a draft assessment order and then the adjudication process as per Section 144C should have followed by the revenue. Since this was not done and instead order with the demand notice was directly issued on assessee the orders deserved dismissal. Thus pleaded the assessee - Held in favour of the assessee that since the process as per Section 144C was not followed and this was not curable under section 292B as well the orders stood dismissed. *Ed. Note:* The original order is worth noting/reading and is enclosed here. The MA is only a fall out of this. *Case:* Marriott International Inc v Dy CIT 2022 TaxPub(DT) 3422 (Mum-Trib)

Tax Publishers

Issue of alleged masking of royalty income as International Sales and Marketing Arrangement fees (ISMA) with no identity of the original owner of the Marriott brand/trademark - case remanded to AO - miscellaneous application alleging order was passed with demand notice with no draft assessment order as per Section 144C.

Facts:

This was a Miscellaneous application for the said assessment years on the same case. The original case goes thus. The original brand/trademark owner of Marriott/Renaissance was not known and the assessee was a group company in the USA. They had collected ISMA fees and other reimbursements for promotional of the said sales/marketing support offered internationally - in this case the collections were from Indian hotel establishments who decided to use the Marriott brand and leverage their sales. The royalty was paid separately by these entities. It was alleged by the revenue that these ISMA etc. were all masked royalty rolled into such descriptions to evade taxes and vide Indo-US DTAA the same was taxable in India and the assessee was held to be a representative assessee (in the absence of the actual brand/trademark owner's name) thus liable to pay tax on the entire sums. The lifting of corporate veil was required to be done in this case thus held the ITAT and remanded the case to the AO in the original ITAT orders. The AO made a draft order and then passed a demand notice as well alongside the same which was what under question in the original ITAT appeal. The question here in the MA petition was that since assessee was a non-resident revenue ought to have passed a draft assessment order and then the adjudication process as per Section 144C should have followed by the revenue. Since this was not done and instead order with the demand notice was directly issued on assessee the orders deserved dismissal. Thus pleaded the assessee -

Held in favour of the assessee that since the process as per Section 144C was not followed and this was not curable under section 292B as well the orders stood dismissed.

Ed. Note: The original order is worth noting/reading and is enclosed here. The MA is only a fall out of this.

Case: Marriott International Inc v Dy CIT 2022 TaxPub(DT) 3422 (Mum-Trib)