ADIT (IT)-2(1), MUMBAI V. M/S. STAR CRUISES MANAGEMENT LTD., MUMBAI

ITA 6112/MUM/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3461 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 21-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 10-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASST YEAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L, MUMBAI. BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO.6112/MUM/2008 (ASSESSMENT YEAR : 2005-06) ASST. DIRECTOR OF INCOME TAX, (INTERNATIONAL TAXATION) RANGE 2(1), R.NO. 120, 1 ST FLOOR, SCINDIA HOUSE, BALLARD ESTATE N.M. ROAD, MUMBAI 400 038 VS. M/S STAR CRUISES MANAGEMENT LTD., C/O MSM ASSOCIATES, CHARTERED ACCOUNTANTS, G-15, EVEREST, TARDEO ROAD, MUMBAI 34. (APPELLANT) (RESPONDENT) C.O. NO. 232/MUM/08 (IN ITA NO.6112/MUM/07) (BY ASSESSEE - ASST. YEAR 2005-06) REVENUE BY : SHRI NARENDRA ASSESSEE BY : SHRI AJAY R. SINGH PER V. DURGA RAO, J.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -XXXXI, MUMBAI PASSED ON 17/07/2008. THE ASSESSEE HAS ALSO FILED C.O. AGAINST THE SAID ORDER OF CIT(A). 2. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE AS FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT NO IN COME ACCRUES / ARISES OR IS DEEMED TO ACCRUE/ARISE IN IN DIA FOR THE PAYMENTS WHICH ARE REMITTED TO THE ASSESSEE ON ACCO UNT OF CRUISE TICKETS BOOKED BY ITS INDIAN AGENT, IGNORING THE FACT THAT THE ENTIRE SALE PROCEEDS COLLECTED BY ITS AGEN T, M/S STAR CRUISES (INDIA) TRAVEL SERVICES PVT. LTD. WERE RECE IVED IN INDIA ON BEHALF OF THE ASSESSEE AND BELONGED TO IT. ITA NO.6112/MUM/08 & CO 232/MUM/09 M/S STAR CRUISES MANAGEMENT LTD. 2 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNE D CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSES SING OFFICER RESTORES. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE, A FOREIGN COMPANY, HAS ENTERED INTO AN AGREEMENT WITH STAR CR UISE (INDIA) TRAVEL SERVICE PVT. LTD., WHICH IS AN INDIAN COMPAN Y, FOR SELLING THEIR CRUISE TICKETS FOR PROVIDING RELATED MARKETIN G SERVICES ON AN AGREED REMUNERATION. THE AGREEMENT BETWEEN THE ASSE SSEE AND INDIAN COMPANY WAS ON PRINCIPAL TO PRINCIPAL BASIS. TICKET AND FINAL CONFIRMATIONS WERE GIVEN BY THE FOREIGN COMPANY TO CUSTOMERS AND PASSENGERS DIRECTLY. NONE OF THE SHIPS OF THE FOREI GN COMPANY OPERATE OR TOUCH ANY PORTS IN INDIA. INDIAN CUSTOME RS HAVE TO TAKE THE CRUISE FROM THE FOREIGN PORTS. THE INDIAN COMPA NY COLLECTS MONEY AND REMIT THE SAME TO THE FOREIGN COMPANY AS PER THE RBI GUIDELINES AND FERA. FOR RENDERING THESE SERVICES I NDIAN COMPANY GETS COMMISSION. THE ASSESSEE HAS NOT CARRIED ANY A CTIVITY IN INDIA AND NO SUCH INCOME ACCRUES OR ARISES IN INDIA. BAS ED ON THE ABOVE FACTS, THE AO HAD COMPUTED THE INCOME OF THE ASSESS EE RECEIVED ON SELLING CRUISE TICKETS BY APPLYING THE PROVISIONS O F SECTION 5(2A) READ WITH SECTION 44B OF THE ACT AT ` . 4,93,02,500/- AND TAXED THE SAME ACCORDINGLY. ON APPEAL, THE LEARNED CIT(A) AF TER CONSIDERING THE FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESS EE, DELETED THE ADDITION MADE BY THE AO BY HOLDING AS UNDER:- 1.2 I HAVE CONSIDERED THE AUTHORISED REPRESENTATIVE S ARGUMENTS AND HAVE ALSO PERUSED THE RECORD. THE ASS ESSMENT ORDER FOR ASSESSMENT YEAR 2005-06 HAS BEEN PASSED O N THE SAME LINES AS OF AYS 2004-05, 2003-04, 2002-03 AND 2001- 02. NO FRESH FACTS HAVE BEEN BROUGHT ON RECORD NOR HAVE ANY FRESH ARGUMENTS BEEN RAISED. I HAVE ALSO PERUSED TH E ORDER OF MY PREDECESSOR FOR AYS. 2001-02, 2003-04 AND 2004-0 5. MY PREDECESSORS HAVE HELD THAT THERE IS NO DISPUTE THA T THE APPELLANT COMPANY IS NOT CARRYING OUT ANY BUSINESS OPERATION OTHER THAN THE SALE OF TICKETS AND MARKETING OF SAL E OF TICKETS THROUGH ITS SOLE NAME AGENT SCTS IN INDIA. THE INDI AN COMPANY IS BEING REMUNERATED AT ARMS LENGTH FOR TH E SERVICES RENDERED IT. IN VIEW OF THE ADEQUATE REMUN ERATION PAID TO THE SOLE SELLING AGENT, AND THE SALE BEING MADE ON ITA NO.6112/MUM/08 & CO 232/MUM/09 M/S STAR CRUISES MANAGEMENT LTD. 3 PRINCIPAL TO PRINCIPAL BASIS AND CONTRACT OF SALE H AVING BEEN OUTSIDE INDIA. IT WAS HELD BY MY LEARNED PREDECESSO R THAT CIRCULAR NO. 23 OF THE CBDT WAS SQUARELY APPLICABLE AND NO MORE INCOME ACCRUES OR ARISES TO THE APPELLANT IN I NDIA. 1.3 I HAVE PERUSED THIS ORDER AND I AM IN AGREE WIT H MY PREDECESSOR. IT IS THEREFORE HELD THAT NO INCOME AC CRUES OR ARISES TO THE APPELLANT IN INDIA REGARDING THE BUSI NESS OF SALE OF TICKETS THROUGH THE SOLE SELLING AGENT. IN THE R ESULT, APPEAL IS ALLOWED. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 5. THE LEARNED DR HAS SUBMITTED THAT AS PER SECTION 5(2A) OF THE ACT, WHATEVER THE AMOUNTS RECEIVED IN INDIA IS INCO ME OF THE ASSESSEE AND NO DTA IS APPLICABLE TO THE ASSESSEE, THEREFORE, THE SAME IS TAXABLE IN INDIA. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE HAS CANVASSED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR AYS 2001-02 AND 2002-03 IN ITA NOS. 4973/MUM/2005 & 6497/MUM/2 006, VIDE ORDER DATED 21 ST DECEMBER, 2009 WHEREIN THE ITAT HELD AS UNDER:- 5. IN THE PRESENT APPEALS THE IDENTICAL QUESTION I S POSED BEFORE US, WHICH WAS FOR OUR CONSIDERATION IN THE D IFFERENT WAY IN THE CASE OF M/S STAR CRUISES (INDIA) SERVICES PV T. LTD. (SUPRA). THE TRIBUNAL HAS ALREADY HELD THAT THE ASS ESSEE WAS NOT HAVING ANY BUSINESS CONNECTION IN INDIA WITHI N THE MEANING OF SECTION 9(1)(I) OF THE ACT, AND HENCE, N O INCOME HAS BEEN ACCRUED TO THE ASSESSEE I.E. M/S SCML IN I NDIA IN RESPECT OF BOOKING OR SALE OF TICKETS FOR TOUR PACK AGES OF THE CRUISES IN INDIA. THE REASONS GIVEN FOR CANCELLING THE DEMAND IN THE CASE OF M/S STAR CRUISES (INDIA) SERVICES PV T. LTD. (SCITS) ARE MUTATIS MUTANDIS, ARE ALSO APPLICABLE T O THE ASSESSEES CASE. WE, THEREFORE, HOLD THAT NO INCOME HAS BEEN ITA NO.6112/MUM/08 & CO 232/MUM/09 M/S STAR CRUISES MANAGEMENT LTD. 4 ACCRUED TO THE ASSESSEE IN INDIA ON THE SALE OF TIC KETS/BOOKING OF CRUISE TOUR PACKAGES WHICH WAS DONE THROUGH ST AR CRUISES (INDIA) TRAVEL SERVICES PVT. LTD. (SCITC). ACCORDIN GLY, THE ORDERS OF THE CIT(A) ARE UPHELD IN BOTH THE ASSESSM ENT YEARS. 7. SINCE THE FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL TO THAT OF ASSESSMENT YEARS 2001-02 AND 2002-03, WE RE SPECTFULLY FOLLOW THE ORDER OF ITAT IN THOSE YEARS AND IN THE LIGHT OF THAT WE UPHOLD THE ORDER OF CIT(A) IN HOLDING THAT NO INCO ME ACCRUES OR ARISES TO THE APPELLANT IN INDIA REGARDING THE BUSI NESS OF SALE OF TICKETS THROUGH THE SOLE SELLING AGENT. THUS, THE G ROUND RAISED BY THE REVENUE IN THIS REGARD IS HEREBY DISMISSED. 8. SINCE THE CROSS OBJECTIONS RAISED BY THE ASSESSE E ARE IN SUPPORT OF CIT(A)S ORDER, WHICH WAS UPHELD BY US I N REVENUES APPEAL, THE C.O. BECOMES INFRUCTUOUS AND, THEREFORE , THE SAME IS DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE C.O. OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2010. SD/- SD/- (R.S. SYAL) (V. DURGA RAO) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DT. 23 RD DEC., 2010. ITA NO.6112/MUM/08 & CO 232/MUM/09 M/S STAR CRUISES MANAGEMENT LTD. 5 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT, MUMBAI (4) CIT(A), MUMBAI (5) DR, (6) GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES