IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "L",MUMBAI BEFORE SHRI R.S. SYAL (AM) & SHRI N.V. VASUDEVAN (JM) I.T.A. No.2521/Mum/2008 (A.Y. 2004-05) Dy. Director of Income-tax (IT)-2(1), M/s. Star Cruises Management Ltd., R.No.120, 1st floor, Scindia House, 3rd floor, Maker Chambers-IV, Ballard Estate, N.M. Road, 222, Nariman Point, Mumbai-400 038. Vs. Mumbai-400 021. PAN: AAHCS0352F Appellant Respondent Appellant by Shri Narender Kumar. Respondent by Shri K. Shivaram. Date of hearing 19-03-2012 Date of pronouncement 20-03-2012 O R D E R
PER N.V. VASUDEVAN, JM :
This appeal preferred by the Revenue is directed against the order dated 07-01-2008 passed by the ld. CIT(A)XXXI, Mumbai, for the assessment year 2004-05.
3. Briefly stated facts of the case are that M/s. Star Cruises (India) Travel Services Pvt. Ltd. ('SCTS'), is an Indian company engaged in the business of providing travel and tour related services. It had entered into a General Sales & Marketing Service Agreement with the Assessee viz. Star Cruises Management Ltd. Isle of Man ('SCML'), a Non-resident company, for selling their cruise tickets and for providing related marketing services for an agreed remuneration. According to the assessee, the 2 ITA No. 2521/Mum/2008 M/s. Star Cruise Mgt.Ltd.
agreement between assessee and the Indian company was on principal to principal basis. Tickets and final confirmation were being given by the foreign company to the customers and passengers directly. None of the ships of foreign company either touch an Indian port or enter into Indian territorial water. Indian customers have to take cruise from foreign port. The Indian company collects the money and remit the same to the foreign company as per the guidelines of FEMA for rendering these services. The Indian company gets commission. The assessee submitted that the assessee company is receiving the remittances of tickets sold by the Indian company outside India. Assessee is not carrying out any activity in India and as such no income accrues or arises in India. However, the AO, after considering the assessee's submissions, inter alia, observed that a plain reading of sections 5 and 44B clearly shows that the amount received by the SCTS as an agent of assessee is the amount of SCML received by its agents in India and such receipt is taxable u/s. 5(2)(a) and accordingly he computed the assessee's income u/s.44B read with sec. 5(2) of the Act vide assessment order dated 23-8-2005 passed u/s. 143(3) of the Income-tax Act, 1961 ("the Act"), as under :
"Gross amount received during the year Rs.29,20,13,308 Income @ 7.5% u/s.44B (7.50% of Rs.29,20,13,308) Rs. 2,19,00,996 Assessed Tax @ 40% of 2,19,00,998) Rs. 87,60,399 Surcharge @ 5% 87,60,399) Rs. 2,19,001"
4. On appeal, the ld. CIT(A), while relying on the appellate order for the assessment years 2001- 02 and 2002-03, held that no income accrues or arises to the appellant in India regarding the business of sale of tickets through the sole selling agent and accordingly deleted the addition made by the AO.
5. Being aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us taking the following ground of appeal :
"1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that no income accrues/arises or is deemed to accrue/arise in India for the payments which are remitted to the assessee on account of cruise tickets booked by its Indian agent, ignoring the fact that the entire sale proceeds collected by its Agent, M/s. Star Cruises (India) Travel Services Pvt. Ltd., were received in India on behalf of the assessee and belonged to it.3 ITA No. 2521/Mum/2008
M/s. Star Cruise Mgt.Ltd.
2. The Appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored.
3. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary".
6. At the time of hearing, the ld. D.R., while relying on the order of the AO, accepted that the Tribunal in the assessee's own case for assessment years 2001-02 and 2002-03 on similar facts and circumstances of the case has dismissed the Revenue's appeal vide order dated 21-12-2009. He also placed on record copy of the said order of the Tribunal.
7. We have carefully considered the submissions of the ld. D.R. and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the ld. CIT(A), while holding that the assessment order for the assessment year 2003-04 has been passed on the same lines as of assessment year 2001-02 and no fresh facts have been brought on record nor any fresh arguments have been raised, followed the appellate order for the assessment year 2001- 02 and held that no income accrues or arises to the assessee in India regarding the business of sale of tickets through the sole selling agent.
8. In DDIT-2(1), Mumbai, vs. Star Cruise Management Ltd. and vice versa in ITA Nos.4973/M/2005 & 6497/M/06 and C.O.Nos.71/M/2006 and 75/M/2007 for the assessment years 2001-02 and 2002-03 dated 21-12-2009, the Tribunal, after following the earlier order of the Tribunal in assessee's own case in ITA Nos.3818 to 3823/Mum/2004 and ITA No.6499/Mum/2006 dated 30- 11-2009, held vide para-5 of its order as under :
"5. In the present appeals the identical question is posed before us, which was for our consideration in the different way in the case of M/s. Star Cruises (India) Services Pvt. Ltd. (supra). The Tribunal has already held that the assessee was not having any 'business connection' in India within the meaning of section 9(1)(i) of the Act, and hence, no income has been accrued to the assessee i.e. M/s. SCML in India in respect of booking or sale of tickets for 'tour packages' of the cruises in India. The reasons given for cancelling the demand in the case of M/s. Star Cruises (India) Services Pvt. Ltd. (SCITS) are mutatis mutandis, are also applicable to the assessee's case. We, therefore, hold that no income has been accrued to 4 ITA No. 2521/Mum/2008 M/s. Star Cruise Mgt.Ltd.
the assessee in India on the sale of tickets/booking of 'Cruise tour packages' which was done through Star Cruises (India) Travel Services Pvt. Ltd. (SCITC). Accordingly, the orders of the CIT(A) are upheld in both the assessment years.
In the absence of any distinguishing feature brought on record by the Revenue, we, respectfully following the consistent view of the Tribunal (supra), hold that no income accrues or arises to the assessee in India on the sale of tickets/booking of 'Cruise tour packages' which was done through Star Cruises (India) Travel Services Pvt. Ltd. (SCITC) and accordingly we uphold the order of the ld. CIT(A) in allowing the appeal of the assessee. The grounds taken by the Revenue are, therefore, rejected.
9. In the result, the appeal by the Revenue is dismissed.
Order pronounced in the open Court on the 20th day of March, 2012.
Sd/- Sd/- (R.S. SYAL) (N.V. VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: 20th March , 2012. NG: Copy to : 1. Department. 2.Assessee. 3 CIT(A)-XXXI,Mumbai. 4 DIT(International Taxtion),Mumbai. 5.DR,"L" Bench,Mumbai. 6.Master file. (TRUE COPY) BY ORDER, Asst. Registrar, ITAT, Mumbai. 5 ITA No. 2521/Mum/2008 M/s. Star Cruise Mgt.Ltd. Details Date Initials Designati on 1. Draft dictated on 19-03-2012 Sr.PS/ 2. Draft Placed before author 19-03-2012 Sr.PS/ 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS 19-03-2012 Sr.PS/ 6. Kept for pronouncement on 20-03-2012 Sr.PS/ 7. File sent to the Bench Clerk 20-03-2012 Sr.PS/ 8. Date on which the file goes to the Head clerk 9. Date on which file goes to the AR 10. Date of dispatch of order