IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "J",MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI B. RAMAKOTAIAH (AM) I.T.A. No.5713/Mum/2007 (A.Y. 2003-04) Dy. Director of Income-tax (IT)-2(1), M/s. Star Cruises Management Ltd., R.No.120, 1st floor, Scindia House, M/s. S.B. Kanodia & Co., C.As, Ballard Estate, N.M. Road, G-15, Everest, 8th floor, Tardeo Road, Mumbai-400 038. Vs. Mumbai-400 034. PAN: AAHCS0352F Appellant Respondent C.O. No.306/Mum/2007 (Arising out of I.T.A. No.5713/Mum/2007) (A.Y. 2003-04) M/s. Star Cruises Management Ltd., Dy. Director of Income-tax (IT)-2(1), M/s. S.B. Kanodia & Co., C.As, R.No.120, 1st floor, Scindia House, G-15, Everest, 8th floor, Tardeo Road, Ballard Estate, N.M. Road, Mumbai-400 034. Vs. Mumbai-400 038. PAN: AAHCS0352F Cross Objector Respondent Department by Shri D.S. Sunder Singh. Assessee by None. Date of hearing 28-11-2011 Date of pronouncement 28 -11-2011 O R D E R
PER D.K. AGARWAL, JM :
This appeal preferred by the Revenue is directed against the order dated 15-6-2007 passed by the ld. CIT(A) for the assessment year 2003-04, against which the assessee has also 2 ITA No.5713 & CO No.306/M/07 M/s. Star Cruise Mgt. Ltd.
filed cross objection. The Revenue's appeal and the assessee's cross objection are disposed of by this common order for the sake of convenience.
2. At the time of hearing, none attends on behalf of the assessee nor filed any application for adjournment of the case. It was, therefore, decided to dispose of the appeal and cross objection ex parte, qua the assessee, on merits, after hearing the ld. D.R.
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 Star Cruises Management Ltd. Isle of Man ('SCML'), a foreign company, and assessee, for selling their cruise tickets and for providing related marketing services for an agreed remuneration. According to the assessee, the 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.41,33,34,898 Income @ 7.5% u/s.44B (7.50% of Rs.41,33,34,898) Rs. 3,10,00,117 3 ITA No.5713 & CO No.306/M/07 M/s. Star Cruise Mgt. Ltd.
Assessed Tax @ 40% of 3,10,00,117) Rs. 1,24,00,047 Surcharge @ 5% 1,24,00,047) Rs. 6,,20,002"
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 or arises to the assessee in India regarding the business of sale of tickets through the sole selling agents.
The Appellant prays that the order of CIT(A) on the above grounds be set aside and that of the A.O. restored."
6. At the time of hearing, the ld. D.R., while relying on the order of the AO, very fairly submits 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 and the assessee's cross objection 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. 4 ITA No.5713 & CO No.306/M/07
M/s. Star Cruise Mgt. Ltd.
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 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.
C.O. No. 306/Mum/2007 (By the assessee):
9. All the grounds taken by the assessee in cross objection are in support of the order passed by the ld. CIT(A).
10. After hearing the ld. D.R. and perusing the material available on record and keeping in view of our finding recorded in the Revenue's appeal hereinabove, we are of the view that the grounds taken by the assessee in its cross objection do not require fresh adjudication and 5 ITA No.5713 & CO No.306/M/07 M/s. Star Cruise Mgt. Ltd.
accordingly we, while upholding the order passed by the ld. CIT(A), reject the grounds taken by the assessee in its cross objection.
11. In the result, the Revenue's appeal and the assessee's cross objection stand dismissed.
Order pronounced in the open Court on the 28th day of November, 2011.
Sd/- Sd/- (B. RAMAKOTAIAH) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: 28th November , 2011. NG: Copy to : 1. Department. 2.Assessee. 3 CIT(A)-XXXI,Mumbai. 4 DIT(International Taxtion),Mumbai. 5.DR,"J" Bench,Mumbai. 6.Master file. (TRUE COPY) BY ORDER, Asst. Registrar, ITAT, Mumbai. 6 ITA No.5713 & CO No.306/M/07 M/s. Star Cruise Mgt. Ltd. Details Date Initials Designati on 1. Draft dictated on 28-11-2011 Sr.PS/ 2. Draft Placed before author 28-11-2011 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 Sr.PS/ 6. Kept for pronouncement on Sr.PS/ 7. File sent to the Bench Clerk 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