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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal filed by the Revenue is arising out of the order of Commissioner of Income Tax-58, Mumbai [in short CIT(A)], in appeal No. CIT(A)-58/57/2015-16, order dated 25.07.2016. 2 2. The only issue in this appeal of Revenue is against the order of CIT(A) holding that tax was not deductible at source on payment on payments made to Star Cruise Management Ltd. (SCML) out of sale proceeds of cruise tickets booked by the assessee and therefore consequential levy of tax under section 201 and interest under section 201A of the Act by the AO is deleted. For this Revenue has raised the following three effective grounds: - “1. Whether on the facts and circumstances of the case and in law, the CIT(A) was correct in law in holding that tax was not deductible at source on payments to Star Cruise Management Ltd. (SCM<) out of sale proceeds of cruise tickets booked by the assessee and therefore consequential levy of tax and interest under section 201 and 201A by the Assessing Officer?
Whether on the facts and the circumstances of the case and in law, the CIT(A) was correct in holding that gross receipts received by SCML as principal from its agents is not chargeable to tax under section 5(2)(a) of the IT Act, 1961?
3. Whether on the facts and the circumstances of the case and in law, the CIT(A) was correct in holding that no income accrues or arises to the assessee in India in relation to business of sale of tickets through selling agents?"
Briefly stated facts are that the assessee acted as Canvasser in India for Cruise Packages, shores excursions promoted by SCMI in respect of vessels owned, chartered, managed and/or operated by Star 3 Cruises Group of Companies from time to time. To remit monies received from PSA's for cruise packages, shore excursions promoted by SCML in India. To keep SCML advised on all relevant laws and regulations and operating criteria relating to the sale of tickets with particular reference to consumer and contract legislations. To treat as confidential all books, documents and information received from SCML and to return the some upon demand; and To keep and render to SCML and accurate accounts of any dealings of all monies received by SCITSPL in relation to sale, bookings & confirmation for and on behalf of SCML. and to pay over to SCML, all monies so received without any deduction except as may be agreed upon or authorized between SCML and SCITSPL While passing his order u/s 195 of the Act, the assessing officer has relied on his order for earlier years and has noted that the facts of the case are identical in comparison to last several assessment years. The AO has dubbed the above arrangement as being in the nature of a business connection between the two panics as contemplated under section 9(1)(i) of the Act and has estimated total profit of the non-resident from this business connection of the turnover from India in terms under section 44B of the Act. Aggrieved, assessee preferred the appeal before CIT(A).
The CIT(A) noted that the assessee’s issue is covered by the order of ITAT in assessee’s own case for the same issued in 3942, 3943, 3945 and 3802/Mum/2010 for AY 2006-07, 2009-10,2007- 08, 2008-09, 2010-11 respectively & in ITA No. 7487/Mum/2011 for AY 2011-12. The CIT(A) quoted the relevant portion of ITAT order for AY 2006-07 in ITA No. 3941/Mum/2010 vide order dated 22.07.2011 which reads as under:
“20. However, the observations so made by Prof Lang, and the ruling rendered by Authority for 4 Advance Ruling in the case of Rajiv Malhotra (284 ITR 564), did not have the benefit of examining the impact of Explanation 1 (a) to Section 9(1)(i) of the Act. As a matter of fact, in Rajiv Malhotra’s case (supra), the Authority for Advance Ruling does observe that “the facts that the agent renders services abroad in the form of pursuing and soliciting the participants and that the commission is remitted to him abroad are wholly irrelevant for the purpose of determining the situs of his income” but then this observation overlooks the fact that in terms of Explanation 1(a) to Section 9(1)(i), “in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India” but then since no part of the operations was carried out in India, no part of assessee’s income could have been thus taxable in India. It would thus seem to us that when no business operations are carried out in India, even if a non resident has a business connection in India, no part of income of such business can be deemed to have accrued or arisen in India. The views expressed by the learned Authority for Advance Ruling, which do not fetter our independent opinion anyway in view of its limited binding force under section 245 S of the Act, do not impress us, and we decline to be guided by the same. Revenue thus derives no support from these observations either. In view of these discussions, 5 and bearing in mind entirety of the case, we uphold the relief granted by the learned Commissioner (Appeals) and decline to interfere in the matter. This conclusion is also in harmony with the conclusions arrived at by a coordinate bench in assessee’s own case for the assessment years 2002-03 to 2005-06, reported in 134 TTJ at page 204 as DDIT Vs Star Cruise India Travel Services Pvt. Ltd and vice versa.”
When this was pointed out to the learned CIT Departmental Representative, he conceded the position that the issue is covered by Tribunal’s decision but he relied on the assessment order.
We have heard rival contentions and gone through the facts and circumstances of the case. We find that the issue is squarely covered in assessee’s own case for earlier year order in assessment year 2006-07 and other years also. Hence, taking a consistent view, we confirm the order of CIT(A) deleting the addition. This appeal of Revenue is dismissed.
In the result, the appeal of Revenue is dismissed.
Order pronounced in the open court on 04-10-2018. (एन. के. प्रधान / NK PRADHAN) (महावीर स िंह /MAHAVIR SINGH) (लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER) मुिंबई, ददनािंक/ Mumbai, Dated: 04-10-2018 स दीप सरकार, व.निजी सधिव / Sudip Sarkar, Sr.PS