No Tax on Income of company registered in Isle of Man received as principal from its agent in India

ACIT Vs Star Cruise Management Ltd (ITAT Mumbai)

ITAT Mumbai held that services provided by Indian Company to company registered in Isle of Man (i.e. non-resident company) under Canvasser Agent Agreement, on principal-to-principal basis not taxable in India.

Facts- The Assessee [i.e. Star Cruise Management Ltd.], a company registered in Isle of Man, was engaged in the canvassing business of travel and tour related services.

The Assessee had entered into Canvasser Agent Agreement, dated 01/04/2005, with Star Cruises (India) Travel Services Pvt. Ltd., (the Indian Company) for canvassing the cruise in India for an agreed remuneration.

For A.Y. 2013-14, the Assessee filed a return of income declaring ‘Nil’ income. The case of the Assessee was selected for scrutiny. During the assessment proceedings, justifying ‘nil’ income offered to tax, the Assessee submitted that the Canvasser Agent Agreement, dated 01/04/2005 between the Assessee and the Indian company was on principal-to-principal basis. The tickets and final confirmation were being given by the Assessee to the customers and passengers directly. None of the ships of the Assessee either touched any Indian port or entered into Indian territorial waters. Indian customers had to take cruises from foreign ports. The Indian company collected the money and remitted the same to the Assessee in return for the agreed commission. The Assessee had no operations in India.

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