TMI Blog2013 (4) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has claimed the benefit in respect of recruitment fees which was earlier not available u/s 33AC of the Act, the scope of which was limited only to profits derived from the operations of ships. Therefore, delete the addition made by the A.O. and confirmed by the ld. CIT(A) on account of recruitment fees. In favour of assessee. Disallowance of expenses claimed against miscellaneous income - Held that:- As rightly submitted by the D.R., the details of the expenses claimed by the assessee have not been furnished by the assessee either before the authorities below or even before the Tribunal and in the absence of the same, agreeing with the contention of the D.R. that there is no case made out by the assessee for the assessee to justify any more opportunity to be given to the assessee at this stage to support and substantiate its claim on this issue. Thus uphold the impugned order of the ld. CIT(A) confirming the disallowance made by the A.O. on this issue. Against assessee. - ITA Nos.6153 & 1038/Mum/2009 - - - Dated:- 3-4-2013 - P M Jagtap, AM And Sanjay Garg, JJ. For the Appellant : Shri Jitendra Jain For the Respondent : Shri O P Meena ORDER:- These tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have some linkage or association with maritime education since both these incomes were placed in the same category. He held that the activity of the agency division of the assessee of advising foreign principals on hiring of people for Indian food and beverage specialities was not a kind of activity which had any linkage either with any kind of education or any aspect of running operation of ships. In this regard, he referred to some of the agreements in connection with recruitment fees and found that the following services were mainly rendered by the assessee company for earning the recruitment fees:- (i) To arrange for medical examination of the hired F B Personnel prior to their departure from India. (ii) To secure the signature of each F B personnel on duplicate originals of the Employment Agreement. (iii) To assist the F B Personnel in obtaining required vaccination, transportation, travel documents, passport, visa and government clearness; (iv) To main communication with injured F B Personnel who have to be repatriated to India in order to ensure that the Principal receives relevant information regarding their maintenance, cure and recovery status. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined in section 115 V-I of the Act. 6. The submissions made on behalf of the assessee were not found acceptable by the ld. CIT(A) and he upheld the action of the A.O. treating the recruitment fees as not forming part of shipping income covered under Tonnage tax Scheme for the following reasons given in para 3.2.1 of his impugned order:- The nature of services provided by the appellant shows that the appellant provided only administrative services and is not engaged in providing skilled services in the shipping industry. As rightly pointed out by the Assessing Officer other than the fact that the appellant provided these services to the persons owning ships, these services have nothing to do with the business of shipping. Moreover, it is found that in the assessment year 2004-05, the appellant claimed deduction under section 33AC of the Income Tax Act on these receipts and the Assessing Officer rejected the claim of the appellant and the CIT(A) in the appellate order dated 14-3-2007 upheld the action of the Assessing Officer holding that income of the appellant from recruitment fee cannot be said to be income derived from the business of shipping. In view of these f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions relating to income of shipping company as contained in Chapter XII-G including section 115 V-I of the Act are inserted in the statute w.e.f. 1-4-2005 and prior to that the benefits for shipping business were provided in section 33-AC only in respect of profits derived from the business of operation of ships. He contended that the provisions of section 115 V-I thus are made applicable for the first time in the year under consideration i.e A.Y. 2005-06 and the assessee is eligible for the benefit provided therein in respect of recruitment fees arising from incidental activities as per s.s. (5) u/s 115 V-I of the Act. 10. The ld. D.R., on the other hand, strongly relied on the impugned order of the ld. CIT(A) in support of the Revenue s case on this issue and submitted that the reasons given by the ld. CIT(A) in para 3.2.1 of his impugned order to deny the benefit to the assessee in respect of recruitment fees may be taken into consideration to decide this issue. He also submitted that similar claim of the assessee for the benefit in respect of recruitment fees was rejected in A.Y. 2004-05 and the same was accepted by the assessee. 11. We have considered the rival su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me (a) Maritime Consultancy Charges - Maritime consultancy charges received by shipping company in the course of business of operating ships in lieu of knowledge offered by it to other companies which do not possess such expertise and which may among other things include rendering advice on setting up of shipping business, ship designing and repair and business acquisition, etc. (b) Income Earned from Loading/Unloading of Cargoes - Charges received for services in connection with loading and unloading of cargo to and from the ship (such charges being separate from the transit charges). (c) Ship Management fees/remuneration for managed vessels - Fees or remuneration earned for providing services of operation and maintenance of vessels on behalf of other ship owners/agencies. (d) Maritime Education/Recruitment fees - Training fees charged/earned by shipping company by extending its surplus training facility to other personnel in the shipping industry and fees earned from foreign ship owners for rendering services by way of screening, interviewing, short-listing and recruitment of floating staff and officers. Keeping in view the Rule 11-R of the I.T. Rules presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of employment prior to leaving in order to join the vessel. 5. To secure the signature of each F B PERSONNEL on duplicate originals of the Employment Agreement (EA) prior to them leaving to join the vessel. The EA shall be in such form as may be specified by PRINCIPAL from time to time. The signed originals shall be sent to PRINCIPAL. Alternatively, PRINCIPAL may elect to have F B PERSONNEL execute the EA at the time they join the vessel. In such event, AGENT shall provide F B PERSONNEL with an advance copy of the EA prior to them leaving to join the vessel so they are aware of what they will be required to execute upon joining the vessel. 6. To assist the F B PERSONNEL in obtaining the required vaccination, inoculation, transportation, travel documents, Bahamian Seaman s Book (wherever required, to be processed by the Principal) Seaman s Certificate, passport, visa and government clearances for leaving India and for entry to the country where the F B PERSONNEL will join the vessel on assignment. 7. a) As determined and directed by PRINCIPAL, to replace any F B PERSONNEL who violates the terms and conditions of EA or who otherwise fails to complete their sailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion, if the nature of services rendered by the assessee as provided in the relevant Manning Agency Agreement is taken into consideration, the fees received for the said services clearly fall in the recruitment fees as prescribed in Rule 11-R of the I.T. Rules being incidental activities for the purpose of relevant shipping income as further elaborated in Note-5 appearing after the corresponding Form 66 which describes the recruitment fees as fees earned from foreign ship owners for rendering services by way of screening, interviewing, short-listing and recruitment of floating staff and officers. Even the copies of debit notes raised by the assessee on foreign ships owners on account of recruitment fees showing the positions for which recruitments were made as well as giving the details of crews further support the case of the assessee that the fees was received in connection with the services rendered to the foreign ship owners for recruitment of floating staff on board their ships. Having regard to all these facts of the case clearly borne out from the relevant documentary evidence placed on record before us, we are of the view that the recruitment fees received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after allowing all the expenses incurred for earning recruitment fees. 17. As the main issue involved in ground No. 1 of the assessee s appeal has been decided by us in favour of the assessee holding that the recruitment fees forming part of its profits from incidental activities as covered by s.s. (5) of section 115 V-I r.w. Rule 11-R of the Income Tax Rules is not chargeable to tax in the hands of the assessee separately, the alternative issue raised in ground No. 2 by the assessee in its appeal has become infructuous and the same is accordingly dismissed. 18. Now, we shall take up the appeal of the assessee for A.Y. 2006-07 being ITA No. 1038/ Mum/2010. 19. The main issue involved in this appeal as raised in ground No. 1 relating to taxability of recruitment fees in the hands of the assessee is similar to the one involved in ground No. 1 of the assessee s appeal for A.Y. 2005-06 which has already been decided by us in the foregoing portion of this order. Following our conclusion drawn in A.Y. 2005-06 on similar issue, we allow ground No. 1 of assessee s appeal for A.Y. 2006-07. 20. The issue raised in ground No. 2 of the assessee s appeal for A.Y. 2006- 07 is also simil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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