IN RE: INDIAN JV. CO. Vs. STATE

JUDGEMENT

(1.) IN this application under section 245Q(1) of the Income -tax Act, 1961 (for short "the Act") the applicant, [omitted]., is an Indian company (hereinafter termed as "Indian JV. Company"). It is a joint venture of a US JV. Partner which is an American company holding 60% equity shares and, Indian JV Partner another Indian company, having 40% equity shares. The US JV. Partner is engaged in the business of international integrated transportation services. The Indian JV. Partner is engaged in the business of a general sales agent for and on behalf of international and domestic airline companies in India. The American Company is also another company incorporated in and a tax resident of the USA (referred to in this ruling as 'the American Company'). All these and some other companies are members of an international group of companies which are engaged in the business of international transportation services and use an international group logo/trademark. On October 30, 2000 the applicant entered into an agreement with the American company in regard to the international transportation services (hereinafter referred to as 'the transportation agreement) for the movement of parcels/packages within and outside India. Under the agreement the applicant is to provide services to the American company for transportation of packages in India and the American company has to provide services to the applicant for transportation of packages throughout the world. For the services rendered by the American company to the applicant in respect of out -bound consignments it would make payment; so also the American company would pay to the applicant for the services rendered by it in respect of in -bound consignments. The applicant and the American company work on principal to principal basis. The American company does not own or otherwise operate through any business premises in India. From January, 2001 the applicant has been carrying on business operations of international/domestic transportation of packages. On these facts, the applicant sought ruling of the Authority on the following question :

(2.) THE jurisdictional Commissioner (referred to in this ruling as 'the Revenue') submitted its comments thrice. After passing the order under sub -section (2) of section 245R of the Act, the following comments are offered :

(3.) MR . Dinesh Kanabar, appearing for the applicant, has summed up his submissions thus : no business operation is carried on by the American company in India and all the operations of transportation business are carried on by it outside India so no part of income arises to the American company in India so as to be taxable under section 9(1)(i) read with Explanation (1) thereto. It is represented that before the Transportation Agreement with the applicant, the American company, had agreement with the ELBEE and on similar facts, the Income -tax Appellate Tribunal held that no income would be deemed to accrue or arise to the American company for the purpose of section 9(1)(i) read with the Explanation thereto; against the order of the Tribunal the application for reference of the question of law, namely, whether any deemed income could be said to accrue or arise under section 9(1)(i) read with the Explanation, was dismissed by the High Court.