2012 (10) TMI 1085 - AT - Income Tax

Summary

Issues involved: Appeal against assessment order u/s 144C(13) r.w.s. 143(3) for AY 2007-08 regarding inclusion of service tax in revenue for profit computation u/s 44B of IT Act, 1961.

Issue 1: Inclusion of service tax in revenue for profit computation u/s 44B
The appellant contested the addition of service tax amounting to Rs. 3,40,76,521 in total revenue for profit calculation u/s 44B. Assessee argued that service tax should not be considered as revenue for this purpose. The appellant relied on various Tribunal decisions supporting their stance. The respondent, however, cited a contrary decision by Delhi ITAT. The Tribunal analyzed the arguments and previous rulings. Referring to the case of Islamic Republic of Iran Shipping Lines, it concluded that service tax, being a statutory liability without profit element, should not be included in total receipts for determining presumptive income under section 44BB. Consequently, the order of DRP was set aside, directing the Assessing Officer not to include service tax amount in total receipts for income calculation under section 44BB. The Tribunal upheld the appellant's appeal based on the aforementioned decision and the subsequent acknowledgment by Delhi ITAT regarding the nature of service tax as a statutory liability devoid of profit element.

Decision: The Tribunal allowed the appeal, pronouncing the judgment on 31st October, 2012.