2015 (7) TMI 1153 - AT - Income Tax

Service tax treated as part of the total receipts for the purpose of computing the Presumptive income u/s 44B - Held that - The amount of service tax cannot be included in the gross receipts for the purpose of computing the Presumptive income of the assessee u/ s 44B.

Summary

Issues involved:
1. Inclusion of service tax in presumptive income u/s 44B
2. Interest levy u/s 234B without following DRP's direction
3. Non-following of DRP's directions on levy of interest u/s 234C
4. Short credit of TDS and advance tax
5. Initiation of penalty proceedings u/s 271(1)(c)

Issue 1: Inclusion of service tax in presumptive income u/s 44B
The main issue was whether service tax should be considered part of total receipts for computing 'Presumptive income' u/s 44B. The Tribunal analyzed various judicial pronouncements and concluded that service tax, being a statutory payment without profit element, cannot be included in gross receipts for determining presumptive income. The decision was consistent with the Tribunal's previous ruling in the assessee's case for earlier years, thus allowing the appeal on this ground.

Issue 2: Interest levy u/s 234B
The Tribunal considered the issue of interest levy u/s 234B in favor of the assessee, following the decision of the jurisdictional High Court. It noted that subsequent decisions and distinctions made by the High Court and the Tribunal supported the assessee's position. Therefore, the Tribunal held that the assessee was not liable for interest u/s 234B, aligning with the majority view and the assessee's previous case history.

Issue 3: Levy of interest u/s 234C
The Tribunal held that the levy of interest u/s 234C was consequential based on its decision in the earlier years, thus ruling in favor of the assessee on this issue.

Issue 4: Short credit of TDS and advance tax
The Tribunal dismissed the ground related to the short credit of TDS and advance tax as the relief had already been allowed by the Assessing Officer in the order passed u/s 154.

Issue 5: Initiation of penalty proceedings u/s 271(1)(c)
The Tribunal considered the initiation of penalty proceedings u/s 271(1)(c) but found that the issue was premature and accordingly dismissed it.

The Tribunal partly allowed the assessee's appeal and dismissed the revenue's appeal based on the decisions and analysis provided for each issue. The judgment was pronounced on 31st July 2015.