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2017 (1) TMI 1137 - AT - Income TaxInclusion of service tax for the purpose of presumptive income under Section 44B - Held that - Following the decision of the Coordinate Bench in the assessee s own case for A.Y. 2007-08 2013 (10) TMI 743 - ITAT MUMBAI we hold that service tax collected by the assessee would form part and parcel of the aggregate amount as specified under sub section (2) of section 44B of the Act for the purpose of determining the income/profit and gain thereunder. We, therefore, uphold the impugned order and consequently dismiss ground raised by the assessee. Levy of penalty under Section 271(1)(c) - Held that - We find that since no penalty under section 271(1)(c) of the Act has been levied on the assessee for A.Y. 2011-12 in the impugned order, no cause of grievance arises to the assessee by mere initiation of these penalty proceedings. This ground, being premature, is not maintainable and is accordingly dismissed as infructuous.
Issues Involved:
1. Inclusion of service tax for the purpose of presumptive income under Section 44B of the Income Tax Act, 1961. 2. Initiation of penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. Detailed Analysis: 1. Inclusion of Service Tax for Presumptive Income under Section 44B: The primary issue raised by the assessee was whether the service tax collected should be included in the gross receipts for determining the taxable income under Section 44B of the Income Tax Act, 1961. The assessee argued that service tax is a statutory levy and should not be considered as part of the gross receipts since it is collected on behalf of the Government and does not entail any profit element. The assessee cited the decision of the Hon'ble jurisdictional Income Tax Appellate Tribunal in the case of Islamic Republic of Iran Shipping Lines v DDIT (46 SOT 101) to support their claim. The Revenue, represented by the learned D.R., contended that the issue had already been decided against the assessee in their own case for A.Y. 2007-08 (ITA No. 8561/Mum/2010 dated 23.08.2013), where it was held that service tax should be included in the gross receipts for the purpose of determining presumptive income under Section 44B. The tribunal reviewed the material on record and judicial pronouncements, including the cited decision in the assessee's own case, and upheld the Revenue's position. The tribunal emphasized that Section 44B overrides Sections 28 to 43A and that the service tax collected forms part of the aggregate amounts specified under sub-section (2) of Section 44B. The tribunal noted that service tax, like demurrage charges or handling charges, is incidental to the business of shipping and should be included in the aggregate amount for determining presumptive profit under Section 44B. Consequently, the tribunal dismissed the assessee's ground on this issue. 2. Initiation of Penalty Proceedings under Section 271(1)(c): The second issue involved the initiation of penalty proceedings under Section 271(1)(c) of the Act. The assessee challenged the initiation of these proceedings by the Assessing Officer. The tribunal found that since no penalty had been levied for A.Y. 2011-12 in the impugned order, the assessee had no cause for grievance merely due to the initiation of penalty proceedings. The tribunal held that this ground was premature and not maintainable, and therefore, dismissed it as infructuous. Conclusion: The tribunal dismissed the appeal for A.Y. 2011-12, upholding the inclusion of service tax in the gross receipts for determining presumptive income under Section 44B and finding no maintainable grievance in the initiation of penalty proceedings under Section 271(1)(c). The order was pronounced in the open court on 20th January 2017.
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