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2018 (8) TMI 1645 - AT - Income TaxComputation of income u/s 44B - Service tax collected by the assessee and paid to the government account having no profit element to be included in the gross receipts from operation of ships for computation of income u/s 44B - Held that - Respectfully following the aforesaid orders of the tribunal in assessee s own case for AY 2010-11 which has elaborately discussed the issue in length, we allow the appeal of the assessee by holding that the service tax collected by the assessee and paid to the government account having no profit element, cannot be included in the gross receipts from operation of ships for computation of income u/s 44B of the 1961 Act. Merely because the Revenue has filed an appeal before the Hon ble Bombay High Court is not sufficient for us to taken a different view as no judgment of the Hon ble High Court/ Hon ble Apex Court holding in favour of Revenue has been brought on record by learned DR. This issue is accordingly decided in favour of the assessee.
Issues Involved:
1. Inclusion of Service Tax in Gross Receipts for Presumptive Taxation under Section 44B of the Income Tax Act, 1961. 2. Non-compliance with Tribunal's previous rulings in favor of the assessee for prior assessment years. Issue-wise Detailed Analysis: 1. Inclusion of Service Tax in Gross Receipts for Presumptive Taxation under Section 44B of the Income Tax Act, 1961: The primary issue in this appeal is whether the service tax amounting to ?35,25,40,620 collected by the assessee and paid to the government should be included in the gross receipts for computing presumptive income under Section 44B of the Income Tax Act, 1961. The assessee, a company incorporated in Seoul, Korea, engaged in global maritime container transportation, opted to be taxed under Section 44B on a presumptive basis. The assessee excluded the service tax from the aggregate amount received from the business of operations of ships while computing presumptive tax under Section 44B. The Dispute Resolution Panel (DRP) upheld the Assessing Officer's (AO) view that the service tax component should be included in the gross receipts for presumptive taxation. The DRP noted that despite the tribunal's previous rulings in favor of the assessee for AY 2007-08 and 2008-09, the Revenue had filed an appeal with the Hon'ble Bombay High Court, which was pending disposal. Consequently, the DRP confirmed the additions, leading to the assessment order dated 31.01.2017. Upon appeal to the tribunal, it was reiterated that in the assessee's own cases for AY 2007-08, 2008-09, and 2010-11, the tribunal had consistently held that the service tax collected by the assessee, being a statutory liability with no profit element, should not form part of the gross receipts for computing presumptive tax under Section 44B. The tribunal referenced its previous decisions, including the order for AY 2010-11, which elaborately discussed the issue and ruled in favor of the assessee. The tribunal emphasized that the service tax collected and paid to the government does not involve any profit element and, therefore, should not be included in the gross receipts for presumptive taxation. The tribunal also noted that merely because the Revenue had filed an appeal before the Hon'ble Bombay High Court was not sufficient to take a different view, especially in the absence of any judgment from the High Court or the Apex Court favoring the Revenue. 2. Non-compliance with Tribunal's Previous Rulings in Favor of the Assessee for Prior Assessment Years: The tribunal noted that the DRP and the AO did not follow the tribunal's previous rulings in the assessee's favor for AY 2007-08 and 2008-09. The tribunal had held in those years that the service tax should not be included in the gross receipts for computing presumptive tax under Section 44B. The tribunal's consistent view across multiple assessment years was that service tax, being a statutory liability collected on behalf of the government, should not be part of the gross receipts. The tribunal reiterated its position that the earlier decisions in the assessee's favor should be followed unless there is a change in law, facts, or circumstances, or a contrary decision from a higher judicial authority. The tribunal's ruling for AY 2010-11 was cited, which followed the same reasoning and excluded service tax from the gross receipts for presumptive taxation. Conclusion: Respectfully following the tribunal's previous orders in the assessee's own case for AY 2010-11, the tribunal allowed the appeal of the assessee. It held that the service tax collected by the assessee and paid to the government account, having no profit element, cannot be included in the gross receipts from the operation of ships for computing income under Section 44B of the Income Tax Act, 1961. The tribunal ordered accordingly, deciding the issue in favor of the assessee. Result: The appeal of the assessee was allowed, and the tribunal pronounced the order in the open court on 28.08.2018.
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