9911796707
TMI Blog2013 (11) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... me at the same figure resulting into refund of Rs 25,91,306/-. Thereafter the Assessing Officer noticed that the taxable income chargeable to tax of the assessee had escaped assessment . Consequently, after recording the reasons for re-assessment, notice u/s 148 was issued on 28.5.2008. A copy of the reasons so recorded was forwarded to the assessee on 26.2.2008 when the assessee made a request for the same. The Assessing Officer [Jt.DIT, (International Taxation] forwarded draft assessment order on 31.12.2009 to the assessee . In this order, the Assessing Officer proposed to assess the total income of the assessee at Rs 9,52,47,213/-. The assessee filed objections before the DRP on 27.1.2010. A notice u/s 144C(11) dated 7.9.2010 was issued to the assessee. Written as well as oral submissions were made on behalf of the assessee. The sum and substance of the assessee's objections were as under:- (i) The reopening of the assessment completed u/s 143(3) on 28.12.2006 was in pursuance of audit objections which simply amounts to change of opinion. The assessee disclosed fully and truly all the material facts before the Assessing Officer during original proceedings and no additional fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 of the Act for the following reasons. i. The reassessment, having been undertaken after and as a result of objection raised by Revenue Audit Party of C&AG, is not sustainable in law. ii. The additions made by the AO in reassessment constitute a review of his earlier decision contained in the original assessment order under S. 143(3) which was passed after due application of mind as all requisite information was provided in the return filed with annexures and in the submissions made during the original assessment, and therefore, amounts to a change of opinion, which is not permitted in law. 2. The Learned AO has grossly erred in treating an amount of Rs 3,573,981 charged and collected by the assessee from M/s Chennai Metropolitan Water Supply and Sewerage Board (hereafter referred to as 'CMWSSB' or 'Customer') towards service tax as income and subjecting the same to tax on gross basis under section 115A read with section 44D of the Act. 3. The Learned AO has grossly erred in treating amounts aggregating to Rs 1 ,552,301 being reimbursements claimed and recovered by the assessee towards car hire charges (~3,670,500), international air tickets (~4,992,429) and equipments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no element of income embedded in service tax; that the assessee has no right or title over the tax billed or collected; the Central Government has an overriding title over the collection so made and as per CBDT Circular No.4/2008 dated 28.4.2008, service tax is not included for the purpose of TDS from the amount of rent recoverable by the landlord. To support this contention, the ld.AR has relied on the decision of this Bench rendered in the case of ACIT vs Real Image Media Technologies (P) Ltd, 114 ITD 573, and also on the decision of ITAT Hyderabad in the case of ACIT vs Louis Berger International Inc., (2010) 40 SOT 370(Hyd). On the other hand, the ld.DR has stated that service tax has to be treated as part of gross business receipt and is to be taxed as per the provisions of section 115A r.w.s 44D of the Act. To substantiate his above contention, the ld. CIT/DR, Dr.I.Vijayakumar, has placed heavy reliance on the order of DRP. This appeal is against the order of DRP, Chennai, passed u/s 144C on a reference made by the assesseecompany. 7. After going through the various documents which include the contract between the assessee and CMWSSB, Tamil Nadu Industrial Policy-2003 and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special provision for the computation of income by way of royalty in the case of a foreign company and its subclause( b) provides for deduction in respect of any expenditure or allowance for computing the income by way of royalty or fees or technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or with the Indian concern. As per this provision, no deduction u/s 28 to 44C is available to the assessee while computing income by way of royalty and technical services. Section 115A prescribes mode of computation of expenses from the fee for technical services. In normal circumstances the assessee would have collected the service tax from the respective clients and would have paid the same. But, reimbursement of service tax cannot form part of the taxable income of the assessee. Fee for technical services is for the service rendered by the assessee . Thus, service tax would not form part of fee for technical services. In other words, service tax is not an expenditure incurred by the assessee. It is a statutory levy on the person who avail the service from the assessee. It would have been a different case if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP, these receipts are on account of services rendered by the assessee and were highly technical in nature. But as per the assessee, such receipts cannot be included in the gross and have to be excluded for taxation purposes. In this regard, reliance has been made on the decision of ACIT vs Louis Berger International Inc. (supra). 10. After considering the rival submissions, we find that the reimbursement of car hire charges, international air tickets and equipments procurement expenses would not be grossed to tax at the flat rate of 20%. We are in agreement with the ld.AR that these being reimbursement expenses earlier incurred by the assessee would not constitute assessee's income by way of fees for technical services and hence, provisions of section 115A are not attracted. Similar view has been taken by the Tribunal while deciding the cases of Real Image Media Technologies(P) Ltd(supra) and Louis Berger International Inc.(supra), which go in the favour of the assessee. Accordingly, by respectfully following the above decisions, we order to delete this addition, after setting aside the finding of the ld. CIT(A), and allow this ground of appeal in favour of the assessee. 11. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the principal, procedures and practices acceptable to the bank. (ii) take all necessary steps to carry out the rehabilitation action plan agreed with the bank. (iii) without prejudice to the generality of the foregoing, shall ensure that a displaced persons are provided for prompt and adequate compensation for the lost assets including dwelling and related structure and (B) displaced persons who are required to relocate are provided adequate assistance, logistical and financial to move to their new area of the residence and are provided necessary financial assistance on a grant basis during the period of relocation and for a reasonable period thereafter." 12. Despite the above claim made by the assessee, the ld.AR contended fiercely that the project in question is included as 'Infrastructure project' and is located in the backward area as per the Industrial Policy and in any other case the assessee had furnished consultancy to Water Supply Project which is included in 'Infrastructure Project' as per Explanation 2 to section 80IA(4) of the Act. The question before us is as to whether the expression 'Infrastructure facility' given in section 80IA can be imported in se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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