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TMI Blog2015 (6) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are without prejudice to each other: Ground No. 1 That based on the facts and circumstances of the case, the Ld. CIT(A)-II, Dehradun erred in upholding the order of the AO that receipts of Rs. 100,803,172/- on account of service tax wer includible in the gross receipts for the purpose of determining income under section 44BB of the Income tax Act, 1961. Ground No. 2 That based on the facts and circumstances of the case, the Ld. CIT erred in not following the judgment of the jurisdictional Income Tax Appellate Tribunal, Delhi 'G' Bench in ITA No. 5284/Del/2011 in the case of Sedco Forex International Driling Inc. vs. Addl. Director of Income tax wherein it was held that service tax receipts were not includible in the gross receipts fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the previous year, the assessee has received revenues on account of the contract entered with Oil and Natural Gas Corporation Limited. The assessee NRC has a PE in India. For availing the benefit of Section 44BB, the assessee is having a PE in India through which it is carrying out business in India. Since the assessee has not claimed any benefit under the DTAA and has not filed any tax residency certificate, the case was assessed under the provisions of the Indian Income Tax Act. The assessee has claimed that the taxable income on the revenues during the year to be computed only in terms of section 44BB of the Income Tax Act, 1961 claiming to be engaged in the providing of services and on facilities, in connection with, or supply plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee filed its replies/ submissions. AO after considering the submissions of the assessee and after relying upon the various judgments has held that the amounts received by the assessee by way of reimbursement of expenses, mobilization and demobilization charges and fees, handling charges are to be included in the amounts specified in subsection (2) of section 44BB, to determine the deemed profit of the assessee. In view of the above, the receipts on account of reimbursement of expenses are taken into account to determine deemed profit of 10% of the gross receipts of the assessee during the year as per section 44BB of Income Tax Act, 1961. The reimbursement of service tax too, is to be included in the gross receipts and taken into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 5.9.2015, as aforesaid. 6. On the other Ld. DR relied upon the orders passed by the revenue authorities. 7. We have heard both the parties and perused the records available with and especially the order dated 05.9.2015 passed by the ITAT, Delhi 'B' Bench, New Delhi in ITA No. 5482/Del/2013 A.Y. 2010-11 in the case of Ensco Maritime Limited vs. Asstt. Director of Income Tax (International Taxation), we are of the view that the issue involved in dispute is squarely covered in favor of the assessee by the decision of the Coordinate Bench, ITAT, New Delhi in the aforesaid case in which one of the Judicial Member was the party. The relevant para no. 9 to 9.1 from Pages 7 to 11 of the aforesaid order is reproduced below:- "9. With reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their decision in Islamic Republic of Iran Shipping Lines (supra) held that service tax being a statutory liability, would not involve any element of profit and accordingly, the same could not be included in the total receipts for determining the presumptive income. In the light of view taken by the Mumbai Bench, especially when the ld. DR did not place any material before us controverting the aforesaid findings of the ld.CIT(A) so as to enable us to take a different view in the matter nor brought to our notice any contrary decision, we are of the opinion that service tax paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement. Therefore, ground no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT, Delhi 'B' Bench, New Delhi in ITA No. 5482/Del/2013 A.Y. 2010-11 in the case of Ensco Maritime Limited vs. Asstt. Director of Income Tax (Int. Taxation) in which one of the Members was the party wherein the issue in dispute was decided in favor of the assessee. Respectfully, following the precedent of the Coordinate Bench as aforesaid, we quash the orders of the authorities below and direct the AO to exclude service tax from the gross receipts for the purpose of determining the income under section 44BB of the Income Tax Act, 1961 and decide the issue in favor of the assessee by allowing the appeal of the assessee.
9. In the result, the appeal filed by the Assessee is allowed.
Order pronounced in the Open Court on 05/6/2015. X X X X Extracts X X X X X X X X Extracts X X X X
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