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TMI Blog2015 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee is a company engaged in the business of providing equipment on hiring and manpower etc. for exploration and production of mineral oil and natural gas. The Assessee filed its income for the AY on 4th October 2008 declaring an income of Rs. 49,31,260 as per provisions of Section 44BB (3) of the Income Tax Act, 1961 ('Act'). In computing the gross receipts for the purposes of determining the taxable income, the Assessee did not include a sum of Rs. 2,09,24,553/- being the service tax received from its customers. 3. The Assessing Officer ('AO') by order dated 7th February 2011 rejected the contention of the Assessee and included the aforementioned sum collected by the Assessee as service tax in the gross receipts for computing the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to payment of customs duty. 7. Mr Piyush Kaushik, learned counsel for the Assessee, on the other hand, submitted that CBDT Circular No. 4/2008, dated 28th April 2008 and CBDT Circular No. 1/2004, dated 13th January 2014 recognize that the gross sums on which tax was to be deducted at source whether Section 194 I or Section 194 J of the Act would not include service tax. He referred to the decision of the Bombay High Court in CIT v. Sudarshan Chemical Industries Ltd. 245 ITR 769 (Bom) where, after considering the decision in George Oakes (P.) Ltd. (supra), it was held that the 'turn over' for the purposes of Section 80HHCof the Act would not include sales tax and excise duty. He also referred to the decision of the Supreme Court in CIT v. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India; and (b) the amount received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India." 9. Section 44BB begins with a non obstante clause that excludes the application of Sections 28 to 41 and Sections 43 and 43A to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... howringhee Sales Bureau (supra) sales tax in the sum of Rs. 32,986 was collected and kept by the Assessee in a separate 'sales tax collection account'. The question considered by the Supreme Court was: 'Whether on the facts and in the circumstances of the case the sum of Rs. 32,986 had been validly excluded from the assessee's business income for the relevant assessment year?". However, there the Assessee did not deposit the amount collected by it as sales tax in the State exchequer since it took the stand that the statutory provision creating that liability upon it was not valid. In the circumstances, the Supreme Court held that the sales tax collected, and not deposited with the treasury, would form part of the Assessee's trading rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other specific context. There the question before the Supreme Court was "whether excise duty and sales tax were includible in the 'total turnover' which was the denominator in the formula contained in Section 80 HHC (3) as it stood in the material time?" The Supreme Court considered its earlier decision in Chowringhee Sales Bureau (supra) and answered the question in the negative. The Supreme Court noted that for the purposes of computing the 'total turnover' for the purpose of Section 80 HHC (3) brokerage, commission, interest etc. did not form part of the business profits because they did not involve any element of export turnover. It was observed: "just as commission received by an assessee is relatable to exports and yet it cannot form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 44 BB of the Act. 17. The Court accordingly holds that for the purposes of computing the 'presumptive income' of the assessee for the purposes of Section 44 BB of the Act, the service tax collected by the Assessee on the amount paid t it for rendering services is not to be included in the gross receipts in terms of Section 44 BB (2) read with Section 44 BB (1). The service tax is not an amount paid or payable, or received or deemed to be received by the Assessee for the services rendered by it. The Assessee is only collecting the service tax for passing it on to the government. 18. The Court further notes that the position has been made explicit by the CBDT itself in two of its circulars. In Circular No. 4/2008 dated 28th Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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