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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 ..... the Assessee for the services rendered by it. The Assessee is only collecting the service tax for passing it on to the government. 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 April 2008 it was clarified that “Service tax paid by the tenant doesn't partake the nature of "income" of the landlord. The landlord only acts as a collecting agency for Government for collection of Service Tax. Therefore, it has been decided that tax deduction at source under sections 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax.’ In Circular No. 1/2014 dated 13th January 2014, it has been clarified that service tax is not to be included in the fees for professional services or technical services and no TDS is required to be made on the service tax component under Section 194J of the Act. - Decided in favour of the Assessee. - ITA 403/2013, ITA 384/2015 - - - Dated:- 28-9-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr Kamal Sawhney, Senior Standing Counsel with Mr Raghvendra Singh, Junior Standing Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. State of Madras [1962] 2 SCR 570. According to him, the decision of the Uttarakhand High Court in DIT v. Schlumberger Asia Services Ltd. (2009)317 ITR 156 was distinguishable on facts since it related 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. Lakshmi Machine Works (2007) 290 ITR 667 (SC) where again the same question was considered and this time, the Supreme Court also took note of the earlier decision in Chowringhee Sales Bureau (supra). Mr. Kaushik also referred to the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al oils in India shall be deemed to be the profits and gains of the chargeable to tax. The purpose of this provision is to tax what can be legitimately considered as income of the Assessee earned from its business and profession. 10. The expression amount paid or payable in Section 44 BB (2) (a) and the expression amount received or deemed to be received in Section 44 BB (2) (b) is qualified by the words on account of the provision of services and facilities in connection with, or supply of plant and machinery. Therefore, only such amounts which are paid or payable for the services provided by the Assessee can form part of the gross receipts for the purposes of computation of the gross income under Section 44 BB (1) read with Section 44 BB (2). 11. It is in this context that the question arises whether the service tax collected by the Assessee and passed on to the Government from the person to whom it has provided the services can legitimately be considered to form part of the gross receipts for the purposes of computation of the Assessee s presumptive income under Section 44BB of the Act? 12. In Chowringhee Sales Bureau (supra) sales tax in the sum of ₹ 32, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 part of turnover , excise duty and sales-tax also cannot form part of the turnover . The object of the legislature in enacting Section 80 HHC of the Act was to confer a benefit on profits accruing with reference to export turnover. Therefore, turnover was the requirement. Commission, rent, interest etc. did not involve any turnover. It was concluded that sales tax and excise duty like the aforementioned tools like interest, rent etc. also do not have any element of turn over . 15. In CIT v. Lakshmi Machine Works (supra), the Supreme Court approved the decision of the Bombay High Court in CIT v. Sudarshan Chemicals Industries Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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