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TMI Blog2017 (1) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Ram Lal Negi , Judicial Member For The Appellant : None For The Respondent : Shri Subchan Ram ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the order assessment for A.Y. 2011-12 passed under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (in short 'the Act'), dated 20.10.2014 pursuant of the directions of the Dispute Resolution Panel-III, (DRP), Mumbai issued under section 144C(5) of the Act vide order dated 22.09.2014. 2.1 In this appeal, the assessee has raised the following grounds: - 1. GROUND I : Inclusion of service tax for the purpose of presumptive income under Section 44B of the Income Tax Act, 1961 ('the Act') 1.1 On the facts and in the circumstances of the case and in law, the learned DDIT erred in including the amount of service tax collected of ₹ 4,598,540, as part of gross receipts for determining the taxable income of the appellant. 1.2 The learned DDIT failed to appreciate the fact that service tax collected by the Appellant is not includible in computing the total income under Section 44B of the Act since service tax is a statutory levy and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of determining presumptive income under section 44B of the Act is covered against the assessee and in favour of Revenue by the decision of the Coordinate Bench of the Tribunal in the assessee s own case for A.Y. 2007-08 in ITA No. 8561/Mum/2010 dated 23.08.2013. A copy of the cited order (supra) was placed on record. It is submitted by the learned D.R. that the AO has followed the aforesaid order of the Coordinate Bench while passing the impugned order. It is prayed that in view of the above, the assessee s appeal for this year be dismissed. 3.2.1 We have heard the learned D.R. for Revenue and perused and carefully considered the material on record; including the judicial pronouncements cited by both the learned D.R. for Revenue (supra) and by the assessee in the grounds of appeal (supra). We find that, as contended by the learned D.R. for Revenue, the issue of inclusion of service tax in gross receipts for the purpose of determining presumptive income under section 44B of the Act has been affirmed in favour of Revenue and against the assessee by the decision of the Coordinate Bench in the assessee s own case for A.Y. 2007-08 in ITA No. 8516/Mum/2010 dated 23.08.2013; co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, make any material difference. It is the true nature and the quality of the receipt and not the head under which it is entered in the account books as would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. We may in this context refer to the case of Punjab Distilling Industries Ltd. vs. CIT (1959) 35 ITR 519 (SC). In that case certain amounts received by the assessee were described as security deposits. This Court found that those amounts were an integral part of the commercial transaction of the sale of liquor and were the assessee s trading receipt. In dealing with the ITA No. 8516/M/2010 China Shipping Container Lines (Hong Kong Co. Ltd. contention that those amounts were entered in a separate ledger termed empty bottles return security deposit account , this Court observed. 9. It is clear from the decision of Hon ble Supreme Court that this issue of the amount received as Sales Tax is treated as trading receipt of the assessee is settled. A similar view has been taken by the Hon ble Supreme Court in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted while computing the profits and gains of the shipping business in case of non-resident as per section 44B. We quote section 44B as under: Special provision for computing profits and gains of shipping business in the case of non-residents. 44B. (1) Notwithstanding anything to the contrary contained in sections 28 to 43A in the case of an assessee, being a nonresident, engaged in the business of operation of ships, a sum equal to seven and a half per cent of the aggregate of the amounts specified in subsection (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession . (i) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods shipped at any port in India; and ITA No. 8516/M/2010 China Shipping Container Lines (Hong Kong Co. Ltd.) (ii) (ii) the amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock, mail or goods shipped at any port outside India. (iii) Explanation- For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no reason/occasion for including the service tax along with the demurrage charges and handling charges in the explanation however when any other amount of similar nature is required to be included then the service tax as far as on the aspect of having no element of profit is similar in nature to that of demurrege charges or handling charges. 11. Further the term turnover is not relevant for estimation of profit and gain u/s 44B and therefore, when the demurrege charges and handling charges are specifically included in the aggregate amount as prescribed under sub-section 2 then whatever amount received or receivable/paid or payable to the assessee on account of carriage of passengers etc. or goods shipped would be part of such amount for computation of profit and gains u/s 44B. Thus, the theory of element of profit would not apply to the aggregate amount as specified in sub- ITA No. 8516/M/2010 China Shipping Container Lines (Hong Kong Co. Ltd. 13 section 2 of section 44B. Moreover service tax is incidental to the transactions of carriage of passengers etc. and goods shipped and the amount paid or payable to and received or receivable by the assessee on account of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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