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TMI Blog2017 (12) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... s revenue of the assessee for the purpose of computation of profits under the provisions of section 44BB of the I.T Act, 1961. (ii) Whether the CIT(A) has erred in not appreciating the fact that section 44BB of the Act is a self-contained code providing for computation of profit at a fixed percentage of gross receipts of the assessee and all the deductions and exclusions from the gross receipts are deemed to have been allowed to the assessee. (iii) Whether the CIT(A) has erred in not appreciating the fact that once the receipts are offered to tax u/s 44BB of the Act which provides for computation of profits on gross basis, there is no scope for computing or re-computing the profits by excluding any part of the receipts from the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly it has been showing its income under section 44BB of the Act, as it is not in dispute that the assessee is to be assessed under the Indian Income Tax Act. In the return of income, the assessee had shown its income under section 44BB(1) which was at 10% of gross revenue amounting to Rs. 200,01,54,038/-. The Assessing Officer, from the perusal of the payment receipts and revenue breakup submitted by the assessee, noted that assessee has not offered to tax the reimbursement of service tax receipts which is part of gross receipt from ONGC amounting to Rs. 19,51,30,225/-. In response to show cause notice by the AO, assessee submitted that statutory charges cannot form part of the amount considered for the purpose of deemed profit under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of DIT vs. Mitchell Drilling International Pvt. Ltd.(supra) wherein the Hon'ble High Court, after analyzing various judgments of Hon'ble Uttarakhand High Court and the judgment in the case of Chowringhee Sales Bureau Pvt. Ltd. vs. CIT (1973) 87 ITR 542, observed and held as under:- "9. Section 44BB begins with a non obstante clause that excludes the application of Sections 28 to 41 and Sections 43 and 43A to assessments under Section 44 BB. It introduces the concept of presumptive income and states that 10% credit of the amounts paid or payable or deemed to be received by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 receipt. 13. The decision in George Oakes (P) Ltd. (supra) was concerned with the constitutional validity of the Madras General Sales (Definition of Turnover and Validation of Assessments) Act, 1954 on the ground that the word turnover was defined to include sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 part of 'turnover', excise duty and sales-tax also cannot form part of the I.T.A. No.6537/DEL/2014 7 'turnover'." The object of the legislature in enacting Section 80 HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 is 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. I.T.A. No.6537/DEL/2014 8 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 April 2008 it was clarified that "Service tax paid by the tenant doesn't partake the n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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