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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 ..... Whether on the facts and in the circumstances of the case and in law, the CIT (A) has erred in holding that receipts on account of service tax are not includible in gross 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 turnover as the same would amount to defeating the very purpose of providing for a presumptive scheme of taxation u/s 44BB of the Act and obviating the need for maintaining accounts for individual receipts, payments etc. (iv) Whether the CIT(A) has erred in ignoring the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit of the assessee under section 44BB. While coming to this conclusion, the Assessing Officer relied upon another judgment of Hon'ble Uttarakhand High Court in the case of CIT vs. Halliburton Offshore Services Inc., 300 ITR 265 (UK) and other decisions noted at page 3 of the Assessment Order. The Assessing Officer also analyzed the provisions of Service Tax Rules and various other decisions, which was dealt by him from pages 4 to 6 of the Assessment Order. 6. The CIT(A) followed the Tribunal's order in the case of Assessee's own case for A.Y. 2009-10 in ITA No.6475/DEL/2012 as well as Hon'ble Delhi High Court's decision in case of DIT vs. Mitchell Drilling International Pvt. Ltd.(supra) and allowed this issue in favour of assessee. 7. We have heard both the parties and perused the records before us along with the ITAT decision in case of Assessee's own case for A.Y. 2011-12 being ITA No. 6537/DEL/2014 order dated 20.09.2017. The Tribunal held as under: "6. We find that now this issue stands covered by the judgment of the Hon'ble Delhi High Court in the case of DIT vs. Mitchell Drilling International Pvt. Ltd.(supra) wherein the Hon'ble High Court, after analyzing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 sales tax collected by the I.T.A. No.6537/DEL/2014 6 dealer on inter-state sales. Upholding the validity of the said statute the Supreme Court held that "the expression 'turnover' means the aggregate amount for which goods are bought or sold, whether for cash or for deferred payment or other valuable consideration, and when a sale attracts purchase tax and the tax is passed on to the consumer, what the buyer has to pay for the goods includes the tax as well and the aggregate amount so paid would fall within the definition of turnover." Since the tax collected by the selling dealer from the purchaser was part of the price for which the goods were sold, the legislature was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal in favour of the Assessee. The service tax collected by the Assessee does not have any element of income and therefore cannot form part of the gross receipts for the purposes of computing the 'presumptive income' of the Assessee under Section 44 BB of the Act. 16. The Court concurs with the decision of the High Court of Uttarakhand in on v. Schlumberger Asia Services Ltd (supra) which held that the reimbursement received by the Assessee of the customs duty paid on equipment imported by it for rendering services would not form part of the gross receipts for the purposes 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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