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TMI Blog2016 (2) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... ogether and are being disposed off by way of this consolidated order for the sake of convenience. 2. Grounds no.1, 2 and 3 of Department's appeal in ITA no.5409/ Mum./2014, for assessment year 2009-10, are corresponding to grounds no.1, 2, 3 and 4 of assessee's appeal in ITA no.4877/Mum./2014, for the assessment year 2010-11, and relates to the issue whether service tax collected by the assessee should be included in the business profit for determining the income chargeable to tax under section 44BB of the Act. 3. Briefly stated the facts are, assessee a non-resident company incorporated in the country of Iran is engaged in the business of operation of ships. As far as shipping operations in India is concerned, assessee has appointed M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed for the assessment year 2009-10 and 2010-11, assessee preferred appeal before the learned Commissioner (Appeals). 4. As far as assessment year 2009-10 is concerned, the learned Commissioner (Appeals) taking into the consideration the fact that identical issue was decided in favour of the assessee by the Tribunal in assessee's own case for the assessment year 2007-08 in ITA no.8845/ Mum./2010, dated 20th April 2011, followed the same and allowed assessee's claim. However, as far as the assessment year 2010-11 is concerned, though, first appellate authority was conscious of the fact that in assessee's own case for assessment year 2007-08, the issue in dispute has been decided in assessee's favour by the Tribunal, but, relying upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate bench of the Tribunal in China Shipping Container Lines (Hong Kong) Co. Ltd. v/s ADIT, ITA no.8561/Mum./2010, order dated 23rd August 2013, 6. Learned Departmental Representative, however, relying upon the decision of the Tribunal in China Shipping Container Lines (Hong Kong) Co. Ltd. (supra) and specifically drawing our attention to Para-10 of the order submitted that service tax collected by the assessee should also form part of the gross receipt by computing income under section 44B. 7. We have considered the submissions of the parties and perused the material available on record. We have also carefully applied our mind to the decision cited by both the learned Representative of the parties. Undisputedly, the core issue in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Court that since no excise duty and sales tax were leviable in respect of exports, therefore, while calculating the deduction u/s.80HHC by the formula - profits of business x Export turnover Total turnover it would not be proper to include the sales tax and excise duty in the total turnover, because there cannot be any element of profit in sales tax and excise duty. In our view, this principle is equally applicable to the service tax also. Again the Hon'ble Uttarakhand High Court in the case of DIT [IT] vs. Schlumberger Asia Services Ltd. [supra], wherein the question was whether the amount of customs duty paid was includible in the total turnover for computing profits u/s.44BB. The Hon'ble High Court has observed at pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew by holding that though service tax collected may not be having any profit element but still the same being similar in nature to demurrage charges and handling charges as provided in Explanation to section 44B, have to be included in the gross receipt for determining profit under section 44B. In view of the conflicting decision of the Co-ordinate bench of the Tribunal, the issue which arise for consideration is, which decision is to be followed in the present situation. In this context, we may refer to the decision of the Tribunal, Mumbai Bench, in Marubeni Corporation v/s DCIT, [2014] 44 Taxmann.com 22 (Mum.), where the Bench held as under:- "16. We have heard both the parties and their contentions have carefully been considered. The d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in case of Mitchell Drilling International Pvt. Ltd. (supra), the Hon'ble Delhi High Court agreeing with the view expressed by Hon'ble Uttarakhand High Court in Schlumberger Asia Services Ltd., (supra) and referring to CBDT Circular no.4 of 2008 dated 28th April 2008, held that service tax collected by assessee on behalf of Government having no profit element cannot be included in gross receipt for computing income under section 44BB. Therefore, following the ratio laid down by the Hon'ble Delhi High Court in Mitchell Drilling International Pvt. Ltd. (supra), in the context of provisions contained under section 44BB, which is pari materia to section 44B and the decision of the Tribunal in assessee's own case for assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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