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TMI Blog2018 (9) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... n Law, the Ld. CIT(A) erred in holding that Service Tax was not part of receipt u/s. 44BB without appreciating that section 44BB being complete code for presumptive taxation, all receipts irrespective whether they are in nature of income or not were to be considered following the ratio of decision in Halliburton Offshore 300 ITR 265(UT) & Chowranghee Sales Bureau 87 ITR 542(SC).?" 2 "Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) erred in following the decision of Delhi High Court in Mitchell Drilling and ignoring the decision of Mumbai ITAT in case China Shipping Container Lines(Hongkong) Co. Ltd in ITA 8516 / M/ 2010?" 3. "The Appellate prays that the order of the CIT(A) be sent aside on the above ground(s) and of the Assessing Officer be restored." 4. "The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 3. The brief facts of the case are that the assessee is a non-resident company incorporated under the laws of British Virgin Islands. The assessee is stated to have executed contract with Cairn Energy India PTY Limited and Canoro Resources Limited. Under the terms of the contract, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed." 5. The revenue is aggrieved by the appellate decision of Ld. CIT(A) which was decided against it and that is how it has come in appeal before the tribunal. The Ld. DR opened the arguments and relied upon assessment order passed by the AO while the on the other hand Ld. Counsel for the assessee submitted that the tribunal in assessee's own case in ITA no. 514/M/2017 for immediately preceding year i.e. AY 2009-10 vide orders dated 20.06.2018 in Revenue's appeal has decided the issue in favour of the assessee by holding as under:- "6. We shall now take up the appeal filed by Revenue. The solitary issue urged therein is whether the service tax collected by the assessee shall form part of gross receipts for computing income under Section 44BB of the Act. 7. The learned A.R. submitted that the Hon'ble Delhi High Court in the case of Mitchell Drilling International (P) Ltd. 380 ITR 130 (Del) has decided the issue in favour of the assessee by holding that service tax collected by the assessee was not to be included in the gross receipts in terms of section 44BB of the Act. He submitted that the learned CIT(A) has followed the decision rendered by the Hon'ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a non-resident company incorporated under the laws of British Virgin Islands. The assessee is stated to have executed contract with Cairn Energy India PTY Limited and Canoro Resources Limited. Under the terms of the contract, the assessee provided land rigs for excavation of oil and gas. A copy of the contract was submitted by the assessee before the AO. The assessee has claimed to be engaged in the business of providing services facilities in connection with the prospecting for, extraction or production of mineral oils. The assessee has offered its income for taxation in terms of provision of Section 44BB(1) of the 1961 Act. The solitary question for adjudication before us is whether service tax amount collected by the assessee from its clients which stood deposited by the assessee to the credit of Central Government shall form part of gross receipt for the purpose of computing of income chargeable to income-tax within provisions of Section 44BB of the Act. The tribunal in the assessee own case has decided the issue in favour of the assessee for immediately preceding year AY 2009-10 in ITA no. 514/Mum/2017 vide orders dated 20.06.2018 in Revenue's appeal, by holding as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We shall now take up the appeal filed by Revenue. The solitary issue urged therein is whether the service tax collected by the assessee shall form part of gross receipts for computing income under Section 44BB of the Act. 7. The learned A.R. submitted that the Hon'ble Delhi High Court in the case of Mitchell Drilling International (P) Ltd. 380 ITR 130 (Del) has decided the issue in favour of the assessee by holding that service tax collected by the assessee was not to be included in the gross receipts in terms of section 44BB of the Act. He submitted that the learned CIT(A) has followed the decision rendered by the Hon'ble Delhi High Court in the case referred above. 8. On the contrary, the learned D.R. submitted that the Mumbai Bench of the Tribunal has held in the case of China Shipping Container Lines (Hong Kong) (2013) TIL-1621-ITAT, Mum-Intl) has held that the service tax collected from distributors shall be included in gross receipts. 9. In the rejoinder the learned A.R. submitted that the Mumbai benches of Tribunal has followed the decision rendered by the Hon'ble Delhi High Court (referred supra) in the cases of Oceaneering International GmbH (ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply in a case where the provisions of section 42 or section 44D or section 44DA or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. (2) The amounts referred to in sub-section (1) shall be the following, namely:- (a) 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 provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India; and (b) the amount received or deemed to be received in India by or on behalf of 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, in the prospecting for, or extraction or production of, mineral oils outside India." 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 44BB. It introduces the concept of presumptive income and states that 10% credit of the amounts pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected by the dealer on interstate 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 incompetent to enact a statute pursuant to Entry 54 in List II make the tax so paid a part of the turnover of the dealer. 14. In the considered view of the Court, both the aforementioned decisions were rendered in the specific contexts in which the questions arose before the Court. In other words the interpretation placed by the Court on the expression "trading receipt' or 'turnover' in the said decisions was determined by the context. The later decision of the Supreme Court in CIT v. Lakshmi Machine Works (supra) which sought to interpret the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptive income' of the assessee for the purposes of Section 44BB of the Act, the service tax collected by the Assessee on the amount paid by it 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. 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 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 service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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