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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 ..... e learned CIT(A) from assessment order dated 15.05.2013 passed by learned Assessing Officer (hereinafter called the AO ) u/s 144C(3) r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ) for assessment year 2010-11. 2. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- 1. Whether on the facts and circumstances of the case and in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting decisions on this issue at ITAT level. However, the decision of Hon'ble Delhi High Court is clearly in favour of the appellant on this issue. Respectfully following the decision of Hon'ble Delhi High Court in the case of Mitchell Drilling International (P) Ltd (supra), it is held that service tax collected by the appellant from its clients will not form part of its turnover for computing profit u/s 44BB of the Act. The second ground is decided in favour of the appellant and is allowed. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. 12. In the result, the appeals filed by the assessee as well as Revenue are dismissed. The learned counsel for the assessee also relied upon the judgment of Hon ble Delhi High Court in the case of Director of Income-tax-I v. Mitcheel Drilling International P. Ltd. reported in (2015) 62 taxmann.com 24(Delhi) wherein Hon ble Delhi High Court has decided the issue in favour of the assessee. 6. We have heard rival contentions and perused the material on record including case laws cited before us. 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 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 adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts. Since the High Court is superior to the Tribunal, the inferior Court should bow to the wisdom of Superior Court. Accordingly, the decision rendered by the High Court should be preferred over the decision rendered by the Tribunal. Accordingly we do not find any infirmity in the action of the AO in following the decision rendered by the Hon'ble Delhi High Court. Therefore we affirm the order passed by the learned CIT(A) on this issue. 12. In the result, the appeals filed by the assessee as well as Revenue are dismissed. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions 28 to 41 and sections 43 and 43A, in the case of an assessee, being a non-resident, engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub-section (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 : Provided that this sub-section shall not apply 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 sales tax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes 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 DIT 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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