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TMI Blog2024 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ANT MEMBER SH. ANUBHAV SHARMA, JUDICIAL MEMBER For the Appellant : Sh. Amit Arora, Adv. For the Respondent : Sh. Mayank Kumar, CIT-DR ORDER Per Dr. B. R. R. Kumar:- 1. The present appeals have been filed by the assessee against the order of Assessing Officer dated 12.10.2021 17.06.2022 for the A.Ys. 2018-19 2019-20. Since, the issue involved in both the appeals are similar, they were heard together and being adjudicated by a common order. In ITA No. 38/DDN/2021, the assessee has raised the following grounds: 2. The assessee has raised the following grounds of appeal:- GROUND NO. 1: Passage of Final Assessment Order without following the directions of the Hon'ble DRP is illegal and non-est On the facts and circumstances of the case, the Final Assessment Order passed by the Ld. Assessing Officer u/s 143(3) R.W.S. 144C(13), being passed not following the binding directions of the Hon'ble Dispute Resolution Panel, is in clear violation of the binding provisions of Section 144C(13) and is thus, illegal, and non-est. GROUND NO. 2 - Service-tax/GST receipts held chargeable to tax Without prejudice to the claim of the Appellant in ground no. 1, the Ld. Assessing Officer has erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of Tribunal in the case of assessee itself for preceding assessment year in the identical facts and circumstances of the case. The ld. DR though relied on the order of the Assessing Officer, but could not controvert the above contention of the assessee regarding the issue having been covered by the decision of coordinate Bench of Tribunal. We have gone through the above referred order of Tribunal and find that the core issue involved in this case is covered in favour of the assessee in the similar facts and circumstances. 4. The assessee is a non-resident company. During the year under consideration, it had offered revenues to taxation on account of ongoing contract entered with ONGC Ltd. The assessee, in its return of income, had claimed that the taxable revenues were to be computed in terms of section 44BB of the Income Tax Act, 1961.During the course of assessment proceedings, the Assessing Officer found that an amount of Rs.****** received on account of service tax had not been added to the gross revenue chargeable to tax u/s 44BB of the Act. It was the assessee s contention that statutory charges cannot form part of the amount for the purpose of deemed profit u/s 44BB of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusions in assessment to opt to proceed under section 44BB (3). (iii) Once the receipts are offered to tax u / s 44BB (1) (2), which provides for computation of profits on gross basis, there is no scope for computing or recomputing the profits by excluding any element of receipts from the total turnover as the same would amount to defeating the very purpose of providing for a scheme of simpler mode of computation of profits and obviating the need for accounting for individual receipts or payments. 7. The Ld. DR further submitted that the amount mentioned in sub-section (2) of section 44BB clearly shows that the amount paid to the assessee on account of provision of services and facilities in connection with the extraction or production of mineral oil, whether paid in or outside India, are to be included. It was submitted by the Ld. DR that the service tax receipt squarely falls within the principle enunciated in Chowringhee Sales Bureau (P.) Ltd. v. CIT [1973] 87 ITR 542 (SC) wherein it was laid down that sales tax charged forms part of the trading receipts and is as such liable to be assessed to income tax. The Ld. DR submitted that since then the courts have consistently held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chell Drilling International Pty Limited (supra) wherein the Hon'ble Delhi High Court has held that service tax being statutory levy should not form part of gross receipts as per provisions of section 44BB of the Act. The relevant observations of the Hon'ble High Court are as under:- 8 44BB. (1) Notwithstanding anything to the contrary contained in sections 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) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate sales tax collection account . The question considered by the Supreme Court was: Whether on the facts and in the circumstances of the case the 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 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 attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a). In the considered view of the Court, the decision of the Supreme Court in Lakshmi Machines Works (supra) is sufficient to answer the question framed in the present appeal 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 44BB 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 44BB 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 it for rendering services is not to be included in the gross receipts in terms of Section 44BB(2) read with Section 44BB(1). The service tax is not an amount paid or payable, or received or deemed to be received ..... X X X X Extracts X X X X X X X X Extracts X X X X
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