ADIT, DEHRADUN vs. M/S. TRITON HOLDINGS LTD., DEHRADUN

PDF · subscribers
ITA 4099/DEL/2014Status: DisposedITAT Delhi26 July 2018AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that service tax collected by the assessee is not includible in the gross receipts for computing presumptive income under Section 44BB. This decision followed the Delhi High Court's ruling that service tax is collected for the government and does not form part of the assessee's income.

What were the facts?

The assessee, a non-resident company providing offshore drilling services, excluded service tax from its gross receipts under Section 44BB. The Assessing Officer added this service tax back, considering it part of gross receipts.

What were the issues?

Whether service tax collected by the assessee forms part of gross receipts for the purpose of computation of profit under Section 44BB.

Which sections of the Income-tax Act were involved?

Section 44BB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI

Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI

For Appellant: Shri Amit Arora, Shri Vishal Misra, CA
For Respondent: Shri Surender Pal Singh, Sr. DR, Shri Amit Arora, Shri Vishal Misra, CA
Hearing: 25/07/2018

The aforesaid appeal has been filed by the assessee against impugned order dated 28.5.2014, passed by Ld. CIT(Appeals)-II, Dehradun for the quantum of assessment passed u/s 143(3)/144C(3)(b) for the assessment year 2010-11. In various grounds of appeal the revenue has challenged that, the Ld. CIT (A) has erred in holding that service tax would not form part of the gross receipts for the purpose of computation of profit under the presumptive provision of section 44BB.

2.

The facts in brief are that the assessee is a non resident company engaged in the business of providing offshore drilling services in relation to exploration, exploitation and production of mineral oil in India. It was executing the contract for M/s. ONGC for carrying out drilling operations and other integrated services. In the return of income the assessee has returned gross revenue of Rs. 2,73,42,51,584/- under the deeming profit of Section 44BB @ 10%. The AO noted that the assessee had excluded the receipt on account of service tax of Rs. 31,90,24,718/- and accordingly, he added the reimbursement of service tax as part of the gross receipt. Ld. CIT (A), following the appellate order for the A.Y. 2009-10, directed the AO to exclude reimbursement of service tax.

3. Before us Ld. Counsel for the assessee submitted that this issue has been decided in favour of the assessee in assessee’s own case for the assessment year 2011-12 in vide order dated 19.2.2018.

3.

Ld. DR on the other hand strongly relied upon the order of the AO.

4.

After considering the aforesaid submission and on perusal of the relevant finding given in the impugned order, we find that this issue whether the service tax collected is part of the gross receipts for the purpose of section 44BB has been decided in favour of the assessee by the Tribunal in assessee’s own case, wherein the Tribunal has followed the judgment of Hon’ble Delhi High Court in the case of DIT vs. Mitchell Drilling International Pvt. Ltd. reported in (2016) 380 ITR 130. The Hon’ble Delhi High Court after referring to the various judgments had observed and held as under:-

“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 t 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 194-1 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 services or technical services and no TDS is required to be made on the service tax component under Section 194J of the Act.”

5.

The aforesaid ratio has been followed by this Tribunal in assessee’s own case in assessment year 2008-09 but also in the A.Y. 2011-12 also. Accordingly, following the aforesaid binding precedence, we hold that service tax reimbursed by the assessee will not be included in the gross receipt in terms of section 44BB. Resultantly, the grounds raised by the revenue are dismissed.

In the result appeal of the revenue is dismissed.

More judgments on Section 44BB

All 388 judgments and leading authorities on Section 44BB →

Recent GST High Court judgments

Search GST case law →