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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’: NEW DELHI
Before: SHRI S.K. YADAV & SHRI B.R.R. KUMAR
The appeal has been filed by the Appellant, was disposed of by Tribunal vide order dated 11.07.2014 on merits.
In the said order, the Ground no. 9 of the grounds of appeal
, relating to reimbursement of Service tax has not been disposed of. Thereafter, the assessee filed a miscellaneous application no. 232/Del/2014, which was disposed of by the Bench vide order dated 16.02.2016, for recalling in respect of Ground no.
9. The Ground no. 9 of this appeal is reproduced as under:-
“ Additional qua Service tax Revenue 9. That the assessing officer erred on facts and in law holding that income of Rs. 101,719,350/- on account of service tax was to be assessed to tax by applying a presumptive profit rate of 25% on gross revenues in this regard, as opposed to claimed exempt from tax.
The Ground no. 9 deals with upholding the income of Rs. 101,719,350/- on account of service tax was to be assessed to tax by applying a presumptive profit rate of 25% on gross revenues. This similar issue stands disposed of by the Co-ordinate Bench of ITAT in order dated 23.03.2018 in the assessee’s own case wherein it was held as under:-
“13. The next issue vide ground nos. 5 to 5(c) relates to the taxation of reimbursement of Service tax.
As regards to this issue the Ld. Counsel for the assessee at the very outset stated that this issue is squarely covered in assessee’s favour vide order dated 05.09.2014 in for the assessement year 2009-10 wherein the relevant findings have been given in paras 7 & 8 of the said order which read as under: 7. We find this issue to be covered in favour of the assessee by the decision of ITAT in the case of Sedco Forex International Drilling Inc. vide ITA No.504/Del/2013, wherein the ITAT held as under:- "3. We have heard both the sides and perused the material placed before us. We find that this issue is CO No. 216/Del/2015 Baker Hughes Asia & Singapore Ltd. covered in favour of the assessee by the decision of ITAT in assessee's own case for AY 2008-09 dated 29th June, 2012 vide ITA No.5284/Del/2011, wherein the ITAT held as under:-
"The service tax is a statutory liability like custom duty. Hon'ble Uttarakhand High Court in their decision in Schlumberger Asia Services Ltd. (supra) concluded that reimbursement of custom duty paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement. Following the view in this decision, Mumbai Bench in their decision in Islamic Republic of Iran Shipping Lines (supra) held that service tax being a statutory liability, would not involve any element of profit and accordingly, the same could not be included in the total receipts for determining the presumptive income. In the light of view taken by the Mumbai Bench, especially when the Id. DR did not place any material before us controverting the aforesaid findings of the Id.CIT(A) so as to enable us to take a different view in the matter nor brought to our notice any contrary decision, we are of the opinion that service tax paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement. Therefore, ground no.3 in the appeal is allowed."
From the above, it is evident that the ITAT decided the above issue in favour of the assessee following the decision of Hon'ble Jurisdictional High Court in the case of Director of Income Tax (International Taxation) and Another Vs. Schlumberger Asia Services Ltd. - [2009] 317ITR 156 (Uttarakhand). No contrary decision of the Hon'ble Jurisdictional High CO No. 216/Del/2015 Baker Hughes Asia & Singapore Ltd. In view of the above, we, respectfully following the above decision of Hon'ble Jurisdictional High Court and also the decision of ITAT in assessee's own case cited supra, direct the Assessing Officer to exclude service tax from the gross receipts for the purpose of determining the income under section 44BB of the Income-tax Act, 1961. Accordingly, ground nos. 1 & 2 of the assessee’s appeal are allowed.
Respectfully following the above decision of ITAT and the decision of Hon'ble Uttarakhand High Court in the case of Director of Income Tax (International Taxation) and Another Vs. Schlumberger Asia Services Ltd. - [2009] 317 ITR 156, we direct the Assessing Officer to exclude service tax from the gross receipt for the purpose of determining the income under Section 44BB of the Income-tax Act, 1961. Accordingly, ground Nos. 3 & 4 of the assessee's appeal are allowed.”
Similarly the Hon'ble Delhi High Court in the case of Pr. CIT Vs Mitchell Drilling International Pvt. Ltd. (2016) 380 ITR 130 held as under:
“that for the purposes of computing the presumptive income of the assessee for the purposes of section 44BB the service tax collected by the assessee on the amount paid to it for rendering services was 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 by the assessee for the services rendered by it. The assessee only collected the service tax for passing it on to the Government."
Since the facts for the year under consideration are similar to the facts involved in assessment year 2009-10, so respectfully following the aforesaid referred to order dated 05.09.2014 in assessee's own case in we do not see any merit in the departmental appeal on this issue.”
6. There is no dispute on the facts or the issue being decided in favour of the assessee in the preceding assessment years. No change of circumstances is pleaded or proved by the revenue. When the Ld. CIT(A) granted relief to the assessee while following the binding precedent of the jurisdictional High Court and also that in assessee's own case in the immediately preceding assessment year the Tribunal held the issue in Favour of the assessee, in the absence of any change of circumstances compelling us to take a different view, we find it difficult to hold that there is any illegality or irregularity in the impugned order so that it has to be rectified at our end. We, therefore, find that the order of the Ld. CITA is legal and justifiable and accordingly uphold the same. Consequently we find that this appeal is devoid of merits and is liable to be dismissed. Appeal of the revenue is, therefore, dismissed.”
4. Further, the matter stands decided in the favour of the assessee by order of the Tribunal in order dated 21.03.2017, based on the Judgment of Hon’ble Delhi High Court in the case of PCIT vs. Mitchell Drilling International Pvt. Ltd. (2016) 380 ITR 130 wherein it was held as under:-
“ that for the purposes of computing the presumptive income of the assessee for the purposes of section 44BB the service tax collected by the assessee on the amount paid to it for rendering services was 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 by the assessee for the services rendered by it. The assessee only collected the services tax for passing it on to the Government.”
The Ld. DR relied on the orders of the Ld. CIT(A).
Since, the issue stands covered in favour of the assessee in the earlier years on merits, we hereby allow the ground of the appeal of the assessee.
In the result, appeal of Assessee is allowed.
Order pronounced in the open court on 06/7/2018