ORIENT OVERSEAS CONTAINER LINE LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-CIRCLE 3(2)(2) , MUMBAI

Orient Overseas Container Line Ltd The taxable event in the case is rendering of taxable services for service tax purpose In the present case, the invoices billed by the assessee to the customer include service tax/GST also. It is clear that assessee is collecting service tax / GST as part of its receipts on account of provision of services relating to transportation of goods in the shipping business No service will be collectible if there are no services. Since assessee company has realized service tax on account of operation of ships and providing services relating to operation of ships, this receipt cannot be separated from other receipts. Since service tax/GST collected by the assessee is directly in connection with services provided and revenue earned related to operation of ship as spelt out in Sec 44B of the Act, this service tax/GST has to be considered as part of gross receipts for computation of profits u/s 44B of the Act.”

The ld. DRP upheld the action of the ld. AO. The majority view of 2:1 held that GST should be considered as part of the amounts paid or payable / amount received or deemed to be received for computing deemed income u/s.44B of the Act in view of provision of Section 44A(ii), whereas minority decision of one of the member was in favour of the assessee. Pursuant to the direction of the ld. DRP, ld. AO has passed the final assessment order considering GST at 7.5% as deemed income u/s.44B of Rs.7,23,56,182/-.

Before us the chequered history in the case of the assessee has been given wherein similar addition in respect of service tax while computing income u/s.44B made by the ld. AO right from A.Y.2007-08 to 2016-17 have been deleted by the tribunal. However, the Revenue‟s contention had been that, since department has preferred the appeal which is pending before the Hon‟ble High Court, therefore to keep the issue alive this Orient Overseas Container Line Ltd addition is being made. Further, it has been brought on record that ld. DRP in A.Y.2018-19 decided this issue in favour of the assessee by majority view of 2:1; however, in A.Y.2020-21, this issue has been decided against the assessee by majority of 2:1 ratio principally on account of interpretation of Section 145A. The directions issued by ld. DRP in A.Y.2018-19, the key observations are summarized in the following manner:- i. The critical word/expression is on account of in section 44B(2)(1) and (ii) of the Act, which would decide the issue. Incidence of service tax/ GST arises 'on account of creation of taxability of the service under the relevant Parliamentary statute and not on account of the business activities mentioned in 448(2)(1) and (1) of the Act. ii. If it is considered that GST collected by the assessee is directly in connection with services provided and revenue earned in relation to operation of ships as provided under Section 44B then it would amount to charging 'Income Tax on Service Tax/GST' because, the assessee would never get an opportunity to claim it as deduction as its 'profits and gains' have been charged to tax on deeming basis. This incongruous operation of Section 44B could never have been intended by the legislature. iii. Reliance was placed on CBDT's Circular No. 04/2008 dated 28 April 2008 wherein CBDT clarified that service tax paid by the tenant doesn't partake the nature of 'Income of the landlord. The landlord only acts as a collection agency for Government for collection of service tax and thus TDS would Orient Overseas Container Line Ltd be required to be deducted on amount of rent paid/payable without including the service tax. This position is reiterated in subsequent Circular no. 1/2014 dated 13 April 2014 and Circular no. 23/2017 dated 19 July 2017. iv. The provisions of section 44B of the Act are 'special provision for computing profits and gains of shipping business in the case of non-residents". Therefore, the provisions of section 44B of the Act would prevail over general provisions meant for computation of profits and gains of business or profession under the Act. Support was driven from rules of interpretation of statutes enunciating in legal maxim of 'Generalia specialibus non derogant'. The provisions of section 145A of the Act, whose heading is 'Method of accounting in certain cases and which starts with "For the purpose of determining the income chargeable under the head 'Profits and gains of business or profession', being a general provision, would not apply to the special provisions of section 44B of the Act. v. Bombay High Court ruling in the case of Knight Frank (India) (P.) Ltd. [2016] 72 taxmann.com 300 (Bombay) would not apply since the same dealt with the provisions of section 145A(a)(ii) which has replaced by the provisions of section 145A(ii) w.r.e.f. 01.04.2017 by the Finance Act 2018. This decision would also not apply to the case of assessee which is covered by special provisions of section 44B of the Act.

On the contrary in A.Y. 2020-21 i.e. impugned assessment year two DRP members have relied on amendment made to the provision of Section 145A and also interpreted the judgment of Hon’ble Supreme Court in the case of Sedco Forex International Inc. v. CIT [2017] 87 taxmann.com 29 (SC) to hold that GST is to be included for computing deemed income u/s. 44B. The observation and the reasoning given by the DRP is summarized in the following manner:- a. GST is on account of provision of relevant services (i.e. carriage of cargo). Had there been no provision of relevant services, the case of payment of GST by the assessee and indirect charge on the customer would not have arisen. b. Coinciding with the introduction of GST, the term 'Services' has been introduced vide Finance Act, 2018 with retrospective effect from 1 April 2017. Hence, the introduction of GST and amendment of section 145A to include 'Services' Orient Overseas Container Line Ltd indicate the legislative intention of inclusion of GST in the receipts of services under the Act. c. The service receipts and sales in the instant case are to be valued inclusive of taxes, as per ICDS guidelines. CBDT vide Circular No. 10/2017 dated March 23, 2017, has clarified that ICDS will be applicable on determination of turnover by non- corporate taxpayers covered under presumptive taxation like Sections 44AD, 44AE, 44ADA, 44B, 44B, 44BA, etc. d. In view of the binding ratio of judgement of Hon'ble Bombay High Court in the case of Knight Frank (India) Pvt. Ltd (Bombay High Court) [2016] 72 taxmann.com 300 (Bombay) (Page 493 to 498 of Legal Paper Book) and amendment in Section 145A, GST collected by the assessee cannot be excluded from the gross receipts while computing profits and gains from business chargeable to tax on presumptive basis under section 44B of the Act. e. A further exposition of how the GeneralisSpecialibus non Derogant rule is not applicable to Section 44B v. Section 145A is that Se. 44B leaves at 'the amount paid or payable received or deemed to be received', without any definition or interpretation of valuation of 'the amount". While Section 145A provides a mandatory scheme for 'the valuation of purchase and sale of goods or services'. Therefore, Section 44B must necessarily be read with Section 145A, else Section 44B is an exercise in vacuum. f. Reliance was placed on decision of Hon'ble Supreme Court in case of Sedco Forex International Inc. v. CIT [2017] 87 Orient Overseas Container Line Ltd taxmann.com 29 (SC) wherein it was held that if the amount paid or payable (whether in or out of India), or amount received or deemed to be received in India is covered by sub- section (2) of Section 44BB of the Act, by fiction created under Section 44f1B of the Act, it becomes 'income' under Sections 5 and 9 of the Act as well. g. Circular No. 04/2008 dated 28 April 2008 (Page 576 of Legal Paper Book) is applicable for TDS on rent under Section 194-1. The base for Section 194-1 is "Income. Section 44B is a presumptive provision where the base of taxation is 'amount paid or payable and "amount received or deemed to be received. Further, Section 44B is meant to determine the 'income". while section 1941 acts upon the already determined 'income'. A section which strives and aims to determine "income ought not be subjected to prior determination of income.

However, the minority decision of one of the DRP member agreed with the objection raised by the assessee and was of the opinion that on the reasoning that the decision of the Hon'ble SC in the case of Sedco Forex International Inc. (supra), the assessing officer missed the point that the inclusion of mobilization fees in the receipt for the purposes of section 44BB of the Act, was before the Hon'ble SC and not service tax/ GST collected by the assessee under the respective laws and paid to the central govt. Rather, the decision/ ratio laid down in the Sedco case (supra) supports the objection by the assessee.

At the time of hearing our attention was drawn to Circular No.169 dated 23/06/1975 explaining the rationale of Section 44B and amendment in Section 172 by Finance Act, 1975. For the sake of ready reference same is reproduced hereunder:- "37. Under the existing law, taxable profits of foreign shipping enterprises are determined by suitably apportioning their global profits between their Indian business and foreign business or on the basis of "voyage accounts". Difficult and complicated issues arise in such assessments, particularly in relation to depreciation (including unabsorbed depreciation of earlier years), the balancing charge/allowance and the apportionment of overhead expenses. With a view to simplifying and rationalizing the assessments in such cases, the Finance Act, 1975 has made a special provision in section 44B for computing profits and gains of shipping business in the case of non-residents. Under this provision, profits and gains of a non-resident from the business of operation of ships will not be calculated in accordance with the provisions of sections 28 to 434 but will instead be taken at 7.5 per cent of the aggregate of the following amounts, 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 carriage of passengers, livestock, mail or goods shipped at any port 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 carriage of Orient Overseas Container Line Ltd passengers, livestock, mail or goods shipped at any port outside India. 38. …..

Section 172 makes a special provision for the levy and recovery of tax in the case of any ship, belonging. to or chartered by a non-resident which carries passengers, livestock, mail or goods shipped at a port in India. Under this provision an ad hoc assessment is made before the ship is allowed to leave the Indian port unless the non-resident shipping concern has an agent in India from whom the tax would be recoverable. For this purpose, one-sixth of the amount paid or payable for the carriage of passengers, livestock, mail or goods shipped at an Indian port is regarded as taxable income which is subjected to tax at the rate applicable in the case of foreign companies. The assessee has, however, the option to file subsequently a return of income and ask for a regular assessment to be made if his actual income is less than the above-mentioned amount of one-sixth of the freight, etc. Where tax already paid on the basis of an ad hoc assessment is found to be more than the tax determined on regular assessment, the excess is refunded Memorandum to Finance (No. 2) Bill, 1975 “…..

With a view to simplifying and rationalising the assessments of non-resident shipping enterprises, the Bill seeks to provide that in the case of a non-resident, the profits and gains from the business of operation of ships will be taken at an amount equal to 7.5 per cent of the amount paid or payable to the taxpayer or to any other person on his behalf. on account of carriage of passengers, live-stock, mail or goods shipped at any Indian port, as also of the amount received, or deemed to be received, in India on account of the carriage of passengers, live-stock, mail or goods shipped at any port outside India. …” Notes on Clauses Clause 8 seeks to insert a new section 44 in the Income-tax Act. Under the new section, in the case of a non-resident, the profits and gains from the business of operation of ships will be taken at Orient Overseas Container Line Ltd amount equal to 71/2 per cent of the amount paid or payable to the assessee or to any other person on his behalf, on account of the carriage of passengers. live-stock, mail or goods shipped at any Indian port as also of the amount received, or deemed to be received, in India on account of the carriage of passengers, live- stock, mail or goods shipped at any port outside India. This amendment will take effect from 1st April, 1976 and will accordingly apply in relation to assessment year 1976-77 and subsequent years.”

The entire controversy which now has risen in this year is the interpretation of Section 145A inserted by the Finance Act 2018 with retrospective effect from 01/04/2017 on the issue of applicability of income computation and disclosure standards. The said provision of Section 145A reads as under:- 145A"For the purpose of determining the income chargeable under the head "Profits and gains of business or profession" (i) the valuation of inventory shall be made at lower of actual cost or net realizable value computed in accordance with the income computation and disclosure standards notified under sub- section (2) of section 145; (ii) the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation; (iii)... (iv)… … Explanation 1. – for the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any righty arising as a consequence to such payment.

Now by the Finance Act 2018, Section 145 of the amendment was given to ICDS and Section 145(2) empowered the Central Government to notify ICDS by this amendment, “services” were also brought into the scope of Section 145A. Now as per Section 145A(ii), the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation. Thus, Section 145A(ii) suggests inclusive method of accounting for computing 'profits and gains of business or profession' under the normal provisions of the Act and it will apply only when all the 3 elements i.e., purchase, sales and inventory are present together. Thus, while the taxes are included by adjusting the turnover and closing inventory, the same are reduced by adjusting the purchases and opening inventories, if paid, before the due date of filing tax return under Section 139(1) of the Act.

In case of presumptive taxation, deduction of expenses is not allowed i.e., purchase and inventory elements are to be ignored for computing deemed income under Section 44B, because the section starts with no-obstante clause overriding computation under sections 28 to 43. The deemed income has to be computed on specified amounts only and nothing more can be Orient Overseas Container Line Ltd added which is not within the scope of Section 44B of the Act because Section 44B provides that non-resident is engaged in the business of operation of ships, then sum equal to 7.5% of the amounts referred to Sub-section (2) has to be computed for the purpose of deemed profits. These amounts are firstly, the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of carriage of passengers, livestock, mail or goods shipped at any port in India; and secondly, the amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock, mail or goods shipped at any port outside India. Thus, what is relevant for computing the deemed income u/s.44B is the amount paid or payable or amount received or deemed to be received on account of carriage of passengers, etc.

Section 145A of the Act takes into consideration "valuation of sale or purchase of goods/services and of inventory", whereas Section 44B (2) considers specified amounts i.e. "amount paid or payable on account of the carriage of goods shipped at any port in India" and "amount received or deemed to be received on account of the carriage of goods shipped at any port outside India. The terms amount paid or payable' and 'amount received or deemed to be received mentioned under Section 44B cannot be replaced with the term 'valuation' in the absence of any specific enabling provisions under Section 44B or Section 145A of the Act or any other provisions of the Act. For instance, Section 50CA is a deeming provision which enables replacement Orient Overseas Container Line Ltd of consideration with 'fair market value' where the amount of consideration is less than the fair market value determined in a prescribed manner.

Thus, in our view adding GST component to the deemed income which has to be computed directly on specified amounts i.e. amount paid or payable on account of carriage of goods shipped which is revenue element only. For the earlier regime of service tax prior to GST, there were various judicial precedents which upheld exclusion of service tax while computing the provision u/s.44B or other similar provisions. For instance, following judgments have been brought to our notice before us wherein the Hon‟ble Courts has approved the exclusion of service tax. i.M/s Deepwater Pacific I Inc SLP (Civil) Dairy No(s). 47374/2023) ii.Vantage International Management Co. [2023] 156 taxmann.com 23 iii.Transocean Offshore International Ventures Lad. [2023] 157 tasumann.com 203 (SC) iv.Schlumberger Asia Services Ltd. [2024] 158 taxfmann.com 267 (SC) Further, Hon‟ble Bombay High Court in the case of Pr. CIT(IT) v. Boskalis International Dredging International CV (Income Tax Appeal No. 55 OF 2017 dated 25 March 2019) (followed the decision of Delhi High Court and Mitchell Drilling International Pty Ltd. (ITA No.403/2013 and 384/2015) dated 28/09/2015 and held as under:

We are in respectful agreement with this view expressed by the Delhi High Court in which identical question had arisen.

In the result, Income Tax Appeal is dismissed.

As the expression 'amount paid or payable' in Section 44BB(2)(a), and the expression amount received or deemed to be received in Section 44BB(2)(b), is qualified by the words 'on account of the provision of services and facilities in connection with, or supply of plant and machinery, it is only such amounts, paid or payable for the services provided by the assessee, which can form part of the gross receipts for the purposes of computation of gross income under Section 44BB(1) read with Section 44BB(2). DIT v. Mitchell Drilling International (P.) Ltd. [2015] 62 taxmann.com 24/234 Taxman 818/[2016] 380 ITR 130 (Delhi). On its literal construction, Section 44BB(2) would only be the amount paid by the ONGC to the assessee Orient Overseas Container Line Ltd on account of (i) provision of services in connection with or (ii) supply of plant and machinery on hire used in, the prospecting, extraction and production of mineral oils. As the amount reimbursed by the ONGC, towards the service tax paid by assessee earlier to the Government, is not an amount paid to the assessee towards the services provided by the latter in connection with the prospecting, extraction or production of mineral oils, it is not required to be included in the amounts specified in clauses (a) and (b) of Section 44BB(2).”

Apart from that in the case of the assessee itself the Tribunal have consistently has been holding that service tax being in the nature of statutory payment does not involve any element of profit therefore, cannot be included in the gross receipts.

The case of the department before us is that the judgments rendered in the context of service tax could not be applicable under the new GST. We find that though GST has replaced by erstwhile service tax law to provide a single tax of supply of goods and services right from manufacture to consumer. For the sake of ready reference Section 68 of erstwhile Service Tax law and Section 49 of CGST Act, the comparison is given herein below. Service Tax GST Section 68 of Section 68 relates to Section 49 of CGST Act, (1) Every deposit made Finance Act, payment of service tax. 2017 towards tax, interest, 1994. Sub-section (1) thereof penalty, fee or any stipulates that every other amount by a person, providing person by internet taxable service to any banking or by using person, shall pay credit or debit cards or service tax at the rate NEFT or RTGS or by specified in section 66B such other mode and of Finance Act 2012 in subject to such Orient Overseas Container Line Ltd such manner, and conditions and within such period, as restrictions as may be may be prescribed. prescribed, shall be credited to the Notwithstanding electronic cash ledger anything contained in of such person to be sub-section (1), in maintained in such respect of [such taxable manner as may be services as may be prescribed. notified by the Central Government in the (2)The input tax credit Official Gazette, the as self- assessed in service tax thereon the return of a shall be paid by such registered person shall person and in such be credited to his manner as may be electronic credit ledger, prescribed at the rate in accordance with specified in section section 41, to be [66B] and all the maintained in such provisions of this manner as may be Chapter shall apply to prescribed. such person as if he is the person liable for (3) The amount paying the service tax available in the in relation to such electronic cash ledger service may be used for making any payment Provided that the towards tax, interest, Central Government penalty, fees or any may notify the service other amount payable and the extent of under the provisions of service tax which shall this Act or the rules be payable by such made thereunder in person and the such manner and subject to such conditions and within such time as may be prescribed. (4) The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act Orient Overseas Container Line Ltd in such manner and subject to such conditions and restrictions within such time as may be prescribed. Rule 3(1) of provisions of this the Chapter shall apply to Cenvat such person to the Credit Rules extent so specified and the remaining part of the service tax shall be paid by the service provider. A manufacturer or producer of final products or a provider of output service shall be allowed to take credit of Service tax paid on any input service received b. Service tax collected in excess (unjust enrichment) Both under the Service Tax Law and GST Law, there are adequate provisions which requires timely deposit of taxes collected including excess taxes collected. Where the taxes collected and not deposited, there are provisions which enables recovery of taxes by the Government. Relevant extract of the provisions is reproduced hereunder: Service Tax GST Reference Provisions Reference Provisions under the under the law, rules, law, rules, etc. etc. Section 73A Section 73A(1) Section 76 of (1) Notwithstanding (1) and (2) - stipulates that CGST Act, anything to the Finance any person who 2017 contrary contained Act, 1994. is liable to pay in any order or service tax, and direction of any has collected Appellate Authority any amount in or Appellate Tribunal Orient Overseas Container Line Ltd excess of the or court or in any service tax other provisions of assessed or this Act or the rules determined and made thereunder or paid on any any other law for the taxable service, time being in force, from the every person who recipient of has collected from taxable service any other person as representing any amount as service tax, shall representing the tax forthwith pay under this Act, and the amount so has not paid the collected to the said amount to the credit of the Government, shall Central forthwith pay the Government. said amount to the Section Government, 73A(2)stipulates irrespective of that where any whether the supplies person, who has in respect of which collected any such amount was amount, which is collected are taxable not required to or not. (2) Where any be collected, amount is required from any other to be paid to the person, in any Government under manner as sub-section (1), and representing which has not been service tax, such so paid, the proper person shall officer may serve on forthwith pay the person liable to the amount so pay such amount a collected to the notice requiring him credit of the to show cause as to Central why the said Government. amount as specified in the notice, should not be paid by him to the Government and why a penalty Orient Overseas Container Line Ltd equivalent to the amount specified in the notice should not be imposed on him under the provisions of this Act. Section Where any 73A(3)- amount is Finance required to be Act, 1994 paid to the credit of the Central Government under sub- section (1) or sub-section (2), and the same has not been so paid, the Central Excise Officer shall serve on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government.

On perusal of the comparison of the relevant provision of service tax law and GST law it can be seen that both are indirect Orient Overseas Container Line Ltd taxes and is recovered by the service provider on behalf of assessee and as an agent of the Government as such rates are specified and thus, the provision under the service tax law are similar to provision of GST law and therefore, in our opinion the judicial precedents delivered in respect of erstwhile tax law would apply mutatis mutandis to the GST laws also.

Otherwise also it would be quirk of a fate that tax collected on behalf of the customer is again to be held as part of taxable income of the assessee who is collecting GST. The assessee is taxable person under the GST laws and shows GST separately in the invoice raised on the customers. We have perused the copy of the sample invoice produced before us at our direction wherein, it is seen that service charge is indicated separately and CGST is levied on such service charge is also indicated separately. If the GST services have been indicated in the invoice separately then it cannot be included for purpose of taxation while computing the income. For instance there are various TDS provisions and CBDT has clarified through various circulars that if GST services are indicated separately in the invoice then no tax would be deducted at GST components. By way of illustration following circulars have been referred to before us under various Sections:-

If we accept the contention of the revenue, then it would lead to a situation where calculation of tax of reimbursement of taxes would tantamount to collection of tax on taxes. Section 44B(2) of the Act provides for deemed taxation on amount paid or payable / received on account of 'carriage' of goods, passengers, etc. Further, the Explanation thereto clarifies that the amounts in connection with the carriage would include 'demurrage charges', 'handling charges" and other amounts of a 'similar nature". Thus, what is sought to be included u/s 44B are the charges' recovered from the consignor of the cargo/ customer as a consideration for transportation from a port in India to outside India and vice versa.

GST being a mandatory 'statutory levy‟ cannot be said to be in the nature of 'charges' by the shipping Company towards the carriage. The incidence of GST is on account of taxability of services under the relevant parliamentary statute i.e., GST laws and not on account of the business activities as envisaged in Sections 44B(2)(i) and 44B(2)(ii) of the Act. Otherwise, including GST in gross receipts for purpose of section 44B would be akin to charging income tax on GST i.e., tax on tax, which would promote cascading effect which cannot be the intent of legislation.

Thus, reliance placed by the Hon‟ble DRP members in the case of Sedco Forex International Inc. (supra) to treat 'GST similar as 'reimbursement of mobilization charges is misplaced and incorrect. In the case of Sedco Forex International Inc. fixed mobilization charges were agreed between the parties, which could be more or less than the actual expenditure. Thus, 'reimbursement of mobilization charges' cannot be equated with pure reimbursement which has no element of income.

The core argument of the department before us and by the ld. DRP is that amendment in the provisions of Section 145A of the Act brought by Finance Act 2018, since it includes “services” within its code therefore, income has to be computed in accordance with Section 145A and any taxes levied under services is included and for that heavy reliance has been placed on the judgment of Hon‟ble High Court of Bombay in the case of Knight Frank (India) Pvt. Ltd (Bombay High Court) [2016] 72 taxmann.com 300 (Bombay). However the Hon‟ble Court held that Section 145A restricts its ambit only to valuation of purchase and sale of goods in inventory and would not apply to service tax billed on rendering of service as service tax billed has Orient Overseas Container Line Ltd no relation to any goods nor does it have anything to do with bringing goods to a particular location. Section 145A which is for the method of accounting which starts with ‘for the purpose of determining the income chargeable under the head 'Profits and gains of business or profession', being a general provision, would not apply to the special provisions of section 44B of the Act. Further, the words "For the purpose of determining the income chargeable under the head "Profits and gains of business or profession..." in section 145A signifies that the essence of section is to compute income under the head profits and gains of business or profession which is computed as per provisions of Section 29 of the Act. On the contrary, provisions of Section 44B (1) starts with a non obstante clause "Notwithstanding anything to the contrary contained in sections 28 to 43A...". Since Section 44B overrides the provisions of Section 29 of the Act, therefore in our opinion Section 145A is not applicable for computing deemed income under Section 44B.

Thus, the decision of the Hon‟ble Bombay High Court will not be applicable in this case same was not rendered in the context of Section 44B and in any case in so far as the observation of the Hon‟ble High Court that any tax or levy cannot be part of turnover receipts unless it is not paid, is not applicable in the case of the assessee. It has been brought to record that assessee discharged its GST liability of Rs.96,51,49,085 through payment of tax to the Government Treasury and input tax credit Orient Overseas Container Line Ltd and this has been demonstrated from the copies of form GSTR 9 and annual GST re-conciliation statement.

Further, ld. DRP members also relied on CBDT Circular No. 10/2017 dated March 23, 2017 which discusses on the applicability of ICDS on determination of turnover by non- corporate taxpayers covered under presumptive taxation like Sections 44AD, 44AE, 44ADA, 44B, 44BB, 44BBA, etc. and stated that the service receipts and sales in the instant case are to be valued inclusive of taxes, as per ICDS guidelines. Relevant extract of Circular is hereunder:- "Question 3: Does ICDS apply to non-corporate taxpayers who are not required to maintain books of account and/or those who are covered by presumptive scheme of taxationlikesections44AD, 44AE, 44ADA, 44B, 44BB, 44BBA, etc. of the Act? Answer: ICDS is applicable to specified persons having income chargeable under the head Profits and gains of business or profession' or 'Income from other sources. Therefore, the relevant provisions of ICDS shall also apply to the persons computing income under the relevant presumptive taxation scheme. For example, for computing presumptive income of a partnership firm under section 44AD of the Act, the provisions of ICDS on Construction Contract or Revenue recognition shall apply for determining he receipts or turnover, as the case may be."

Thus, reliance placed by the DRP on the aforesaid Circular is not valid since Delhi High Court in the case of Chamber of Tax Consultants v. Union of India [2017] 87 taxmann.com 92 (Delhi) held that the aforesaid Circular was ultra vires the provisions of the Act and liable to be struck down. Also, the Orient Overseas Container Line Ltd amendment was introduced vide Finance Act 2018 to bring certainty on the issue of applicability of ICDS and not to validate the circular. Even otherwise, in the aforesaid Circular, CBDT has also clarified that where there is a conflict between ICDS which is a general provision and specific provisions, specific provision shall prevail.

Before us, the plea was taken that if GST is to be added to the amounts paid on account of taxes, then deduction of such GST is also required to be given u/s.43B. Though the provision of Section 44B overrides Section 28-43A of the Act, but other sections including Section 43B are not specifically over ridden by Section 44B. This issue has been decided by the Hon‟ble Uttarakhand High Court in the case of DIT v. Schlumberger Asia Services Ltd. [2019] 414 ITR 1 (Uttarakhand) (FB) wherein it has held that the benefit of deduction of tax can be claimed by the assessee in view of section 43B(a), while computing its income under section 28, and the provisions of section 43B would prevail notwithstanding anything contained in, among others. Thus, it has been stated that invoking the provisions of Section 43B under Section 44B shall force the assessee to prepare a memorandum account wherein the specified amounts are credited and adjusted by GST due to Section 145A and correspondingly, GST discharged before the due date of filing of tax return specified under Section 139 of the Act is debited to such account. However, preparation of such memorandum account is neither required under the Act nor can replace the express provisions of Section 44B of the Act. We therefore, find Orient Overseas Container Line Ltd merits in such contention of the ld. Counsel that if it is held that Section 145A are applicable for computing deemed income u/s.44B and GST is added to the specified amounts and provisions of Section 29 are invoked, then deduction of GST paid should be allowed while computing income under the head „profits and gains‟ of business or profession as per Section 43B. Even otherwise also Section 44B over rights Section 28-43A and 43B and therefore, in case if department seeks to add GST on the turnover for the purpose of calculating the profit u/s.44B, then, deduction u/s.43B has to be allowed if it is paid on or before the due date and similarly it can be disallowed once GST has not been paid within the due date. However, this is purely academic, contention which has been raised because we have already held that for the purpose of Section 44B only specified amount mentioned in the sub-Section 2 of Section 44B alone is the subject matter of computation of profit @7.5% and Section 145A has no applicability. Thus we hold that while computing income u/s.44B, GST cannot be included and all the judgments relied upon by the assessee by the Hon‟ble High Court and Hon‟ble Supreme Court and the Tribunal will apply in this year also. Thus, in our opinion, the minority view of the single member of the DRP is to be upheld that GST cannot be included while computing deemed income u/s.44B, accordingly, this issue is decided in favour of the assessee.

In the result, ground No.3 is allowed.

With regard to short grant of tax deducted at source and credit of advance tax as raised by ground No.5 & 6, it has been stated that assessee has filed rectification application before the ld. AO which has not been disposed of. Accordingly, we direct the ld. AO to examine this issue and decide accordingly.

The other ground raised