TMI Blog2018 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... or collection of Service Tax. Therefore, it has been decided that tax deduction at source) under sections 194-1 would be required to be made on the amount of rent paid/payable without including the service toot. 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. - I.T.A .No. 2072/DEL/2016 - - - Dated:- 30-1-2018 - SHRI G. D. AGRAWAL, PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Amit Arora Vishal Mishra, CA For The Respondent : Sh. G. K. Dhal, CIT DR ORDER PER SUCHITRA KAMBLE This appeal is by the assessee against the order dated 10/02/2016 passed by CIT(A)-2, Noida for Assessment Year 2011-12. 2. The grounds of appeal are as under:- Based on the facts and circumstances of the case, your appellant respectfully submits the following grounds:- Ground No.1 That the Ld. ClT (A) has erred on facts and in law in affirming the action of the A.O in holding that the receipts on account of reimbursements of expenses i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Drilling Unit, the same are brought to tax u/s 44BB(1) of the Act at 10% deemed profit rate protectively by the Assessing Officer. The Assessing Officer in draft assessment order proposed to complete the assessment on a total income of ₹ 63,73,82,419/- under protective assessment. The assessee did not file any objection against the said draft order before the Dispute Resolution Panel. The final assessment order was passed on 15/5/2014 whereby finalizing the draft assessment order thereby on a total income of ₹ 64,13,82,486/-. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) held that the Consortium between assessee and Schlumberger Asia Services Ltd. (SALS) did not constitute AOP. Thus, it is not proper on part of the Assessing Officer to pass protective assessment in the case of Schlumberger Asia Services Ltd. (SALS). Thus, the same ground was allowed by the CIT(A). As related to the issue of reimbursement receipts on account of material recharge and fuel reimbursement included in the revenues as taxable u/s 44BB of the Income Tax Act was upheld by the CIT(A). 5. The Ld. AR submitted that Ground No. 1 2 are held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers to the total payment to the assessee or payable to the assessee or deemed to be received by the assessee, whereas income has been defined u/s 2(24) of the Income Tax Act and section 5 and 9 deal with the income and accrued income and deemed income. It was not in dispute that the amount had been received by the assessee. Therefore the AO added the said amount which was received by the nonresident company rendering services under the provisions of section 44 BB to the ONGC and imposed the income tax thereon. He was justified in doing so. Therefore, we dismissed ground Nos. 1 and 2 of assessee's appeal. 8. As relates to Ground Nos. 3 and 4, we find that now this issue stands covered by the judgment of the Hon'ble Delhi High Court in the case of DIT vs. Mitchell Drilling International Pvt. Ltd.(supra) wherein the Hon'ble High Court, after analyzing various judgments of Hon'ble Uttarakhand High Court and the judgment in the case of Chowringhee Sales Bureau Pvt. Ltd. vs. CIT (1973) 87 ITR 542, observed and held as under:- 9. Section 44BB begins with a non obstante clause that excludes the application of Sections 28 to 41 and Sections 43 and 43A to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutional 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 price for which the goods were sold, the legislature was not incompetent to enact a statute pursuant to Entry 54 in List II make the tax so paid a part of the turnover of the dealer. 14. In the considered view of the Court, both the aforementioned decisions were rendered in the specific contexts in which the questions arose before the Court. In other words the interpretation placed by the Court on the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 44 BB of the Act, the service tax collected by the Assessee on the amount paid is for rendering services is not to be included in the gross receipts in terms of Section 44B (2) read with Section 44 BB (1). The service tax is not and amount paid or payable, or received or deemed to be received by the Assessee for the services rendered by it. The 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 itselfin 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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