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2022 (9) TMI 354 - Income Tax
Deemed taxable income u/s. 44BBA - Computing profits and gains of business of operation of aircraft in the case of non-residents - whether this service tax component is includible in the gross receipts for computing the deemed taxable income u/s. 44BBA? - assessee is a non-resident engaged in the business of operation of airlines and is subjected to income tax under the Act on presumptive basis in terms of section 44BBA - HELD THAT:- Where an assessee who is a non-resident and is engaged in the business of operation of aircraft, a sum equal to 5% of the aggregate of amount paid or payable to the assessee on account of carriage of passengers, live stock material or goods from any place in India and the amount received or deemed to be received in India by or on behalf of the assessee on account of carriage of passengers, live stock material or goods from any place outside India, shall be deemed to be the profit and gains of such business chargeable to tax. We also note that the expression “amount paid or payable” in section 44BBA(2)(a) and the expression “amount received or deemed to be received” in section 44BBA(2)(b) is qualified by the words “on account of the carriage of passengers, live stock material or goods from any place in India/outside India”. Therefore, in our considered understanding, only such amounts which are paid or payable for the service provided by the assessee can form part of the gross receipts for the purpose of computation of gross total income u/s. 44BBA(1).
We also note and agree with the submission made by the Ld. Counsel for the assessee that service tax collected by the assessee does not have any element of income, it is collected by the assessee from its customers for and on behalf of the Central Government on account of a statutory levy and, therefore, it does not form part of the receipts of the assessee on which income accrues or arises to it. We are in agreement with the contention of the Ld. Counsel for the assessee that assessee merely acts as a collection agent for and on behalf of the Central Government and after collection, deposits the service tax so collected into the treasury of the Central Government.
As in Sedco Forex International Inc. [2017 (11) TMI 78 - SUPREME COURT] was paid mobilization fees from ONGC which was included by the Ld. AO as part of gross receipts for the purpose of section 44BB. Hon’ble Supreme Court has observed that mobilization fees is a fixed amount that might be less or more than the actual expenses incurred and contract in question being indivisible one, held that amount received by the assessee as mobilization fee was to be included in gross receipts for computing the deemed profits u/s. 44BB.
Thus, the facts of this case are distinguishable from the facts in the present case before us since Hon’ble Supreme Court dealt with the issue of inclusion of mobilization fees arising out of the commercial terms, in the gross receipts whereas in the present case before us, the issue relates to inclusion of service tax component in the gross receipt which is a statutory levy collected for and on behalf of the Central government by the assessee. CIT, DR has contended that deduction of expenses is not available from the receipts u/s. 44BBA which in our considered understanding is not tenable since assessee has not claimed service tax component as an expenses deduction.
Considering the facts on record, provisions of section 44BBA of the Act, the decision of Hon’ble High Court of Delhi in Mitchell Drilling International Pvt. Ltd. [2015 (10) TMI 259 - DELHI HIGH COURT] as well as the position clarified by CBDT in its two circulars we do not find any reason to interfere with the finding and decision given by the CIT(A) and accordingly, dismiss the ground taken by the revenue on the issue under consideration. Accordingly, the appeal of the revenue is dismissed.