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TMI Blog2012 (9) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... rated in Australia. It was engaged in the business of providing equipment on hiring and manpower etc. for exploration and production of mineral oil and natural gas. During the year under appeal. the assessee received following amounts from its various customers: S.No.. Particulars Amount (in Rs.) 1. Income from Drilling Operations 13,95,28,845 2. Income from exploration of Mineral Oil 2,40,33,727 3. Reimbursement of mobilization expenses 1,00,86,965 3. The assessee offered its income to tax on gross basis under sub-section (1) of section 44BB and 10% of the gross receipts was deemed to be the income chargeable to tax. It, however, did not include the amount of Rs. 2,09,24,553/- in the gross receipts, being service tax rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the assessee giving elaborately the basis and reasoning as per paras.5 to 5.9 of his order. 6. Aggrieved by this order of CIT(A), department has come up in appeal and while relying upon decision of Authority for Advance Ruling in the case of Siem Offshore Inc., In re, (2011) 337 ITR 207 (AR) dated 25.7.2011, has pleaded for reversal of the order passed by the CIT(A) and restoring that of the Assessing Officer. Since service tax is part of receipt, therefore, for presumptive income, same has rightly been added by the Assessing Officer and reliance was also placed in the case of Technip Offshore Contracting BV (2009) 29 SOT 33 (Del.) and so far as Uttrakhand High Court judgment is concerned, which has been relied upon by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit u/s 44BB, subsequently, Hon'ble Uttarakhand High Court decision dated 24th July, 2009 in the case of DIT & Anr. Vs. Schlumberger Asia Services Ltd. ,317 ITR 156(Uttarakhand) 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 dated 20.4.2011 in I.T.A. no.8845/Mum/2010 in the case of Islamic Republic of Iran Shipping Lines Vs. DCIT,2011-TOII-77-MUM-INTL, held that service tax being a statutory liability, would not involve any element of profit and a service provider having collected the amount on behalf of the Government, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India, and (B) deemed to be received by the assessee in India on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils outside India. 6. Thus, it is clear from the perusal of s. 44BB that all the amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive. This amount is the basis of determination of deemed profits and gains of the assessee @ 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the AO in the light of directions of the DRP in para 3.2 of their order dated 2nd September, 2011 in respect of reimbursement of amount on account of fuel recharge. In view thereof, ground no. 2 in the appeal is dismissed. 6. As regards reimbursement of amount in respect of service tax, as pointed out by the ld. AR, the ITAT Delhi Bench in their decision in Technip Offshore Contracting BV(supra) concluded that service tax collected by the assessee being directly in connection with services or facilities or supply specified u/s 44BB of the Act provided by the assessee to ONGC, have to be included in the total receipts for the purpose of determination of presumptive profit u/s 44BB of the Act. It is well established that section 44BB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of, mineral oils outside India. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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