TMI Blog2013 (11) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Shri S. E. Dastur, Neeraj Seth Ashish Gupta ORDER Per B.R.Mittal, JM: These two appeals are filed by the department against orders dated 1.3.2005 and 21.8.2007 of the CIT(A)XXXIII, Mumbai for the assessment years 2001-02 2003- 04, respectively on similar ground, which is as under: On the facts and in the circumstances of the case and in law, ld CIT(A) erred in holding that the amount of service tax is not apart of Fees for Technical Services as defined in section 9(1)(vii) of the Income tax Act, 1961 and directing the Assessing Officer to delete the income tax levied thereon. 2. The facts are that the assessee company is a non-resident company incorporated under the laws of Denmark. It is engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be considered as fees for technical services. He has stated that service tax collected by service provider is the tax of the Government levied on the consumer which is collected from the service provider. The service tax paid by the consumer to the assessee has an overriding title that it should be paid to the Government. That it is not at all a receipt which has any profit element to service provider. Hence, income tax cannot be charged on the service tax collected and paid to the Government and, accordingly, ld CIT(A) directed the AO to delete the income tax levied on the service tax collected by the assessee for both the assessment years under consideration. Hence, department is in further appeals before the Tribunal. 4. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separate levy imposed by Government and not levied for technical fee received by the assessee. He submitted that under section 115A of the Income tax Act, income tax is payable on the gross amount of Royalties and technical fees charged by the assessee and the service tax is not the fee charged for Royalties and technical fees. Ld A.R. submitted that similar issue has been considered by ITAT, Chennai Bench in the case of Veolia Ea- Compagnie vs ADIT (Income Tax Act No.2131/Mds/2010) vide order dated 23.6.2011, wherein, it was held that service tax received by the assessee is in the nature of reimbursement, which is paid to the Government and it cannot be considered as part of trading receipt and hence, cannot form part of total income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 44D provides for deduction from receipts in the nature of royalty and fee for technical services etc., which is chargeable @ 20% as per provisions of Section 115A(1)(b)(B) of the Income tax Act, if fee is charged pursuant to an agreement made after 31.5.1997 but before 1.6.2005. The amount in question is the amount of service tax collected by the assessee on which the Government has overriding right on the same, cannot be considered for levy of tax in the hands of the assessee. It is relevant to state that in the said case, ITAT also placed reliance on the decision of ITAT Hyderabad Bench in the case of ACIT vs. Louis Berger International Inc,(2010) 40 SOT 370(Hyd) and in the said case the decision of Hon ble apex Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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