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TMI Blog2016 (3) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the draft order of assessment was completed u/s. 144C(1) r.w.s. 143(3) of the Act wherein the income of the assessee was determined at Rs. 1,06,42,360/- in view of an addition of Rs. 51,86,212/- in respect of an addition on account of inclusion of service tax collected in the assessee's gross receipts for the purpose of determining the taxable income @ 7.5% u/s. 44B of the Act. Aggrieved, the assessee file its objections thereto before the DRP. The DRP issued its directions on 18/10/2013, upholding the Assessing Officer's action in including the service tax collected as a part of the gross receipts for determining the taxable income of the assessee u/s. 44B of the Act, by following the decision of the Co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08 in ITA No.8516/Mum/2010 dated 23/08/2013. The final assessment order was passed in consequence thereof. Vide order u/s.143(3) r.w.s. 144C of the Act vide order dated 22/11/2013. 3.1 Aggrieved by the final order of assessment for assessment year 2010-11 dated 22/11/2013, the assessee has preferred this appeal raising the following grounds:- "1. Ground of Appeal I: Service tax collected consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. On being queried by the Assessing Officer as to why the service tax of Rs. 51,86,212/- should not be considered as part of gross receipts for the purpose of computation of its income under section 44B of the Act, the assessee submitted that the service tax is collected during the year under consideration but cannot be included in computing its income. The Assessing Officer did not accept the assessee's contention and completed the draft of assessment on 28/03/2013 including the service tax collected amounting to Rs. 51,86,212/- in the gross receipts of the assessee for the purpose of computing its income as per the provisions of section 44B of the Act. This draft order of assessment was upheld by the DRP following the order of the Co-ordinate Bench of this Tribunal in the assessee's own case for assessment year 2007-08 in ITA No.8516/Mum/2010 dated 23/08/2013. 3.4 We find that, as contended by the Ld. Departmental Representative appearing for the Revenue, that the same issue of inclusion of service tax collections in the gross receipts of the assessee for determining its income u/s.44B of the Act has been considered and decided the issue in favour Revenue and against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the head "sales-tax collection account" would not, in our opinion, make any material difference. It is the true nature and the quality of the receipt and not the head under which it is entered in the account books as would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. We may in this context refer to the case of Punjab Distilling Industries Ltd. vs. CIT (1959) 35 ITR 519 (SC). In that case certain amounts received by the assessee were described as security deposits. This Court found that those amounts were an integral part of the commercial transaction of the sale of liquor and were the assessee's trading receipt. In dealing with the contention that those amounts were entered in a separate ledger termed "empty bottles return security deposit account", this Court observed." 9. It is clear from the decision of Hon'ble Supreme Court that this issue of the amount received as Sales Tax is treated as trading receipt of the assessee is settled. A similar view has been taken by the Hon'ble Supreme Court in case of ACIT Vs T. Naggi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per section 44B. We quote section 44B as under: "Special provision for computing profits and gains of shipping business in the case of non-residents.44B. (1) Notwithstanding anything to the contrary contained in sections 28 to 43A in the case of an assessee, being a non-resident, engaged in the business of operation of ships, a sum equal to seven and a half per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession". (i) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods shipped at any port in India; and (ii) 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. Explanation- For the purposes of this sub-section, the amount referred to in clause (i) or clause (ii) shall include the amount paid or payable or received or deemed to be received, as the case may be, by way of demurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of profit is similar in nature to that of demurrage charges or handling charges. 11. Further the term turnover is not relevant for estimation of profit and gain u/s 44B and therefore, when the demurrege charges and handling charges are specifically included in the aggregate amount as prescribed under sub-section 2 then whatever amount received or receivable/paid or payable to the assessee on account of carriage of passengers etc. or goods shipped would be part of such amount for computation of profit and gains u/s 44B. Thus, the theory of element of profit would not apply to the aggregate amount as specified in section 2 of section 44B. Moreover service tax is incidental to the transactions of carriage of passengers etc. and goods shipped and the amount paid or payable to and received or receivable by the assessee on account of service tax is very much part of the amount received on account of the business of shipping. According to the normal commercial practice, levy of tax on sale of goods or service is reflected in the bills either as merged in the price or being shown separately. Therefore, the amount received on account of service tax as part of the price of carriage/shippe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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