TMI Blog2016 (3) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/DEL/2014 - - - Dated:- 29-2-2016 - Sh. G. D. Agrawal V. P. And Sh. C.M. Garg, J. M For the Appellant: Sh. Anuj Arora, CIT-DR For the Respondent : Sh. Amit Arora, Sh. Suraj Nangia, Advocates ORDER Per C.M. Garg, JM 1. This appeal by the revenue has been directed against the order of the Commissioner of the Income Tax (Appeals) II Dehradun dated 19.12.2013 passed in First Appeal No. 59/CIT(A)-II/2012-13 for AY 2010-11. 2. The grounds raised by the assessee read as under: Whether on the facts and in the circumstances of the case and in law, the Ld CIT(Appeals) has erred holding that receipts on account of services tax are not includible in gross revenue of the assessee for the propose of computation of profits under the presumptive provisions u/s 44BB of the Income Tax Act, 1961 ( The Act ). Whether the Ld. CIT(A) has erred in not appreciating the fact that the provisions of section 44BB of the Act are a selfcontained code providing for computation of profits at a fixed percentage of gross receipts of the assessee and all the deductions and exclusions from income are deemed to have been allowed to the assessee. Whether the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges forms part of trading receipts and is as such liable to be assessed to Income Tax. Finally, the Ld. CIT-DR submitted that the matter may kindly be decided in favour of the revenue by holding that the service tax receipts be included in the aggregate amount of being brought to tax. 5. On careful consideration of above submission at the outset we note that the similar issue has been decided in favour of the assesses own appeal by the ITAT for AY 2009-10 (Order dated 02.08.2013) wherein the issue was decided by following ITAT order dated 29.06.2012 for AY 2008-09 (Supra) as under. 6. At the time of hearing before us, the learned counsel fairly agreed that this issue is covered against the assessee by the decision of Hon'ble Jurisdictional High Court in the case of CIT and Another Vs. Halliburton Offshore Services Inc. - [2008] 300 ITR 265 (Uttarakhand). The facts in the said case were that the assessee rendered services to the ONGC. For the assessment year 1991-92, it claimed that the amount of ₹ 6,16,989/- received on account of reimbursement of freight and transportation charges actually incurred in respect of equipment was not includible while computing its in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttarakhand High Court in DIT v. Schlumberger Asia Services Ltd. (2009)317 ITR 156 was distinguishable on facts since it related to payment of customs duty. 7. Mr Piyush Kaushik, learned counsel for the Assessee, on the other hand, submitted that CBDT Circular No. 4/2008, dated 28th April 2008 and CBDT Circular No. 1/2004, dated 13th January 2014 recognize that the gross sums on which tax was to be deducted at source whether Section 194 I or Section 194 J of the Act would not include service tax. He referred to the decision of the Bombay High Court in CIT v. Sudarshan Chemical Industries Ltd. 245 ITR 769 (Bom) where, after considering the decision in George Oakes (P.) Ltd. (supra), it was held that the 'turn over' for the purposes of Section 80HHCof the Act would not include sales tax and excise duty. He also referred to the decision of the Supreme Court in CIT v. Lakshmi Machine Works (2007) 290 ITR 667 (SC) where again the same question was considered and this time, the Supreme Court also took note of the earlier decision in Chowringhee Sales Bureau (supra). Mr. Kaushik also referred to the decisions in DIT v. Schlumberger Asia Services Ltd (supra), Sedco Forex Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains of the chargeable to tax. The purpose of this provision is to tax what can be legitimately considered as income of the Assessee earned from its business and profession. 10. The expression 'amount paid or payable' in Section 44BB (2) (a) and the expression 'amount received or deemed to be received' in Section 44 BB (2) (b) is qualified by the words 'on account of the provision of services and facilities in connection with, or supply of plant and machinery.' Therefore, only such amounts which are paid or payable for the services provided by the Assessee can form part of the gross receipts for the purposes of computation of the gross income under Section 44 BB (1) read with Section 44 BB (2). 11. It is in this context that the question arises whether the service tax collected by the Assessee and passed on to the Government from the person to whom it has provided the services can legitimately be considered to form part of the gross receipts for the purposes of computation of the Assessee's 'presumptive income' under Section 44BB of the Act? 12. In Chowringhee Sales Bureau (supra) sales tax in the sum of ₹ 32,986 was coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the denominator in the formula contained in Section 80 HHC (3) as it stood in the material time? The Supreme Court considered its earlier decision in Chowringhee Sales Bureau (supra) and answered the question in the negative. The Supreme Court noted that for the purposes of computing the 'total turnover' for the purpose of Section 80 HHC (3) brokerage, commission, interest etc. did not form part of the business profits because they did not involve any element of export turnover. It was observed: just as commission received by an assessee is relatable to exports and yet it cannot form part of 'turnover', excise duty and sales-tax also cannot form part of the 'turnover'. The object of the legislature in enacting Section 80 HHC of the Act was to confer a benefit on profits accruing with reference to export turnover. Therefore, turnover was the requirement. Commission, rent, interest etc. did not involve any turnover. It was concluded that 'sales tax and excise duty' like the aforementioned tools like interest, rent etc. 'also do not have any element of 'turn over''. 15. In CIT v. Lakshmi Machine Works (supra), the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 7. In this judgment the Hon ble High Court of Delhi has also referred to the decisions of the Hon ble Supreme Court in the case of M/s Chowringhee Sales Bureau (P) Ltd. Vs CIT (Supra) and finally held that the service tax is not an amount paid or payable or receipt or deemed to be received by the assessee for the services rendered by it. Rather, the assessee is only collecting the service tax for passing on the Government therefore the service tax collected by the assessee on the amount paid to it for rendering services it not to be included in the gross receipts in the terms of section 44BB (2) Read with section 44BB(1) of the Act. In this situation we decline to accept contention of Ld CIT-DR and hold that the issue is covered on all for corners in favour of the assessee and against the revenue by the decision of the ITAT in assessee s own appeals for AY 2008-09 (Supra) and 2009-10 (Supra) hence we are unable to see any valid reason to interfere with the impugned order of the CIT(A) and thus we uphold the same. Accordingly, ground No. 1 to 1.3 being devoid of merits are dismissed. 8. In the result, appeal of the revenue is dismissed. Order is pronounced in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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