9911796707
TMI Blog2017 (1) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... r determining the taxable income of the appellant. 1.2 The learned DDIT failed to appreciate the fact that service tax collected by the Appellant is not includible in computing the total income under Section 44B of the Act since service tax is a statutory levy and the appellant only acts as agent on behalf of Government for collection and deposit of service tax into the treasury and therefore, the amount so collected should not form part of gross freight for computing the taxable income; 1.3 The learned DDIT failed to appreciate the fact that service tax is neither a collection on account of carriage of goods 'nor in nature of 'demurrage charges or handling charges or any other amount of similar nature 'to fall within the purview of section 44B of the IT Act; 1.4 The learned DDIT erred in not following the decision of the Hon'ble jurisdictional Income Tax Appellate Tribunal in the case of Islamic Republic of Iran Shipping Lines v DDIT (46 SOT 101); 1.5 The learned DD1T failed to appreciate that the amount of service tax collected by the Appellant and subsequently deposited with the government treasury does not entail any profit element, as such it should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive income under section 44B of the Act has been affirmed in favour of Revenue and against the assessee by the decision of the Coordinate Bench in the assessee's own case for A.Y. 2007-08 in ITA No. 8516/Mum/2010 dated 23.08.2013; considering the issue and holding as under at paras 8 to 12 thereof: - 8. We have considered the rival submissions and carefully gone through the relevant material on record as well as the various decisions relied upon by either of the parties. With a view to simplify and rationalise the assessment and computation of profit and gain of shipping business in the case of non-resident the Finance Act 1975 has made special provision in section 44B of the Income Tax Act. Under this provision, profits and gain of non-resident from the business of operation of ships will not be calculated in accordance with the provisions of section 28 to 43A of the Income Tax Act but the same will be taken as 7.5% of the aggregate of the amounts paid or payable to the assessee or to any persons on his behalf on account of carriage of passengers, livestock, mail or goods, shipped at any port in India as well the amount received or deemed to be received in India on account of car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 Reddy (supra) as well as in case of Mcdowell & CO. Ltd. Vs CTO (supra). The assessee has heavily relied upon the decision of this Tribunal in case of Islamic Republic of Iran Shipping Lines Vs DCIT (supra) wherein this Tribunal has relied upon the decision of Hon'ble High Court in case of CIT Vs Sudarshan Chemicals Industries Ltd. (supra) and held that service tax is statutory liability and would not involved any element of profit and accordingly the same cannot be included in the total receipt for determining the presumptive income. On the other hand, the Ld. DR has relied upon the decision of this Tribunal in case of DDIT Vs Technip of Sources Contracting B.V (Supra) wherein the Tribunal has relied upon the decision of Hon'ble Uttarakhand High Court in case of Sedko Forex Inc. (supra) and held that service tax collected by the assessee in connection with the services specified u/s 44BB of the Act will be included in the total receipt for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived 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. (iii) 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 demurrage charges or handling charges or any other amount of similar nature." 10. As we have already mentioned that the provisions of section 44B has been brought into statute to simplify the determination of taxable income of the non-resident who are in the business of shipping. The presumptive profits and gain of such business chargeable to tax under the provisions of section 44B are determined as a sum equal to 7.5% of the aggregate amounts paid or payable to the assessee on account of carriage of passengers etc. or goods shipped at any port in India as well as amount received or deemed to be received in India on account of carriage of passengers or goods shipped at any port outside India. There is no dispute that the service tax received/collected by the assessee is in respect of the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eover 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/shipped service is very much a trading/business receipt and would be part of the aggregate amount for presumptive profit and gain to be determined u/s 44B. 12. In view of the above discussion we hold that the service tax collected by the assessee would form part and partial of the aggregate amount as specified under sub-section 2 of section 44B for the purpose of determining the profit and gain under this section. Accordingly, we upheld the orders of the authorities below qua this issue." 3.2.2 Following the aforesaid decision of the Coordinate Bench in the assessee's own case for A.Y. 2007-08 (supra), we hold that service tax collected by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
