TMI Blog2018 (4) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not Section 44D of the Act. For includibility of Service Tax/VAT reimbursement in the gross receipts is concerned, it is seen that the issue is squarely covered by the judgment of the Hon'ble Delhi High Court in the case of Mitchell Drilling International Pty. Limited (2015 (10) TMI 259 - DELHI HIGH COURT) wherein held that service tax being statutory levy should not form part of gross receipts as per provisions of section 44BB of the Act - Decided against revenue - ITA No. 6167/Del /2014 - - - Dated:- 20-4-2018 - Shri R. K. Panda, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member Appellant by : Shri Ravi Kant Gupta, Sr. DR Respondent by : Shri Amit Arora, CA Shri Vishal Mishra, CA ORDER Per Sudhanshu Srivastava, J. M. This appeal filed by the revenue is directed against the order dated 26.08.2014 passed by the Ld. Commissioner of Income Tax (Appeals)-II, Dehradun and pertains to assessment year 2011-12. 2. Brief facts of the case are that the return was filed declaring total income of ₹ 32,51,26,385/-. The case was later selected for scrutiny. During the year under consideration, the assessee company was engaged in providing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with companies not directly engaged in Oil Production and Explorations and, therefore, liable to tax u/s 9 (1) (vi)/9(1)(vii) read with section 44DA and not section 44BB of the IT Act, 1961 ('Act). 1 (a) The Ld CIT (A) has erred in holding that the receipts of the assessee from Non- PSC Partners on account of equipment rental are not in the nature of Royalty u/s 9(1)(vi) of the Act, 1961 read with section 44DA of the Act and are eligible for treatment under presumptive provisions of sections 44BB of the Act. 1 (b) The Ld CIT (A) has erred in holding that the receipts of the assessee from Non- PSC Partners on account of provisions of services are not in the nature of Fees for Technical Services (FTS) u/s 9(1)(vii) read with section 44DA of the Act and are eligible for treatment under presumptive provisions of section 44BB of the Act. 1 (c) The Ld CIT(A) has erred in holding that the receipts of the assessee from Non- PSC Partners on account of re- imbursable items are not in the nature of FTS/Royalty u/s 9(1)(vii)/9(1)(vi) read with section 44DA of the Act and are eligible for treatment under section 44BB of the Act, not appreciating the findings of the AO that re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to have been allowed to the assessee. 3.2 Whether the Ld. CIT (A) has erred in not appreciating the fact once the receipts held as taxable u/s 44BB of the Act, there is no scope for computing or re-computing the profits by excluding any element of the receipts from the total turnover as the same would amount to defeating the very purpose of providing for a scheme of similar mode of computation of profits u/s 44BB of the Act and obviating the need for accounting for individual receipts and payments etc. 3.3 Whether the Ld. CIT{A) has erred in ignoring the ratio of the judgment in the case of M/s Chowringhee Sales Bureau (P) Ltd (82 ITR 542,SC) wherein the Hon'ble Apex Court has held that the sales tax collected by an assessee in the ordinary course of its business forms part of its business receipts. Owing to the inherent similarity in the nature of the sales tax and services tax, the ratio of the judgment in the said case is directly applicable in the facts of the Instant case. 3.4 Without prejudice to the grounds at S. No. 3.1 to 3.3 above, the Ld Commissioner of Income Tax (A) has erred in allowing relief with regard to the re-imbursements of Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record. As far as ground nos. 1, 1(a), 1(b), 1(c), 2, 2.1, 2, 2.1, 2.2 and 2.3 pertaining to the taxability of receipts from the non-PSC companies are concerned, it is seen that this issue is covered in favour of the assessee by the orders of the Tribunal in the assessee s own case for assessment years 2007-08 to 2010-11. It is also noteworthy that the case of the assessee is also supported by the judgment of the Hon ble Uttarakhand High Court in the case of SBS Marine Ltd. vs. ADIT and the issue is further covered by the judgment of Hon ble Apex Court in the case of ONGC vs. CIT reported in 376 ITR 306(SC). The Hon ble Apex Court has held in the case of ONGC vs. CIT (supra) that where the pith and substance of each of the contracts/agreements is inextricably connected with prospecting, extraction or production of mineral oil and where the dominant purpose of each of such agreement is for prospecting, extraction or production of mineral oils, though there may be certain ancillary works contemplated there under, the payments received under the said contracts would be more appropriately assessable under the provisions of section 44BB and not Section 44D of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies 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. 9. Section 44BB begins with a non obstante clause that excludes the application of Sections 28 to 41 and Sections 43 and 43A to assessments under Section 44 BB. It introduces the concept of presumptive income and states that 10% credit of the amounts paid or payable or deemed to be received by the Assessee 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 in India shall be deemed to be the profits and 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 44 BB (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover of the dealer. 14. In the considered view of the Court, both the aforementioned decisions were rendered in the specific contexts in which the questions arose before the Court. In other words the interpretation placed by the Court on the expression trading receipt or turnover in the said decisions was determined by the context. The later decision of the Supreme Court in CIT v. Lakshmi Machine Works (supra) which sought to interpret the expression turnover was also in another specific context. There the question before the Supreme Court was whether excise duty and sales tax were includible in the total turnover which was 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 assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
