ADIT, Dehradun V. M/s. Sedco Forex International Drilling Inc., Mumbai

ITA 1049/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6672 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 08-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-02-2014

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SH. G.D. AGRAWAL V.P. AND SH. C.M. GARG, J.M ITA NO. 1049/DEL/2014 ASSTT. YEAR: 2010 - 11 APPELLANT BY: SH. ANUJ ARORA, CIT - DR RESPONDENT BY: SH. AMIT ARORA, SH . SURAJ NANGIA, ADVOCATES DATE OF FINAL HEARING : 08.02.2016 DATE OF PRONOUNCEMENT : 29. 02.2016 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 DAT ED 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: ADIT, INTERNATIONAL TAXATION , AAYAKAR BHAWAN, 13A - SUBHASH ROAD, DEHRADUN - 248001 VS M/S S EDCO FOREX INTERNATIONAL DRILLING INC. TRANSOCEAN HOUSE, LAKE BOULEVARD ROAD, HIRANADANI BUSINESS PARK MUMABI - 400076 APPELLANT RESPONDENT PAN NO. AACCS9208D 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(APPEALS) HAS ERRED HOLDING THAT RECEIPTS O N 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 APPRECIATIN G THE FACT THAT THE PROVISIONS OF SECTION 44BB OF THE ACT ARE A SELF - CONTAINED 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 ALLOW ED TO THE ASSESSEE . WHETHER THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ONCE THE RECEIPTS ARE OFFERED TO TAX U/S 44BB OF THE ACT WHICH PROVIDES FOR COMPUTATION OF PROFITS ON GROSS BASIS, 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 SIMPLER MODE OF COMPUTATION OF PROFITS U/S 44BB OF THE ACT AND OBVIATING THE NEED FOR ACCOUNTING F OR INDIVIDUAL RECEIPTS AND PAYMENTS ETC. 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 3 THE SALES TAX COLLECTED B Y AN ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS FORMS PART OF ITS BUSINESS RECEIPTS. OWING TO THE INHERENT SIMILARITY IN THE NATURE IF THE SALES TAX AND SERVICE TAX, THE RATIO OF THE JUDGMENT IN THE SAID CASE IS DIRECTLY APPLICABLE IN THE FACTS OF THE INSTANT CASE. 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND PERUSED THE RELEVANT MATERIALS PLACED BEFORE US. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVER4ED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL PASSED IN AS SESSES ON APPEALS I.E. ITA NO. 504/DELHI/2013 FOR AY 2009 - 10 DATED 02.08.2013 AND EARLIER ORDER PASSED IN ITA NO. 5284/DELHI/2011 DATED 19.06.2012. THE LD COUNSEL ALSO POINTED OUT THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL PTY. LIMITED IN ITA NO. 403/2013 DATED OF PRONOUNCEMENT IS 28.09.2015, OF WHEREIN THE HON BLE COURT HAS HELD THAT SERVICE TAX BEING STATUTORY LEVY SHOULD NOT FORM PART OF GROSS RE CEIPTS AS PER PROVISION OF SECTION 44 BB OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 4. REPLYING TO THE ABOVE THE LD . CIT - DR VEHEMENTLY CONTENDED THAT THE ISSUE IS NOT ACCEPTED AS COVERED BY THE SAID JUDGMENTS AS RELIED BY THE APPELLANT BECAUSE SECT ION 44BB IS COMPLETE COURT IN ITSELF AND IT 4 PROVIDES BY A LEGAL FICTION TO BE PROFITS AND GAINS OF THE NON RESIDENT ASSESSEE ENGAGED IN THE BUSINESS OF OIL EXPLORATION. THE LD CIT - DR ALSO POINTED OUT THAT THE SERVICE TAX RECEIPTS SQUARELY FALSE WITHIN THE PRINCIPLE ENUNCIATED IN M/S CHOWRINGHEE SALES BUREAU (P) LTD. VS CIT (1973) 87 ITR 542 (SC) WHEREIN IT WAS LAID DOWN THAT SALES TAX CHARGES FORMS PART OF TRADING RECEIPTS AND IS AS SUCH LIABLE TO BE ASSESSED TO INCOME TAX. FINALLY, THE LD . CIT - DR SUBMITTE D 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 I SSUE 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, TH E 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 5 ACCOUNT OF REIMBURSEMENT OF FREIGHT AND TRANSPORTATION CHARGES ACTUALLY INCURRED IN RESPECT OF EQUIPMENT WAS NOT INCLUDIBLE WHILE COMPUTING ITS INCOME UNDER SECTION 44BB . THE ASSESSING OFFICER REJECTED THE CLAIM BUT THE CIT(A) AND THE TRIBUNAL ACCEPTED IT. ON APPEAL, THE HON'BLE HIGH COURT HELD AS UNDER: - ' HELD, ALLOWING THE APPEAL, THAT IT WAS NOT IN DISPUTE THAT THE AMOUNT HAD BEEN RECEIVED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER ADDED THE SAID AMOUNT WHICH WAS 4 ITA - 504/DEL/2013 RECEIVED BY THE NON - RESIDENT COMPANY RENDERING SERVICES UNDER THE P ROVISIONS OF SECTION 44BB TO THE ONGC AND IMPOSED THE INCOME TAX THEREON. HE WAS JUSTIFIED IN DOING SO.' 7. THE RATIO OF THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICAB LE TO THE CASE OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAME, WE REJECT GROUND NO.3 OF THE ASSESSEE'S APPEAL. 6. AT, THIS JUNCTURE IT IS ALSO RELEVANT TO TAKE COGNIZANCE OF DECISION OF HON BLE HIGH COURT OF DELHI IN THE CASE OF DIT VS MITCHELL DRILLIN G INTERNATIONAL PVT. LTD. (SUPRA) WHEREIN THERE LORDSHIP HELD THAT THE SERVICE TAX COLLECTED BY THE ASSESSEE AND PASSED ON TO THE GOVERNMENT OF INDIA FROM THE PERSON TO WHOM IT HAS PROVIDED THE SERVICES CAN LEGITIMATELY NOT TO BE CONSIDERED TO FORM A PART OF THE GROSS RECEIPTS FOR THE PURPOSE OF COMPUTATION OF ASSESSEE S PRESUMPTIVE INCOME 6 U/S 44BB OF THE ACT. THE RELEVANT OPERATIVE PART OF THIS ORDER READ AS UNDER. 5. WHILE ADMITTING THIS APPEAL ON 28TH MAY, 2014, THE COURT FRAMED THE FOLLOWING QUESTI ON OF LAW: 'WHETHER THE AMOUNT OF SERVICE TAX COLLECTED BY THE ASSESSEE FROM ITS VARIOUS CLIENTS SHOULD HAVE BEEN INCLUDED IN GROSS RECEIPT WHILE COMPUTING ITS INCOME UNDER THE PROVISIONS OF SECTION 44BB OF THE ACT?' 6. IT IS SUBMITTED BY MR KAMAL SAWHNE Y, LEARNED SENIOR STANDING COUNSEL FOR THE REVENUE THAT SECTION 44BB IS AN INSTANCE OF TAXATION OF A PRESUMPTIVE INCOME. ACCORDING TO HIM, THE EXPRESSIONS 'PAID OR PAYABLE TO THE ASSESSEE' OCCURRING IN SE CTION 44 BB (2) (A) AND 'RECEIVED OR DEEMED TO BE RECEIVED' BY THE ASSESSEE OCCURRING IN SECTION 44 B (2) (B) HAVE TO PAYABLE TO OR RECEIVED BY ASSESSEE ON ACCOUNT OF THE SERVICE TAX ON THE SUM PAID OR P AYABLE FOR THE SERVICES PROVIDED BY THE ASSESSEE. HE PLACED CONSIDERABLE RELIANCE ON THE DECISIONS OF THE SUPREME COURT IN CHOWRINGHEE SALES BUREAU PVT. LTD. V. COMMISSIONER OF INCOME - TAX [1973] 87 ITR 54 2 AND GEORGE OAKES (P.) LTD. V. STATE OF MADRAS [1962] 2 SCR 570. ACCORDING TO HIM, THE DECISION OF THE UTTARAKHAND HIGH COURT IN DIT V. SCHLUMBERGER ASIA SERVICES LTD. (2009)317 ITR 156 WAS DISTINGUISHAB LE ON FACTS SINCE IT RELATED TO PAYMENT OF CUSTOMS DUTY. 7 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 RECO GNIZE 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 CONSIDE RED 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 INTERNATIONAL INC. V. CIT 299 ITR 238 (UTTARAKHAND) AND THE DECISION OF THIS COURT IN CIT TAX - XI V. M/S DLF COMMERCIAL PROJECT CORPORATION 2015 - TIOL - 1609 - HC - DEL - IT. 8. SECTION 44BB (1) AND (2) OF THE ACT READ AS UNDER: '44BB. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A, IN THE CASE OF AN ASSESSEE, BEING A NON - RESIDENT, ENGAGED I N THE BUSINESS OF PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH, OR SUPPLYING PLANT AND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS, A 8 SUM EQUAL TO TEN PER CENT OF THE AGGREGATE OF THE A MOUNTS 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' : PROVIDED THAT THIS SUB - SECTION SHALL NOT APPLY IN A CASE WHERE THE PROVISION S OF SECTION 42 OR SECTION 44D OR SECTION 44DA OR SECTION 115A OR SECTION 293A APPLY FOR THE PURPOSES OF COMPUTING PROFITS OR GAINS OR ANY OTHER INCOME REFERRED TO IN THOSE SECTIONS. (2) THE AMOUNTS REFERRED TO IN SUB - SECTION (1) SHALL BE THE FOLLOWING, NAMELY: -- (A) 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 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; AND (B) THE AMOUNT RECEIVED OR DEEMED TO BE RECEIVED IN INDIA BY OR ON BEHALF OF THE ASSESSEE ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUP PLY 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 EXC LUDES THE APPLICATION OF SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A TO ASSESSMENTS UNDER SECTION 44 BB. IT INTRODUCES THE 9 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 FACIL ITIES 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' I N 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 ASSESSE E 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 RS. 32,986 WAS COLLECTED AND KEPT BY THE ASSESSEE IN A SEPARATE 'SALES TAX COLLECTION ACCOUNT'. THE QUESTION CONSIDERED BY THE 10 SUPREME COURT WAS: 'WHETH ER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE SUM OF RS. 32,986 / - HAD BEEN VALIDLY EXCLUDED FROM THE ASSESSEE'S BUSINESS INCOME FOR THE RELEVANT ASSESSMENT YEAR?'. HOWEVER, THERE THE ASSESSEE DID NOT DEPOSIT THE AMOUNT COLLECTED BY IT AS SALES T AX IN THE STATE EXCHEQUER SINCE IT TOOK THE STAND THAT THE STATUTORY PROVISION CREATING THAT LIABILITY UPON IT WAS NOT VALID. IN THE CIRCUMSTANCES, THE SUPREME COURT HELD THAT THE SALES TAX COLLECTED, AND NOT DEPOSITED WITH THE TREASURY, WOULD FORM PART OF THE ASSESSEE'S TRADING RECEIPT. 13. THE DECISION IN GEORGE OAKES (P) LTD. (SUPRA) WAS CONCERNED WITH THE CONSTITUTIONAL VALIDITY OF THE MADRAS GENERAL SALES (DEFINITION OF TURNOVER AND VALIDATION OF ASSESSMENTS) ACT, 1954 ON THE GROUND THAT THE WORD TURN OVER WAS DEFINED TO INCLUDE SALES TAX COLLECTED BY THE DEALER ON INTER - STATE SALES. UPHOLDING THE VALIDITY OF THE SAID STATUTE THE SUPREME COURT HELD THAT 'THE EXPRESSION 'TURNOVER' MEANS THE AGGREGATE AMOUNT FOR WHICH GOODS ARE BOUGHT OR SOLD, WHETHER FO R CASH OR FOR DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION, AND WHEN A SALE ATTRACTS PURCHASE TAX AND THE TAX IS PASSED ON TO THE CONSUMER, WHAT THE BUYER HAS TO PAY FOR THE GOODS INCLUDES THE TAX AS WELL AND THE AGGREGATE AMOUNT SO PAID WOULD FALL WIT HIN THE DEFINITION OF TURNOVER.' SINCE THE TAX COLLECTED BY THE SELLING DEALER FROM THE PURCHASER WAS PART OF THE PRICE FOR WHICH THE GOODS WERE SOLD, THE LEGISLATURE WAS NOT INCOMPETENT TO ENACT A STATUTE PURSUANT TO ENTRY 54 IN LIST II MAKE THE TAX SO PA ID A PART OF THE TURNOVER OF THE DEALER. 11 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 INTER PRET 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 ASSESSEE IS RELATABLE TO EXPO RTS 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 TURN OVER. 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''. 12 15. IN CIT V. LAKSHMI MACHINE WORKS (SUPRA), THE SUPREME COURT APPROVED THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. SUDARSHAN CHEMICALS INDU STRIES LTD . (SUPRA) WHICH IN TURN CONSIDERED THE DECISION OF THE SUPREME COURT IN GEORGE OAKES (P) LTD. (SUPRA). IN THE CONSIDERED VIEW OF THE COURT, THE DECISION OF THE SUPREME COURT IN LAKSHMI MACHINES WORKS (SUPRA) IS SUFFICIENT TO ANSWER THE QUESTION FRAMED IN THE PRESENT APPEAL IN FAVOUR OF THE ASSESSEE. THE SERVICE TAX COLLECTED BY THE ASSESSEE DOES NOT HAVE ANY ELEMENT OF INCOME AND THEREFORE CANNOT FORM PART OF THE GROSS RECEIPTS FOR THE PURPOSES OF COMPUTING THE 'PRESUMPTIVE INCOME' OF THE ASSESSE E UNDER SECTION 44 BB OF THE ACT. 16. THE COURT CONCURS WITH THE DECISION OF THE HIGH COURT OF UTTARAKHAND IN DIT V. SCHLUMBERGER ASIA SERVICES LTD (SUPRA) WHICH HELD THAT THE REIMBURSEMENT RECEIVED BY THE ASSESSEE OF THE CUSTOMS DUTY PAID ON EQUIPMENT IM PORTED BY IT FOR RENDERING SERVICES WOULD NOT FORM PART OF THE GROSS RECEIPTS FOR THE PURPOSES OF SECTION 44 BB OF THE ACT. 17. THE COURT ACCORDINGLY HOLDS THAT FOR THE PURPOSES OF COMPUTING THE 'PRESUMPTIVE INCOME' OF THE ASSESSEE FOR THE PURPOSES OF SEC TION 44 BB OF THE ACT, THE SERVICE TAX COLLECTED BY THE ASSESSEE ON THE AMOUNT PAID T IT FOR RENDERING SERVICES IS NOT TO BE INCLUDED IN THE GROSS RECEIPTS IN TERMS OF SECTION 44 BB (2) READ WITH SECTION 44 BB (1). THE SERVICE TAX IS NOT AN AMOUNT PAID OR PAYABLE, OR RECEIVED OR DEEMED TO BE RECEIVED BY THE ASSESSEE FOR THE SERVICES RENDERED BY IT. THE ASSESSEE IS ONLY COLLECTING THE SERVICE TAX FOR PASSING IT ON TO THE GOVERNMENT. 13 18. THE COURT FURTHER NOTES THAT THE POSITION HAS BEEN MADE EXPLICIT BY THE CBDT ITSELF IN TWO OF ITS CIRCULARS. IN CIRCULAR NO. 4/2008 DATED 28TH APRIL 2008 IT WAS CLARIFIED THAT 'SERVICE TAX PAID BY THE TENANT DOESN'T PARTAKE THE NATURE OF 'INCOME' OF THE LANDLORD. THE LANDLORD ONLY ACTS AS A COLLECTING AGENCY FOR GOVERNMENT FO R COLLECTION OF SERVICE TAX. THEREFORE, IT HAS BEEN DECIDED THAT TAX DEDUCTION AT SOURCE) UNDER SECTIONS 194 - I OF INCOME TAX ACT WOULD BE REQUIRED TO BE MADE ON THE AMOUNT OF RENT PAID/PAYABLE WITHOUT INC LUDING THE SERVICE TAX.' IN CIRCULAR NO. 1/2014 DATED 13TH JANUARY 2014, IT HAS BEEN CLARIFIED THAT SERVICE TAX IS NOT TO BE INCLUDED IN THE FEES FOR PROFESSIONAL SERVICES OR TECHNICAL SERVICES AND NO TDS IS REQUIRED TO BE MADE ON THE SERVICE TAX COMPONENT UNDER SECTION 194J OF 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. V S 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 CO NTENTION OF 14 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 VA LID 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 OPEN COUR T ON 29/ 02/2016 S D / - S D / - (G. D. AGRAWAL) (C.M GARG) VICE PRESIDENT JUDICIAL MEMBER DATED : 29 TH FEBRUARY 2016. *RES. DESKTOP COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT (APPEALS) 5 . DR: ITAT