DCIT, New Delhi V. M/s. Mitchell Drilling International Pty. Ltd., New Delhi

ITA 1737/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5421 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Presumptive income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH.BHAVNESH SAINI, JUDICIAL MEMBER AND SH.O.P.KANT, ACCOUNTANT MEMBER ITA NO.1737/DEL/2015 [ASSESSMENT YEAR: 2010-11] APPLICANT BY SH.SURENDER PAL, SR.DR (INT. TAXATION) RESPONDENT BY SH.PIYUSH KAUSHIK, ADV. & SH. AMIT ARORA, CA DATE OF HEARING 25.04.2018 DATE OF PRONOUNCEMENT 26 .04.2018 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD.CIT(A)-43, NEW DELHI DATED 16.01.2015 FOR AY 201 0-11, CHALLENGING THE ORDER OF LD.CIT(A) IN HOLDING THAT SERVICE TAX BEIN G A STATUTORY LIABILITY WOULD NOT INVOLVE ANY ELEMENT OF PROFIT AND, ACCORDINGLY, THE SAME COULD NOT BE INCLUDED IN THE TOTAL RECEIPTS FOR DETERMINING THE PRESUMPTION INCOME IGNORING THEREBY PROVISIONS OF SECTION 44BB OF THE INCOME TA X ACT, 1961 (IN SHORT ACT). 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A COMPANY INCORPORATED IN AUSTRALIA AND IS ENGAGED IN BUSINES S OF PROVIDING EQUIPMENT ON HIRING AND MANPOWER ETC. FOR EXPLORATION AND PRODUC TION OF MINERAL OIL AND NATURAL GAS. DURING THE YEAR UNDER APPEAL, THE ASS ESSEE HAS EARNED GROSS DCIT, CIRCLE-GURGAON, INTERNATIONAL TAXATION, ROOM NO.411, CIVIC CENTRE, NEW DELHI. VS MI TCHELL DRILLING INTERNATIONAL PTY. LTD., C/O-M/S. NANGIA & CO., CAS, SUIT 4A, PLAZA M-6, JASOLA, NEW DELHI PAN-AADCM9904H (APPLICANT) (RESPONDENT) ITA NO.1737/DEL/2015 PAGE | 2 RECEIPTS OF RS.22.39 CRORES AND HAS OFFERED IT FOR TAXATION U/S 44BB OF THE ACT. ACCORDINGLY, THE ASSESSEE HAS FILED THE RETURN OF I NCOME DECLARING THEREIN TAXABLE INCOME OF RS.2.26 CRORES INCLUDING THE INCO ME FROM OTHER SOURCES AT RS.2,31,845/-. THE AO ACCEPTED THE APPLICABILITY O F SECTION 44BB OF THE ACT. THE ONLY ISSUE INVOLVED WAS THAT THE ASSESSEE HAS N OT INCLUDED SERVICE TAX AMOUNTING TO RS.2,40,79,785/- IN THE GROSS RECEIPTS FOR THE PURPOSES OF COMPUTATION OF INCOME U/S 44BB OF THE ACT. THE AO HAS BROUGHT THIS AMOUNT OF SERVICE TAX WITHIN THE AMBIT OF SECTION 44BB OF THE ACT AND ASSESSED THE INCOME AT RS.2.50 CRORES. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD.C IT(A) AND IT WAS SUBMITTED THAT THE SERVICE TAX COLLECTED BY THE ASS ESSEE FOR AND ON BEHALF OF THE CENTRAL GOVERNMENT BY ITSELF CANNOT BE SAID TO HAVE BEEN RECEIVED IN RETURN OF PROVIDING ANY SERVICE OR FACILITIES IN TERMS OF SEC TION 44BB OF THE ACT. IT WAS SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED IN AYS 2 008-09 & 2009-10 AND LD.CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE WHICH IS CONFIRMED BY THE TRIBUNAL. LD. CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE BECAUSE SAME ISSUE WAS DECIDED BY THE ITAT IN FAOVUR OF THE ASSESSEE IN EARLIER YEARS. THE APPEAL OF THE ASSESSEE WAS ALLOWED. 4. LD. SR. DR RELIED UPON THE ORDER OF THE AO AND A LSO RELIED UPON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. CHOWRINGHEE SALES BUREAU (P)VS CIT, WEST BENGAL 1973 AIR 376. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND FURTHER SUBMITTED THAT ORDER OF THE TRIBUNAL IN EARLIER YEARS I.E. AYS 2008- 09 & 2009-10 HAVE BEEN CONFIRMED BY THE HONBLE DEL HI HIGH COURT IN THE CASE ITA NO.1737/DEL/2015 PAGE | 3 OF THE SAME ASSESSEE IN DIT VS MITCHELL DRILLING INTERNATIONAL PVT. LTD. [2 016] 380 ITR 130 (DEL.) IN WHICH IT WAS HELD AS UNDER:- HELD, DISMISSING THE APPEALS, (I) THAT FOR THE PUR POSES OF COMPUTING THE PRESUMPTIVE INCOME OF THE ASSESSEE FOR THE PURPOSES OF SECTION 44BB THE SERVICE TAX COLLECTED BY THE ASSESSEE ON THE AMOUNT PAID TO IT FOR RENDERING SERVICES WAS NOT TO BE INCLUDED IN THE GROSS RECEIP TS IN TERMS OF SECTION 44BB(2) READ WITH SECTION 44BB(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 ONLY COLLECT ED THE SERVICE TAX FOR PASSING IT ON TO THE GOVERNMENT. (II) THAT CIRCULAR NO.4 OF 2008, DATED APRIL 28, 20 08, CLARIFIED THAT SERVICE TAX PAID BY THE TENANT DOES NOT PARTAKE OF THE NATURE OF INCOME OF THE LANDLORD. THE LANDLORD ONLY ACTS AS A COLLECTING AGENCY FOR GOVERNMENT FOR COLLECTION OF SERVICE TAX . CIRCULAR NO.1 OF 2014, DATED JANUARY 13, 2014, ALSO CLARIFIED THAT S ERVICE TAX IS NOT TO BE INCLUDED IN THE FEES FOR PROFESSIONAL SERVICE S OR TECHNICAL SERVICES. 5. HE HAS FURTHER SUBMITTED IN THE SAME JUDGEMENT, HONBLE DELHI HIGH COURT ALSO CONSIDERED THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. CHOWRINGHEE SALES BUREAU (P)VS CIT, WEST BENG AL (SUPRA) RELIED UPON BY THE LD. SR. DR. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE ITAT IN THE CASE OF SAME ASSESSEE FOR AY 2008-09 HELD THAT THE SERVICE TAX PAID BY THE ASSESSEE COULD NOT FOR M PART OF THE AMOUNT FOR THE PURPOSE OF DEEMED PROFIT U/S 44BB OF THE AC T UNLIKE THE OTHER AMOUNTS RECEIVED. THE JUDGEMENT OF THE TRIBUNAL HAVE BEEN CONFIRME D BY THE HONBLE DELHI HIGH COURT IN THE CASE OF SAME AS SESSEE (SUPRA). THE ISSUE ITA NO.1737/DEL/2015 PAGE | 4 IS, THEREFORE, COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P.KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* DATE:-26.04.2018 COPY FORWARDED TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) CONCERNED 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI