DCIT (IT)-3(1)(1), MUMBAI V. JET DRILLING (S) PTE. LTD., MUMBAI

ITA 1921/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5962 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 02-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT JHAWERI
• Assessee Lawyers: NEERAJ AGARWAL
• Keywords: Presumptive income
• Section: 44BB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F , MUMBAI BEFORE S HRI G. MANJUNATHA (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 1921 /MUM/2019 ASSESSMENT Y EAR: 2013 - 14 THE DEPUTY COMMISSIONER OF INCOME TAX (IT) - 3(1)(1), 16 TH FLOOR ROOM NO. 1603, AIR IND IA BUILDING, NARIMAN POINT, MUMBAI - 400021 VS. M/S JET DRILLING (S) PTE. LTD., 1 ST FLOOR, AJANTA EXECUTIVE CENTRE , 8 JUHU TARA ROAD, JUHU, MUMBAI - 400064 PAN: AABCJ9895N (APPELLANT) (RESPONDENT) REVENUE BY: SHRI JAYANT JHAWERI (CIT DR) ASSESS EE BY : SHRI NEERAJ AGARWAL ( AR ) DATE OF HEARING: 16 /03 /2020 DATE OF PRONOUNCEMENT: 11 / 0 6 /2020 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORD ER DATED 18.01.2019 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 57 (FOR SHORT THE CIT (A ) MUMBAI , FOR THE ASSESSMENT YEAR 2013 - 14 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3)/144C(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIE F FACTS OF THE CASE ARE THAT THE ASSESSEE A SUBSIDIARY COMPANY OF NORTHERN OFFSHORE LTD., FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL INC OME AT R S. 25,12,56,850/ - AS PER THE PROVISIONS OF SECTION 44BB(1) OF THE ACT. SINCE IT WAS OBSERVED THAT SERVICE TAX AMOUNTING TO RS. 33,70,18,809/ - HAD BEEN DEDUCTED FROM THE GROSS RECEIPT, AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AMOUNT OF SERV ICE TAX DEDUCTED FROM GROSS RECEIPT SHOULD NOT BE ADDED TO ITS INCOME. THE ASSESSEE CONTENDED THAT STATUTORY CHARGES CANNOT FORM PART OF THE AMOUNT SPECIFIED IN SUB - SECTION(2) OF SECTION 44BB OF THE ACT FOR THE PURPOSES OF DETERMINING THE 2 ITA NO. 1921 / MUM/2019 ASSESSMENT YEAR: 2013 - 1 4 PROFITS AND GAINS OF SUCH BUSINESS. HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND ADDED THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A). THE LD. CIT(A) RELYING ON THE DECISION OF THE TRIB UNAL IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEAR 2011 - 12, ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE AND DIRECTED THE AO TO DELETE THE ADDITION OF THE SAID AMOUNT. AGAINST THE SAID FINDINGS OF THE LD. CIT(A) , THE REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 3. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUND : - WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THERE IS NO MERIT FOR INCLUSION O F SERVICE TAX IN THE TOTAL TURNOVER, WHILE COMPUTING INCOME U/S 44BB (1) OF IT ACT WITHOUT APPRECIATING THE FACT THAT THE SERVICE TAX COLLECTED BY THE ASSESSEE IS LIABLE TO BE INCLUDED IN THE GROSS RECEIPT OF THE ASSESSEE FOR THE PURPOSE OF TAXATION AS PER THE PROVISION OF SECTION 145A OF THE ACT AND SERVICE TAX IS AN INTEGRAL PART OF SALE RECEIPTS AND THUS FROM PART OF TOTAL TURNOVER. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVE D IN THE PRESENT CASE IS COVERED IN F AVOUR OF THE ASSESSEE BY THE DECISION OF THE MUMBAI TRIBUNAL IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEARS 2011 - 12 AND 2015 - 16. THE LD. COUNSEL FURTHER POINTED OUT THAT SINCE THE FINDINGS OF THE LD. CIT(A) ARE IN ACCORDANCE WITH THE DECISION OF THE TRIB UNAL, THERE IS NO MERIT IN THE PRESENT APPEAL. ACCORDINGLY, THE LD. COUNSEL SUBMITTED THAT THE PRESENT APPEAL MAY BE DISMISSED. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTING THE ASSESSMENT ORDER CONTENDED THAT SINCE THE ASSESSEE HAD OFFERED 10% OF THE GROSS RECEIPTS UNDER SECTION 44BB OF THE ACT, ON PRESUMPTIVE BASIS , THE AMOUNT OF SERVICE TAX WAS NOT REQUIRED TO BE DE DUCTED FROM THE GROSS RECEIPT. 6. WE HAVE PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTION OF THE PARTIES. AS POINTED OUT BY THE LD. COUNSEL, THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSE E S APPEAL ITA NO.6439/MUM/2014, AY 2011 - 12 BY FOLLOWING THE JUDGMENT OF THE 3 ITA NO. 1921 / MUM/2019 ASSESSMENT YEAR: 2013 - 1 4 HONBLE DELHI HIGH COURT IN THE CASE OF MI TCHELL DRILLING INTERNATIONAL(P) LTD.380 ITR 130 (DELHI), WHERE IN THE HONBLE COURT HAS HELD THAT FOR THE PURPOSES OF PRESUMPTIVE INCOME OF ASSESSEE UNDER SECTION 44BB, SERVICE TAX COLLECTED BY THE ASSESSEE WAS NOT TO BE INCLUDED IN THE GROSS RECEIPTS WIT HIN THE MEANING OF SUB - SECTION (2) OF SECTION 44BB OF THE ACT. THE COORDINATE BENCH FURTHER FOLLOWED THE SAME DECISION IN REVENUES APPEAL IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 2015 - 16 AND DISMISSED THE REVENUES APPEAL ON THE IDENTICAL GROUND. THE FI NDINGS OF THE COORDINATE BENCH READ AS UNDER: - 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THEM. WE SHALL FIRST ADVERT TO THE CLAIM OF THE LD. A.R. THAT THE CIT (A) HAD RIGHTLY CONCLUDED THAT THE SERVICE TAX RECEIPTS WERE NOT TO BE INCLUDED FOR THE PURPOSE OF COMPUTING ITS INCOME UNDER SEC. 44BB OF THE ACT. AS OBSERVED BY US HEREINABOVE, T HE AFORESAID ISSUE IS SQUARELY COVERED BY THE ORDER PASSED BY A CO - ORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT J BENCH, MUMBAI, IN THE ASSESSEES OWN CASE FOR A.Y. 2011 - 12 IN JET DRILLING (S) PTE LTD. VS. ADIT (INTERNATIONAL TAXATION) - 3(10(1), MUMBAI (ITA NO. 6439/MUM/2014, DATED 07.07.2016). IN THE AFORESAID CASE THE TRIBUNAL AFTER RELYING ON THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN MITCHELL DRILLING INTERNATIONAL (P) LTD. (2016) 380 ITR 130 (DEL) AND THAT OF THE HONBLE UTTARAKHAND HIGH COURT IN DIT VS. SCHLUMBERGER ASIA SERVICE LTD. (2009) 317 ITR 156 (UTTARAKHAND), HAD CONCLUDED THAT SERVICE TAX RECEIVED BY THE ASSESSEE WAS NOT TO BE INCLUDED WHILE COMPUTING ITS TURNOVER UNDER SEC. 44BB OF THE ACT. IN FACT, THE TRIBUNAL WHILE CONCLUDING AS HERE INABOVE HAD HELD AS UNDER: - '4. THE CONTENTION OF ID AR WAS THAT SERVICE TAX & NOT INCLUDICLE IN THE GROSS RECEIPTS WHILE COMPUTING PRO FIT U/S.44B OF THE I T ACT THE I SSUE UNDER CONSID ERATION IS SQUARELY COVERED BY THE DECISION OF HON'BL E DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL (P) LTD [2016] 380 ITR 130 (DELHI), WHEREIN THE COURT HELD THAT FOR THE PURPOSE OF PRESUMPTIVE INCOME OF ASSESSEE UNDER SECTION 44BB, SERVICE TAX COLLECTED BY ASSESSEE WAS NOT BE INCLUDED IN THE GROSS RECEIPT S IN TERMS OF SECTION 44BB(2) R.W.S 44BB(1). THIS ORDER OF THE HONBLE DELHI HIGH COURT IS DATED 28 - 9 - 2015 AND IT HAS ALREADY CONSIDERED BY EARLIER DECISION OF HONBLE UTTARAKHAND HIGH COURT IN 4 ITA NO. 1921 / MUM/2019 ASSESSMENT YEAR: 2013 - 1 4 THE CASE OF DIT VS. SCHLUMBERGER ASIA SERVICES LTD. [2009] 317 ITR 156 AS CITED BY LD. AR. 5. AFTER THE DECISION OF HONBLE DELHI HIGH COURT, ITAT MUMBAI BENCH IN THE CASE OF OCEANEERING INTERNATIONAL GMBH, ITA NO. 1023/MUM/2014, ORDER DATED 6 - 11 - 2015 HELD THAT SERVICE TAX IS NOT INCLUDIBLE WHILE COMPUTING TURN OVER U/S 44BB. 6. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL (P) LTD. (SUPRA), WE NOT FIND ANY MERIT FOR INCLUSION OF SERVICE TAX IN THE TOTAL TURNOVER, WHILE COMPUTING INCOME U/S 44BB (1) OF THE I.T. ACT. AS SUCH, FINDING NO REASON TO TAKE A DIFFERENT VIEW, WE RESPECTFULLY FOLLOW THE ORDER PASSED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2011 - 12 IN ITA NO. 6439/MUM/2014 AND THEREIN CONCLUDE THAT THE CIT (A) HAD RIGHTLY OBSERVED THAT THE SERVICES TAX OF RS. 45,84,55,073/ - RECEIBVED BY THE ASSESSEE WAS NOT TO BE INCLUDED FOR THE PURPOSE OF DETERMINING ITS TAXABLE INCOME UNDER SEC. 44BB OF THE ACT. THE GROUND OF APPEAL NO. 1 RAISED BY THE REVENUE IS DISMISSED. 7. T HE ISSUE INVOLVE D IN THE PRESENT CASE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE COORDINATE BENCHES RENDERED IN ASSESSEES CASE ITA NO. 6439/MUM/2014 FOR THE ASSESSMENT YEAR 2011 - 12 AND ITA NO. 680/MUM/2018 FOR THE ASSESSMENT YEAR 2015 - 16 . S INCE THE LD. CIT(A) HAS DECIDED THE ISSUE IN QUESTION IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE TRIBUNAL , WE DO NOT FIND ANY REASON TO INTE RFE RE WITH THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, WE UPHOLD THE DECISION OF THE LD. CIT(A) AND DISMISS THE SOLE GROUND OF APPEAL OF THE REVENUE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2013 - 2014 IS DISMISSED. ORDER PRONOUNCED ON 11 TH . JUNE , 2020 BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34(4) OF THE AP PELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( G. MANJUNATHA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 11 / 0 6 / 2020 ALINDRA, PS 5 ITA NO. 1921 / MUM/2019 ASSESSMENT YEAR: 2013 - 1 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI