Transocean Offshore Deepwater Drilling Inc., New Delhi V. Addl. CIT (International Taxation), Dehradun

ITA 2072/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3870 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G K DHAL
• Assessee Lawyers: VI SHAL MISHRA
• Keywords: Presumptive income; Business income; Deemed to accrue or arise in india
• Section: 28

Judgement Text

` 1 ITA NO. 2072/DEL/2016 IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL, PRES IDENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 2072/DEL/2 016 (A.Y 2011-12) TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC. C/O. NANGIA & COMPANY, SUITE 4A, PLAZA M-6, JASOLA NEW DELHI AABCT6720C (APPELLANT) VS ADDL. CIT(INTERNATIONAL TAXATION) INCOME TAX OFFICE, SUBHASH ROAD DEHRADUN (RESPONDENT) APPELLANT BY SH. AMIT ARORA & VISHAL MISHRA, CA RESPONDENT BY SH. G. K. DHAL, CIT DR ORDER PER SUCHITRA KAMBLE THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER DA TED 10/02/2016 PASSED BY CIT(A)-2, NOIDA FOR ASSESSMENT YEAR 2011- 12. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, Y OUR APPELLANT RESPECTFULLY SUBMITS THE FOLLOWING GROUNDS:- GROUND NO.1 DATE OF HEARING 06.12.2017 DATE OF PRONOUNCEMENT 30.01.2018 ` 2 ITA NO. 2072/DEL/2016 THAT THE LD. CLT (A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE A.O IN HOLDING THAT THE RECEIPTS ON ACCOUNT OF REIM BURSEMENTS OF EXPENSES INCURRED ON SUPPLY OF MATERIALS, AMOUNTING TO INR 1 18,655,056/- WERE INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINATION OF INCOME UNDER SECTION 44BB OF THE INCOME TAX ACT 1961 (THE ACT) . GROUND NO. 2 THAT THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE A.O IN HOLDING THAT THE RECEIPTS ON ACCOUNT OF REIM BURSEMENTS OF EXPENSES INCURRED ON PROVISION OF FUEL, AMOUNTING TO INR 692 ,665,431/- WERE INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINATION OF INCOME UNDER SECTION 44BB OF THE ACT. GROUND NO. 3 THAT THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE A.O IN HOLDING THAT THE RECEIPTS ON ACCOUNT OF REIM BURSEMENTS OF SERVICE TAX, AMOUNTING TO INR 486,455,033/- WERE INCLUDIBLE IN T HE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINATION OF INCOME UNDER SECTION 44 BB OF THE ACT. GROUND NO. 4 THAT THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE A.O IN HOLDING THAT THE RECEIPTS ON ACCOUNT OF REIM BURSEMENTS OF INTEREST ON SERVICE TAX, AMOUNTING TO INR 7,254,268/- WERE INCL UDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINATION OF INCOME UNDER SE CTION 44BB OF THE ACT. YOUR APPELLANT PRAYS THAT THE ERRONEOUS ORDER BE CA NCELLED AND APPROPRIATE RELIEF MAY BE GRANTED TO THE APPELLANT. YOUR APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND , VARY, OMIT, SUBSTITUTE OR DELETE ANY OF THE AFOREMENTIONED GROUNDS OF APPEAL OR ADD A NEW GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ` 3 ITA NO. 2072/DEL/2016 3. THE ASSESSEE IS A NON RESIDENT COMPANY AND DURIN G THE YEAR UNDER CONSIDERATION IT HAS OFFERED ITS REVENUES ON ACCOUN T OF ONE CONTRACT ENTERED AS THE CONSORTIUM OF TRANSOCEAN OFFSHORE DEEPWATER DRI LLING INC (TODDI) USA AND SCHLUMBERGER ASIA SERVES LTD. (SALS) HONG KONG WHEN OIL & NATURAL GAS CORPORATION LTD. DURING THE YEAR UNDER CONSIDERATI ON, THE ASSESSEE OFFERED ITS REVENUE TO THE EXTENT OF RS.50,64,35,355/- ON ACCOU NT OF THE ASSESSEE CONTRACT ENTERED WITH M/S OIL & NATURAL GAS CORPORATION LTD VIDE CONTRACT DATED 6/11/2003 WHICH WAS AMENDED ON 19/4/2006 FOR THE CH ARTER HIRE OF DEEP WATER DRILLING UNIT RIG-DISCOVERER SEVEN SEAS ALON G WITH ITS CONSORTIUM MEMBER M/S SCHLUMBERGER ASIA SERVICES LTD. SINCE, THE REVENUES OF RS.50,64,35,355/- ARE EARNED ON ACCOUNT OF CHARTER HIGHER OF DEEPWATER DRILLING UNIT, THE SAME ARE BROUGHT TO TAX U/S 44BB (1) OF THE ACT AT 10% DEEMED PROFIT RATE PROTECTIVELY BY THE ASSESSING OF FICER. THE ASSESSING OFFICER IN DRAFT ASSESSMENT ORDER PROPOSED TO COMPLETE THE ASSESSMENT ON A TOTAL INCOME OF RS.63,73,82,419/- UNDER PROTECTIVE ASSESS MENT. THE ASSESSEE DID NOT FILE ANY OBJECTION AGAINST THE SAID DRAFT ORDER BEFORE THE DISPUTE RESOLUTION PANEL. THE FINAL ASSESSMENT ORDER WAS PASSED ON 15 /5/2014 WHEREBY FINALIZING THE DRAFT ASSESSMENT ORDER THEREBY ON A TOTAL INCOME OF RS.64,13,82,486/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER THE ASSE SSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) HELD THAT THE CONSORTIUM BE TWEEN ASSESSEE AND SCHLUMBERGER ASIA SERVICES LTD. (SALS) DID NOT CONS TITUTE AOP. THUS, IT IS NOT PROPER ON PART OF THE ASSESSING OFFICER TO PASS PRO TECTIVE ASSESSMENT IN THE CASE OF SCHLUMBERGER ASIA SERVICES LTD. (SALS). TH US, THE SAME GROUND WAS ALLOWED BY THE CIT(A). AS RELATED TO THE ISSUE OF R EIMBURSEMENT RECEIPTS ON ACCOUNT OF MATERIAL RECHARGE AND FUEL REIMBURSEMENT INCLUDED IN THE REVENUES AS TAXABLE U/S 44BB OF THE INCOME TAX ACT WAS UPHEL D BY THE CIT(A). 5. THE LD. AR SUBMITTED THAT GROUND NO. 1 & 2 ARE H ELD AGAINST THE ASSESSEE AS PER THE DECISION IN CASE OF CIT VS. HAL LIBURTON OFFSHORE SERVICES ` 4 ITA NO. 2072/DEL/2016 INC. 300 ITR 265. AS RELATED TO GROUND NO. 3 & 4 WH ICH IS RELATING TO REIMBURSEMENT OF SERVICE TAX AND INTEREST ON SERVIC E TAX, THE LD. AR SUBMITTED THAT THE SAME IS IN FAVOUR OF THE ASSESSEE IN CASE OF DIT VS. MITCHELL DRILLING INTERNATIONAL PVT. LTD. 380 ITR 130 WHEREIN THE JUR ISDICTIONAL DELHI HIGH COURT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 6. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND CIT(A) AS WELL AS THE JURISDICTIONAL HIGH COURT DECISION WHIC H IS IN FAVOUR OF REVENUE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. AS RELATES TO GROUND NO. 1 AND 2, HE ISSUE IS SQUARELY COVERED BY THE JURISDICTIONAL HIGH COURT IN CASE OF HALLIBURTON OF FSHORE SERVICES AGAINST THE ASSESSEE. THE HON'BLE UTTARAKHAND HIGH COURT IN TH E CASE OF CIT VS. HALLIBURTON OFFSHORE SERVICES LTD HAS HELD AS UNDER: 'S.44BB OF THE INCOME TAX ACT, 1961 IS A COMPLETE C ODE IN ITSELF. IT PROVIDES BY A LEGAL FICTION THE PROFITS AND GAINS OF A NON-R ESIDENT ASSESSEE ENGAGED IN THE BUSINESS OF OIL EXPLORATION AT 10 PER CENT OF T HE AGGREGATE AMOUNT SPECIFIED IN SUB SECTION (2) CLAUSE(A) OF SUBSECTIO N(2) REFERS TO THE AMOUNTS, (A) PAID TO THE ASSESSEE (WHETHER IN OR OUT OF INDIA) O N ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR S UPPLY OF PLANT AND MACHINERY ON HIRE USED OR TO BE USED IN THE PROSPEC TING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS IN INDIA, AND (B) PAYAB LE TO THE ASSESSEE (WHETHER IN OR OUT OF INDIA) ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINERY O N HIRE USED, OR TO BE USED IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS IN INDIA. CLAUSE (B) OF SUB SECTION (2) REFERS TO THE AMOUNTS , (A) RECEIVED BY ASSESSEE IN INDIA ON ACCOUNT OF THE PROVISION OF SERVICES AND F ACILITIES 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 O UTSIDE INDIA. THUS, IT IS CLEAR FROM A PERUSAL OF SECTION 44BB THAT ALL THE AMOUNTS EITHER PAID OR PAYABLE (WHETHER IN OR OUT OF INDIA) ARE MUTUALLY INCLUSIVE . THIS AMOUNT IS THE BASIS OF ` 5 ITA NO. 2072/DEL/2016 DETERMINATION OF DEEMED PROFITS AND GAINS OF THE AS SESSEE AT 10 PER CENT. THE AMOUNT PAID OR RECEIVED REFERS TO THE TOTAL PAYMENT TO THE ASSESSEE OR PAYABLE TO THE ASSESSEE OR DEEMED TO BE RECEIVED BY THE ASSESSEE, WHEREAS INCOME HAS BEEN DEFINED U/S 2(24) OF THE INCOME TAX ACT AND SECTION 5 AND 9 DEAL WITH THE INCOME AND ACCRUED INCOME AND DEEMED INCOME. IT WAS NOT IN DISPUTE THAT THE AMOUNT HAD BEEN RECE IVED BY THE ASSESSEE. THEREFORE THE AO ADDED THE SAID AMOUNT WHICH WAS RE CEIVED BY THE NON- RESIDENT COMPANY RENDERING SERVICES UNDER THE PROVI SIONS OF SECTION 44 BB TO THE ONGC AND IMPOSED THE INCOME TAX THEREON. HE WAS JUSTIFIED IN DOING SO. THEREFORE, WE DISMISSED GROUND NOS. 1 AND 2 OF ASSE SSEE'S APPEAL. 8. AS RELATES TO GROUND NOS. 3 AND 4, WE FIND THAT NOW THIS ISSUE STANDS COVERED BY THE JUDGMENT OF THE HON'BLE DELHI HIGH C OURT IN THE CASE OF DIT VS. MITCHELL DRILLING INTERNATIONAL PVT. LTD.(SUPRA) WHEREIN THE HON'BLE HIGH COURT, AFTER ANALYZING VARIOUS JUDGMENTS OF HON'BLE UTTARA KHAND HIGH COURT AND THE JUDGMENT IN THE CASE OF CHOWRINGHEE SALES BUREAU PV T. LTD. VS. CIT (1973) 87 ITR 542, OBSERVED AND HELD AS UNDER:- '9. SECTION 44BB BEGINS WITH A NON OBSTANTE CLAUSE THAT EXCLUDES THE APPLICATION OF SECTIONS 28 TO 41 AND SECTIONS 43 AN D 43A TO ASSESSMENTS UNDER SECTION 44 BB. IT INTRODUCES THE CONCEPT OF P RESUMPTIVE INCOME AND STATES THAT 10% CREDIT OF THE AMOUNTS PAID OR PAYAB LE OR DEEMED TO BE RECEIVED BY THE ASSESSEE ON ACCOUNT OF 'THE PROVISI ON OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINER Y ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PROD UCTION 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 ULTIMATELY CONSIDERED AS INCOME OF THE ASSESSEE EARNED. FROM ITS BUSINESS AN D PROFESSION.. 10. THE EXPRESSION AMOUNT PAID OR PAYABLE IN SEC TION 44BB (2) (A) ` 6 ITA NO. 2072/DEL/2016 AND THE EXPRESSION 'AMOUNT RECEIVED OR DEEMED TO BE RECEIVED' IN SECTION 44BB(2)(B) IS QUALIFIED BY THE WORDS 'ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLA NT AND MACHINERY. THEREFORE, ONLY SUCH AMOUNTS WHICH ARE PAID OR PAYABLE FOR THE SENDEES PROVIDED BY THE ASSESSES CAN FORM PART OF THE GROSS RECEIPTS FOR TH E PURPOSES OF COMPUTATION OF THE GROSS INCOME UNDER SECTION 44 BB (1) READ WI TH SECTION 44BB(2). 11. IT IS IN THIS CONTEXT THAT THE QUESTION ARISES WHET HER THE SERVICE TAX COLLECTED BY THE ASSESSES AND PASSED ON TO THE GOVE RNMENT FROM THE PERSON TO WHOM IT HAS PROVIDED THE SERVICES CAN LEGITIMATE LY BE CONSIDERED TO FORM PART OF THE GROSS RECEIPTS FOR THE PURPOSES OF COMP UTATION 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 SUPREME COURT WAS: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE SUM OF RS. 32,986 HAD BEEN VALIDLY EXCLUDED FROM THE ASSES SEE'S BUSINESS INCOME FOR THE RELEVANT ASSESSMENT YEAR?'. HOWEVER, THERE THE ASSESSEE DID NOT DEPOSIT THE AMOUNT COLLECTED BY IT AS SALES TAX IN THE STATE EXCHEQUER SINCE IT TOOK THE STAND THAT THE STATUTORY PROVISION CREATIN G 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, WOU LD FORM PART OF THE ASSESSEE'S TRADING RECEIPT. THE DECISION IN GEORGE OAKES (P) LTD. (SUPRA) WAS C ONCERNED WITH THE CONSTITUTIONAL VALIDITY OF THE MADRAS GENERAL SALE S (DEFINITION OF TURNOVER AND VALIDATION OF ASSESSMENTS)) ACT, 1954 ON THE GR OUND THAT THE WORD TURNOVER WAS DEFINED TO INCLUDE SALES TAX COLLECTED BY THE DEALER ON INTER- STATE SALES , UPHOLDING THE VALIDITY OF THE SAID STATUTE THE SUPR EME COURT HELD THAT 'THE EXPRESSION ' TURNOVER' MEANS THE AGGREGATE AMOUNT FOR WHICH GOOD S ARE BOUGHT OR SOLD, WHETHER FOR CASH OR FOR DEFERRE D PAYMENT OR OTHER VALUABLE CONSIDERATION, AND WHEN A SALE ATTRACTS PURCHASE TA X AND THE TAX IS PASSED ` 7 ITA NO. 2072/DEL/2016 ON TO THE CONSUMER, WHAT THE BUYER HAS TO PAY FOR T HE GOODS INCLUDES THE TAX AS WELL AND THE AGGREGATE AMOUNT SO PAID WOULD FALL WITHIN THE DEFINITION OF TURNOVER.' SINCE THE TAX COLLECTED BY THE SELLING D EALER FROM THE PURCHASER WAS PART OF THE PRICE FOR WHICH THE GOODS WERE SOLD, TH E LEGISLATURE WAS NOT INCOMPETENT TO ENACT A STATUTE PURSUANT TO ENTRY 54 IN LIST II MAKE THE TAX SO PAID A PART OF THE TURNOVER OF THE DEALER. 14. IN THE CONSIDERED VIEW OF THE COURT, BOTH TH E 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 DECISIO NS WAS DETERMINED BY THE CONTEXT. THE LATER DECISION OF THE SUPREME COURT IN CIT V. LAKSHMI MACHINE WORKS (SUPRA) WHICH SOUGHT TO INTERPRET THE EXPRESS ION '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 BBC (3) AS IT STOOD IN THE MATERIAL TIME?' THE SUPREME COURT C ONSIDERED ITS EARLIER DECISION IN CHOWRINGHEE SALES BUREAU (SUPRA) AND AN SWERED THE QUESTION IN THE NEGATIVE. THE SUPREME COURT NOTED THAT FOR THE PURPOSES OF COMPUTING THE 'TOTAL TURNOVER' FOR THE PURPOSE OF SECTION 80 BBC (3) BROKERAGE, COMMISSION, LID NOT FORM PART OF THE BUSINESS PROFITS BECAUSE T HEY DID NOT INVOLVE ANY ELEMENT OF EXPORT TURNOVER. IT WAS OBSERVED: JUST AS COMMISSION RECEIVED BY AN ASSESSEE IS TAXABLE TO EXPORTS AND YET IT CANNOT FORM PART OF THE TURNOVER' EXCISE DUTY AND SALES-TAX ALSO CANNOT FORM PART OF THE 'TURNOVER'.' THE OBJECT OF THE LEGISLATURE IN ENACTING SECTION 80 HHC OF TH E ACT WAS TO CONFER A BENEFIT ON PROFITS ACCRUING WITH REFERENCE TO EXPORT TURNOV ER. THEREFORE, 'TURNOVER' WAS THE REQUIREMENT. 'COMMISSION, RENT, INTEREST ETC. D ID NOT INVOLVE ANY TURNOVER.' IT WAS CONCLUDED THAT SALES TAX AND EXCISE DUTY 1 LIKE THE AFOREMENTIONED TOOLS LIKE INTEREST, TENT ETC. 'ALSO DO NOT HAVE AN Y ELEMENT OF 'TURN OVER'. 15. IN CIT V. LAKSHMI MACHINE WORKS (SUPRA), THE S UPREME COURT APPROVED THE DECISION OF THE BOMBAY HIGH COURT IN CN V. SUDA RSHAN CHEMICALS INDUSTRIES LTD. (SUPRA) WHICH IN TURN CONSIDERED TH E 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 MACHIN ES WORKS (SUPRA) IS ` 8 ITA NO. 2072/DEL/2016 SUFFICIENT TO ANSWER THE QUESTION FRAMED IN THE PRE SENT 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 T HE ASSESSEE UNDER SECTION 44 BB OF THE ACT. 16. THE COURT CONCURS WITH THE DECISION OF THE HI GH COURT OF UTTARAKHAND IN ON V. SCHLUMBERGER ASIA SERVICES LTD (SUPRA) WHICH HELD THAT THE REIMBURSEMENT RECEIVED BY THE ASSESSEE OF THE CUSTO MS DUTY PAID ON EQUIPMENT IMPORTED BY IT FOR RENDERING SERVICES WOU LD 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 PURPO SES OF COMPUTING THE 'PRESUMPTIVE INCOME' OF THE ASSESSEE FOR THE PURPOS ES OF SECTION 44 BB OF THE ACT, THE SERVICE TAX COLLECTED BY THE ASSESSEE ON T HE AMOUNT PAID IS FOR RENDERING SERVICES IS NOT TO BE INCLUDED IN THE GRO SS RECEIPTS IN TERMS OF SECTION 44B (2) READ WITH SECTION 44 BB (1). THE SE RVICE TAX IS NOT AND AMOUNT PAID OR PAYABLE, OR RECEIVED OR DEEMED TO BE RECEIV ED BY THE ASSESSEE FOR THE SERVICES RENDERED BY IT. THE ONLY COLLECTING THE SE RVICE TAX FOR PASSING IT ON TO THE GOVERNMENT. 18. THE COURT FURTHER NOTES THAT THE POSITION HAS B EEN MADE EXPLICIT BY THE CBDT ITSELFIN 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 ON LY ACTS AS A COLLECTING AGENCY FOR GOVERNMENT FOR COLLECTION OF SERVICE TAX . THEREFORE, IT HAS BEEN DECIDED THAT TAX DEDUCTION AT SOURCE) UNDER SECTION S 194-1 OF INCOME TAX ACT WOULD BE REQUIRED TO BE MADE ON THE AMOUNT OF RENT PAID/PAYABLE WITHOUT INCLUDING THE SERVICE TOOT. IN CIRCULAR NO. 1/2014 DATED 13TH JANUARY 2014, IT HAS BEEN CLARIFIED THAT SERVICE TAX IS NOT TO BE IN CLUDED 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. THUS, GROUND NO.1 & 2 OF THE ASSESSEES APPEAL ARE DISMISSED AND GROUND NO. 3 & 4 OF THE ASSESSEES APPEAL ARE ALLOW ED. ` 9 ITA NO. 2072/DEL/2016 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2018 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) PRESIDENT JUDICIAL MEMBER DATED: 30/01/2018 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 06/12/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 06/12/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30.01.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS ` 10 ITA NO. 2072/DEL/2016 7. FILE SENT TO THE BENCH CLERK 30.01.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.