ADIT, Dehradun V. M/s. Triton Holdings Ltd., Dehradun

ITA 4099/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6931 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 21-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST IMPUGNED DATED PASSED
• Keywords: Presumptive income

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT M EMBER ITA NO. 4099/DEL/2014 ASSTT. YEAR: 2010-11 O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 28.5.2014, PASSED BY LD. CIT(A PPEALS)-II, DEHRADUN FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3)/144C(3)(B) FOR THE ASSESSMENT YEAR 2010-11. IN VARIOUS GROUNDS OF APPEAL THE REVENUE HAS CHALLENGED THAT, THE LD. CIT (A) HAS ERRED IN HOLDING THAT SERVICE TAX WOULD NOT FORM PART OF THE GROSS RECEIPTS FOR THE PURPOSE OF COMPUTATION OF PROFIT UNDER THE PRESUMPTIVE PROVISION OF SECTION 44BB. ADIT INTERNATIONAL TAXATION DEHRADUN VS. TRITON HOLDINGS LTD. C/O M/S. NANGIA & CO. CAS 75/7, RAJPUR ROAD DEHRADUN 248 001 PAN AABCT5272D (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI SURENDER PAL SINGH, SR. DR ASSESSEE BY : SHRI AMIT ARORA, SHRI VISHAL MISRA, CA DATE OF HEARING 25/07/2018 DATE OF PRONOUNCEMENT 26/07/2018 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A NON RESIDENT COMPANY ENGAGED IN THE BUSINESS OF PROVIDING OFFSHO RE DRILLING SERVICES IN RELATION TO EXPLORATION, EXPLOITATION AND P RODUCTION OF MINERAL OIL IN INDIA. IT WAS EXECUTING THE CONTRACT FOR M/S. ONGC FOR CARRYING OUT DRILLING OPERATIONS AND OTHER INTEGRATED SERVICES. IN THE RETURN OF INCOME THE ASSESSEE HAS RETURNED GROSS REVEN UE OF RS. 2,73,42,51,584/- UNDER THE DEEMING PROFIT OF SECTION 44BB @ 10%. THE AO NOTED THAT THE ASSESSEE HAD EXCLUDED THE RECEIPT ON ACCOUNT OF SERVICE TAX OF RS. 31,90,24,718/- AND ACCORDINGLY, H E ADDED THE REIMBURSEMENT OF SERVICE TAX AS PART OF THE GROSS RECEI PT. LD. CIT (A), FOLLOWING THE APPELLATE ORDER FOR THE A.Y. 2009-10, D IRECTED THE AO TO EXCLUDE REIMBURSEMENT OF SERVICE TAX. 3. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2011-12 IN ITA NO. 911/DEL/2016 V IDE ORDER DATED 19.2.2018. 3. LD. DR ON THE OTHER HAND STRONGLY RELIED UPON THE O RDER OF THE AO. 4. AFTER CONSIDERING THE AFORESAID SUBMISSION AND ON PERUSAL OF THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER, WE FIND THAT THIS ISSUE WHETHER THE SERVICE TAX COLLECTED IS PART OF THE G ROSS RECEIPTS FOR THE PURPOSE OF SECTION 44BB HAS BEEN DECIDED IN FAVOU R OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE, WHE REIN THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. MITCHELL DRILLING INTERNATIONAL PVT. LTD. REPORTED IN (2016) 380 ITR 130 . THE HONBLE DELHI HIGH COURT AFTER REFERRING TO THE VARIOUS JUDGMENTS HAD OBSERVED AND HELD AS UNDER:- 3 17. THE COURT ACCORDINGLY HOLDS THAT FOR THE PURPO SES OF COMPUTING THE 'PRESUMPTIVE INCOME' OF THE ASSESSEE FOR THE PURPOSES OF SECTION 44 BB OF THE ACT, THE SERVICE T AX 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 SE CTION 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 ON LY COLLECTING THE SERVICE TAX FOR PASSING IT ON TO THE GOVERNMENT. 18. THE COURT FURTHER NOTES THAT THE POSITION HAS B EEN 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 'I NCOME' OF THE LANDLORD. THE LANDLORD ONLY ACTS AS A COLLECTING AG ENCY 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 TAX .' IN CIRCULAR NO. 1/2014 DATED 13TH JANUARY 2014, IT HAS BEEN CLA RIFIED THAT SERVICE TAX IS NOT TO BE INCLUDED IN THE FEES FOR P ROFESSIONAL SERVICES OR TECHNICAL SERVICES AND NO TDS IS REQUIR ED TO BE MADE ON THE SERVICE TAX COMPONENT UNDER SECTION 194J OF THE ACT. 5. THE AFORESAID RATIO HAS BEEN FOLLOWED BY THIS TRIB UNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2008-09 BUT AL SO IN THE A.Y. 2011-12 ALSO. ACCORDINGLY, FOLLOWING THE AFORESAID BINDING PRECEDENCE, WE HOLD THAT SERVICE TAX REIMBURSED BY THE ASSESSEE WI LL NOT BE INCLUDED IN THE GROSS RECEIPT IN TERMS OF SECTION 44BB. RESULTANTLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. 4 THIS DECISION WAS PRONOUNCED IN THE OPEN CO URT ON 26 TH JULY, 2018. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/07/2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI