KOREA MARINE TRANSPORT CO. LTD, MUMBAI V. DCIT (IT) 3(1)(2), MUMBAI

ITA 4432/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2391 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2014-2015
• Appeal Filed On: 15-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHISHIR DHAMIJA
• Keywords: Presumptive income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 4432/MUM./2017 ( ASSESSMENT YEAR : 20 14 15 ) KOREA MARINE TRANSPORT CO. LTD. C/O SEA HORSE SHIP AGENCIES PVT. LTD. SEA HORSE HOUSE, 30/32, MARZBAN STREET BALLARD ESTATE, MUMBAI 400 001 PAN AACCK1101F . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX (I.T) CIRCLE 3(1)(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI SANDESH DESAI REVENUE BY : SHRI SHISHIR DHAMIJA DATE OF HEARING 30 . 1 0.2018 DATE OF ORDER 09.11.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE FINAL ASSESSMENT ORDER DATED 15 TH MAY 2017, PASSED UNDER SECTION 143(3) R/W SECTION 144C(1 3 ) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) FOR THE ASSESSMENT YEAR 2014 15, IN PURSUANCE TO THE DIRECTION S OF THE DISPUTE RESOLUTION PANEL (DRP). 2 KOREA MARINE TRANSPORT CO. LTD. 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFI NED TO THE ISSUE , WHETHER SERVICE TAX COLLECTED AND REMITTED TO THE GOVERNMENT CAN FORM PART OF FREIGHT RECEIPTS FOR THE PURPOSE OF COMPUTING GROSS TAXABLE INCO ME UNDER SECTION 44B OF THE ACT? 3 . AT THE OUTSET, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE PERTAINING TO THE ASSESSMENT YEAR S 2011 12 AND 2012 13 VIDE ITA NO.1025/MUM./20 15, AND OTHERS DATED 11 TH JULY 2018. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , AGREED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, HOWEVER, HE PREFERRED TO RELY UPON THE DECISION OF THE DRP AND THE ASSESSING OFF ICER. 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS EVIDENT, THE LEARNED DRP ENTIRELY RELYING UPON ITS DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2013 14 HAS REJECTED THE OBJECTIONS OF THE ASSESSEE. IT IS FURTHER EVI DENT FROM THE IMPUGNED ORDER OF THE DRP , WHILE DECIDING IDENTICAL ISSUE IN ASSESSMENT YEAR 2013 14, IT HAS OBSERVED THAT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2012 13 BY THE DRP FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COU RT IN CASE OF MITCHELL DRILLING. 3 KOREA MARINE TRANSPORT CO. LTD. HOWEVER , TAKING NOTE OF THE FACT THAT IN CASE OF HALLIBURTON OFF SHORE SERVICES INC. V/S ACIT, A DIVISION BENCH OF THE HON'BLE UTTARAKHAND HIGH COURT HAS REFERRED IDENTICAL ISSUE TO A LARGER BENCH, TO SAFEGUARD THE INTER EST OF REVENUE, THE DRP DECIDED THE ISSUE AGAINST THE ASSESSEE. HOWEVER, IT IS NOTED BY US , WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011 12 AND 2012 13, THE TRIBUNAL AFTER FOLLOWING THE RATIO LAID DOWN IN CERTAIN JUDICIAL PRECEDENTS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: 8. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND ARE OF THE CONSIDERED VIEW, THAT AS THE SERVICE TAX WHICH IS A STATUTORY LEVY COLLECTED BY THE ASSESSEE IN HIS CAPACITY AS A SERVICE PROVIDER FROM ITS CUSTOMERS ON BEHALF OF THE GOVERNMENT DOES NOT INVOLVE ANY ELEMENT OF PROFIT THUS, THE SAME CANNOT BE INCLUDED IN THE TOTAL RECEIPTS OF THE ASSESSEE FOR DETERMINING ITS INCOME UNDER SEC.44B. WE HAVE PERUSED THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144(C)(13) AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN TO THE CONTRARY BY HIM. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HON BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF CIT (INTERNATIONAL TAXATION) VS. SCHLUMBERGER ASIA SERVICES LTD. (2009) 317 ITR 156 (UTTARAKHAND).THE HIGH COURT IN ITS AFORESAID JUDGMENT HAD DISTINGUISHED THE EARLIER DECISIONS OF THE COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL INC. VS. CIT (2008) 299 ITR 238 (UTTARANCHAL) AND CIT VS. TRANS. OCEAN OFFSHORE INC. (2008) 299 ITR 248 (UTTARANCHAL). IN THE BACKDROP OF THE FACTS INVOLVED IN THE CASE BEFORE THE HIGH COURT, IT WAS HELD THAT REIMBURSEMENT OF CUSTOM DUTY PAID BY THE ASSESSEE COMPANY, BEING IN THE NATURE OF A STATUTORY LEVY, WOULD NOT FORM PART OF THE FREIGHT RECEIPTS FOR THE PURPOSE OF COMPUTING ITS DEEMED PROFIT UNDER SEC.44BB. WE FURTHER FIND THAT A SIMILAR VIEW HAD ALSO BEEN ARRIVED AT BY THE HON BLE HIGH COURT OF DELHI IN THE CASE OF DIT VS. MITCHELL DRILLING INTERNATIONAL PTY. LTD (2016) 380 ITR 130 (DEL). THE HIGH COURT IN THE AFOREMENTIONED CASE FINDING ITSELF TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE 4 KOREA MARINE TRANSPORT CO. LTD. HIGH COURT OF UT TARAKHAND IN THE CASE OF SCHLUMBERGER ASIA SERVICES LTD(SUPRA) , OBSERVED THAT FOR THE PURPOSES OF COMPUTING THE PRESUMPTIVE INCOME OF THE ASSESSEE FOR THE PURPOSES OF SECTION 44BB OF THE ACT, THE SERVICE TAX COLLECTED BY THE ASSESSEE ON THE AMOUNT PAID TO IT FOR RENDERING SERVICES WAS NOT TO BE INCLUDED IN THE GROSS RECEIPTS IN TERMS OF SECTION 44BB(2) R.W SECTION 44BB(1). THE HIGH COURT WHILE CONCLUDING AS HEREINABOVE, OBSERVED THAT AS SERVICE TAX WAS COLLECTED BY THE ASSESSEE FOR PASSING IT ON TO THE GOVE RNMENT, AND WAS NOT AN AMOUNT PAID OR PAYABLE, OR RECEIVED OR DEEMED TO BE RECEIVED BY THE ASSESSEE FOR THE SERVICES RENDERED BY IT, THUS, THE SAME COULD NOT BE INCLUDED IN THE GROSS RECEIPTS OF THE ASSESSEE FOR COMPUTING ITS INCOME UNDER SEC. 44BB.STILL F URTHER, WE FIND THAT A COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ISLAMIC REPUBLIC OF IRAN SHIPPING LINES VS. DCIT (INTERNATIONAL TAXATION) (2011) 46 SOT 101 (URO) HAD ALSO CONCLUDED THAT AS SERVICE TAX WHICH WAS COLLECTED BY THE ASSESSEE FROM ITS CUS TOMERS ON BEHALF OF THE GOVERNMENT, DID NOT INVOLVE ANY ELEMENT OF PROFIT, THEREFORE, THE SAME WAS NOT LIABLE TO BE INCLUDED IN THE TOTAL RECEIPTS FOR DETERMINING THE PRESUMPTIVE INCOME OF THE ASSESSEE UNDER SEC.44B OF THE ACT. WE FURTHER FIND THAT ANOTHER COORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT MUMBAI BENCH D IN THE CASE OF ORIENT OVERSEAS CONTAINER LINE LTD. VS. ADDL. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), RANGE - 4, MUMBAI(2013) 35 TAXMAN.COM 342 (MUM), AFTER DELIBERATING AT LENGTH ON THE IS SUE UNDER CONSIDERATION, HAD OBSERVED THAT SERVICE TAX WAS NOT TO BE INCLUDED IN TOTAL RECEIPTS FOR COMPUTING THE PRESUMPTIVE INCOME UNDER SEC.44BB OF THE ACT. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE UNDER CONSIDERATION IN THE BACKDROP O F THE SETTLED POSITION OF LAW. WE ARE OF THE CONSIDERED VIEW THAT AS THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE AFORESAID JUDGMENTS OF THE HON BLE HIGH COURTS AND THE ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL, THEREFORE, RESPECTFULLY FOLLOW THE SAME. WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS, BEING OF THE CONSIDERED VIEW THAT THE A.O HAD ERRED IN INCLUDING THE SERVICE TAX COLLECTIONS OF RS.3,94,59,752/ - IN THE TOTAL RECEIPTS OF THE ASSESSEE FOR COMPUTING ITS INCOME U NDER SEC.44B OF THE ACT, DIRECT HIM TO RECOMPUTE THE INCOME UNDER THE SAID STATUTORY PROVISION AFTER EXCLUDING THE SAID AMOUNT. THE GROUNDS OF APPEAL NOS. 1 TO 4 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND OF APPEAL NO. 5 BEING GENERAL I N NATURE IS DISMISSED AS NOT PRESSED. 5 KOREA MARINE TRANSPORT CO. LTD. 6 . SINCE , IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 2011 12 AND 2012 13, IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE ORDER REFERRED TO ABOVE , AND THERE BEING NO DIFFERENCE IN FACT BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE IMPUGNED ASSESSMENT YEAR, ADHERING TO THE NORMS OF JUDICIAL DISCIPLINE, WE RESPECTFULLY FOLLOW THE DECISION OF THE CO ORDINATE BENCH , AS REFERRED TO ABOVE , AND HOLD THAT SERVICE TAX COLLECTED AND REMITTED TO THE GOVERNMENT WILL NOT FORM PART OF COMPUTATION OF GROSS TAXABLE INCOME UNDER SECTION 44B(1) OF THE ACT. GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.11.2018 SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 09.11.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER ( SR. PRIVATE SECRETARY ) ITAT, MUMBAI