DCIT - (IT) -2(3)(2), MUMBAI V. GLOBAL SANTAFE DRILLING COMPANY, MUMBAI

ITA 5638/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0957 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Right to appeal; Set aside
• Section: 143(3); 201; 44BB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5638 /MUM/201 8 ( / ASSESSMENT YEAR: 20 1 5 - 16 ) DCIT - (IT) 2(3)(2) 1711, 17 TH FLOOR, AIR INDIA B UILDING, NARIMAN POINT, M UMBA - 400021 . / VS. M/S. GLOBAL SANTAFE DRILLING COMPANY T RANSOCEAN HOUSE, LAKE BOULEVARD , ROAD, H IRANANDANI BUSINESS PARK, POWAI, MUMBAI - 400076. ./ ./ PAN/GIR NO. : AAFCG2196 P ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 02 / 12 / 201 9 / DATE OF PRONOUNCEME NT : 09 /12 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 24 . 07 .201 8 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 56 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVA NT TO THE A.Y. 20 1 5 - 1 6 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN HOLDING THAT THE SERVICE TAX SHOULD BE EXCLUDED FROM GROSS RECEIPTS FOR THE PURPOSE OF COMPUTATION OF INCOME U/ S 44BB WITHOUT APPRECIATING THE FACT THAT WORD USED IN THE SECTION IS REVENUE BY : SHRI AWANGSHI GIMSON ASSESSEE BY: MR. KISHAN MUNDHRA ITA NO. 5638 /M/201 8 A.Y.20 15 - 16 2 AGGREGATE OF THE AMOUNTS AND AGGREGATE INTENDS COMBINED OR COLLECTIVE AND ALSO THE FACT THAT AN APPEAL HAS BEEN ADMITTED BY THE JURISDICTIONAL HIGH COURT ON THE SIMILAR GROUNDS IN TH E CASE OF HANJIN SHIPPING CO. LTD. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NEC ESSARY . 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE DRAFT ASSESSMENT ORDER U/S 143(3) R.W.S. 144C(1) OF THE ACT WAS PASSED ON 27.11.2017 AND WAS DULY SERVED UPON THE ASSESSEE. IN VIEW OF THE RELYING UPON THE DRAFT ASSESSMENT, THE ASSESSEE HAS ELECTED NOT TO FILE THE OBJECTIONS BEFORE THE DRP AND RESERVES THE RIGHT TO FILE AN APPEAL BEFORE THE CIT( A) ON RECEIPT OF THE FINAL ASSESSMENT ORDER TO BE ISSUED U/S 144C(3) OF THE ACT. IN T HE RETURN OF INCOME, THE ASSESSEE OFFERED AN AMOUNT OF RS.52,69,18,790/ - AS ITS RECEIPT ON GROSS BAS IS AND HAS OFFERED THE SAME U/S 44BB ON PRESUMPTIVE BASIS @ 10% OF THE SAME AND ACCORDINGLY AN AMOUNT OF RS.526,918,793/ - WAS OFFERED TO TAX. THE ASSESSEE ALSO REPORTED GROSS REVENUES OF RS.6,125,752,616/ - WHICH INCLUDES RECEIPTS ON ACCOUNT OF SERVICE TAX AMOUNTING TO RS.856,564,689/ - . THEREAFTER, NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE, AN AMOUNT OF RS.856,564,689/ - WAS ADDED TO THE NET RECEIPT S . THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.612,575,26 0/ - . F EELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE SERVICE TAX WAS WRONGLY EXCLUDED FROM THE GROSS RECEIPT ITA NO. 5638 /M/201 8 A.Y.20 15 - 16 3 FOR THE PURPOSE OF COMPUTATION OF INCOME U/S 44BB OF THE ACT, THEREFORE, THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE, HE NCE, IS LIABLE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD .: - 5 ON IDENTICAL FACTS AND CIRCUMSTANCES DECISION IS TAKEN IN APPELLATE ORDER NO. CIT(A)/DCIT(IT) - 2(3)(2)/2016 - 17/316 - G DATED 25.01.2018. THE MATTER BEING SAME ON ACCOUNT OF SAME REASONS THE SAME DECISION APPLIES. THE AO IS DIRECTED TO EXCLUDED SERVICE TAX PORTION IN COMPUTING INCOME UNDER SECTION 44BB. ACCORDINGLY , THE GROUND IS ALLOWED. 5 . ON APPRAI SAL OF THE ABOVE MENTIONED FINDING , WE NOTICED THAT THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF HIS EARLIER DECISION FOR TH E A.Y. 2016 - 1 7 DATED 25.01.2018. AT THE TIME OF ARGUMENT, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF TITLED AS DIRECTOR OF INCOME TAX - 1 VS. MITCHELL DRILLING INTERNATIONAL IN ITA. NO.403/201 3 DATED 28.09.2015 AND THE DECISION OF THE MUMBAI BENCH IN THE CASE OF M/S. WEATHERFORD DRILLING VS. DCIT IN ITA. NO.495/M/2017 DATED 20.06.2018. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS PLACED RELIANCE UPON THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF CHINA SHIPPING CONTAINER LINES VS. ASSISTANT DIRECTOR OF INCOME TAX, MUMBAI. NO DOUBT, THE LAW RELIED BY THE LD. REPRESENTATIVE OF THE REVENUE SPEAKS THAT THE SERVICE TAX IS THE PART AND PARCEL OF THE PROFIT, THEREFORE, T HE SAME WAS SUBJECT TO PRESUMPTIVE PROFIT AND GAIN U/S 44BB OF THE ACT. THE ISSUE HAS BEEN CONSIDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL (SUPRA), SUBSEQUENTLY, BY ITAT ITA NO. 5638 /M/201 8 A.Y.20 15 - 16 4 MUMBAI BENCH IN THE CASE OF M/S. WEATHERFORD DRI LLING VS. DCIT IN WHICH IT HAS BEEN CLEARLY HELD THAT THE SERVICE TAX IS NOT LIABLE TO BE INCLUDE IN GROSS RECEIPT IN TERMS OF SECTI ON 44BB(1) R.W. SECTION 44BB(2) OF THE ACT BECAUSE THE SAME IS NOT PART OF THE GROSS RECEIPT FOR THE PURPOSE OF DEPOSITING T HE PRESUMPTIVE TAX. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE DE CIDE ALL THE ISSUES IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 09 /12 /2019 . SD/ - SD / - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 09 /12 /2019 V IJAY PAL SINGH /SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RES PONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI