Baker Hughes Singapore, New Delhi V. Addl. DIT, Dehradun

ITA 5824/DEL/2011

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7214 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K DHALL
• Keywords: Presumptive income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: C: NEW DELHI) BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO:- 5824/DEL/2011, ( ASSESSMENT YEAR: 2008-09) BAKER HUGHES SINGAPORE PTE. VS. ADDL. DIRECTOR OF INCOME - TAX, INTERNATIONAL TAXATION, DEHRADUN. PAN NO: AAACB8516F APPELLANT RESPONDENT ASSESSEE BY : SH. AMIT ARORA, CA REVENUE BY : SH. G.K. DHALL CIT (DR) DATE OF HEARING : 05.07.2018. DATE OF PRONOUNCEMENT : 06/07/2018. ORDER PER: B.R.R. KUMAR, AM THE APPEAL HAS BEEN FILED BY THE APPELLANT, WAS DI SPOSED OF BY TRIBUNAL VIDE ORDER DATED 11.07.2014 ON MERITS. 2. IN THE SAID ORDER, THE GROUND NO. 9 OF THE GROUN DS OF APPEAL, RELATING TO REIMBURSEMENT OF SERVICE TAX HAS NOT BEEN DISPOSED OF. THEREAFTER, THE ASSESSEE FILED A MISCELLANEOUS APPLICATION NO. 232/DEL/2014, WHICH WAS DISPOSED OF BY THE BENCH VIDE 2 ITA NO.-5824/DEL/2011. BAKER HUGHES SINGAPORE PTE. ORDER DATED 16.02.2016, FOR RECALLING IN RESPECT OF GROUND NO. 9. THE GROUND NO. 9 OF THIS APPEAL IS REPRODUCED AS UNDER:- ADDITIONAL QUA SERVICE TAX REVENUE 9. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW HOLDING THAT INCOME OF RS. 101,719,350/- ON ACCOUNT OF SERVICE T AX WAS TO BE ASSESSED TO TAX BY APPLYING A PRESUMPTIVE PROFIT RATE OF 25% ON GROSS REVENUES IN THIS REGARD, AS OPPOSED TO CLAIMED EXEMPT FROM TAX. 3. THE GROUND NO. 9 DEALS WITH UPHOLDING THE INCOM E OF RS. 101,719,350/- ON ACCOUNT OF SERVICE TAX WAS TO BE ASSESSED TO TAX BY APPLYING A PRESUMPTIVE PROFIT RATE OF 25% ON GROSS REVENUES. THIS SIMILAR ISSUE STAND S DISPOSED OF BY THE CO-ORDINATE BENCH OF ITAT IN ITA NO. 6259/DEL/2016 ORDER DATED 23.03.2018 IN THE ASSESSEES OWN CASE WHEREIN IT WAS HELD AS UNDER:- 13. THE NEXT ISSUE VIDE GROUND NOS. 5 TO 5(C) REL ATES TO THE TAXATION OF REIMBURSEMENT OF SERVICE TAX. 14. AS REGARDS TO THIS ISSUE THE LD. COUNSEL FOR T HE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED I N ASSESSEES FAVOUR VIDE ORDER DATED 05.09.2014 IN ITA NO. 6476/DEL/2012 FOR THE ASSESSEMENT YEAR 2009-10 WHEREIN THE RELEVANT FINDINGS HAVE BEEN GIV EN IN PARAS 7 & 8 OF THE SAID ORDER WHICH READ AS UNDER: 7. WE FIND THIS ISSUE TO BE COVERED IN FAVOUR OF THE A SSESSEE BY THE DECISION OF ITAT IN THE CASE OF SEDCO FOREX INTERNATIONAL DR ILLING INC. VIDE ITA NO.504/DEL/2013, WHEREIN THE ITAT HELD AS UNDER:- '3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL PLACED BEFORE US. WE FIND THAT THIS ISSUE IS CO NO. 216/DEL/2015 BAKER HUGHES ASIA & SINGAPORE LTD. COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT IN ASSESSEE'S OWN CASE FOR AY 2008-09 DATED 29TH JUNE, 2012 VIDE ITA NO.5284/DEL/2011, WHEREIN THE ITAT HELD AS UNDER:- 3 ITA NO.-5824/DEL/2011. BAKER HUGHES SINGAPORE PTE. 'THE SERVICE TAX IS A STATUTORY LIABILITY LIKE CUST OM DUTY. HON'BLE UTTARAKHAND HIGH COURT IN THEIR DECISION IN SCHLUMBERGER ASIA S ERVICES LTD. (SUPRA) CONCLUDED THAT REIMBURSEMENT OF CUSTOM DUTY PAID BY THE ASSESSEE COULD NOT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED P ROFITS U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. F OLLOWING THE VIEW IN THIS DECISION, MUMBAI BENCH IN THEIR DECISION IN IS LAMIC REPUBLIC OF IRAN SHIPPING LINES (SUPRA) HELD THAT SERVICE TAX BEING A STATUTORY LIABILITY, WOULD NOT INVOLVE ANY ELEMENT OF PROFIT AND ACCORDINGLY, THE SAME COULD NOT BE INCLUDED IN THE TOTAL RECEIPTS FOR DETERMINING THE PRESUMPTIVE INCOME. IN THE LIGHT OF VIEW TAKEN BY THE MUMBAI BENCH, ESPECIALLY WHEN THE ID. DR DID NOT PLACE ANY MATERIAL BEFORE US CONTROVERTING THE AFOR ESAID FINDINGS OF THE ID.CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VI EW IN THE MATTER NOR BROUGHT TO OUR NOTICE ANY CONTRARY DECISION, WE ARE OF THE OPINION THAT SERVICE TAX PAID BY THE ASSESSEE COULD NOT FORM PAR T OF AMOUNT FOR THE PURPOSE OF DEEMED PROFITS U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. THEREFORE, GROUND NO.3 IN TH E APPEAL IS ALLOWED.' 4. FROM THE ABOVE, IT IS EVIDENT THAT THE ITAT DECI DED THE ABOVE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF HO N'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERN ATIONAL TAXATION) AND ANOTHER VS. SCHLUMBERGER ASIA SERVICES LTD. - [2009 ] 317ITR 156 (UTTARAKHAND). NO CONTRARY DECISION OF THE HON'BLE JURISDICTIONAL HIGH CO NO. 216/DEL/2015 BAKER HUGHES ASIA & SINGAPORE LTD. IN VIEW OF THE ABOVE, WE, RESPECTFULLY FOLLOWING T HE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AND ALSO THE DECI SION OF ITAT IN ASSESSEE'S OWN CASE CITED SUPRA, DIRECT THE ASSESSING OFFICER TO EXCLUDE SERVICE TAX FROM THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMIN ING THE INCOME UNDER SECTION 44BB OF THE INCOME-TAX ACT, 1961. ACCORDINGLY, GROUND NOS. 1 & 2 OF THE ASSESSEES APPEAL ARE ALLOWED. 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF ITA T AND THE DECISION OF HON'BLE UTTARAKHAND HIGH COURT IN THE CASE OF DIREC TOR OF INCOME TAX (INTERNATIONAL TAXATION) AND ANOTHER VS. SCHLUMBERG ER ASIA SERVICES LTD. - [2009] 317 ITR 156, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE SERVICE TAX FROM THE GROSS RECEIPT FOR THE PURPOSE OF DETERMINI NG THE INCOME UNDER SECTION 44BB OF THE INCOME-TAX ACT, 1961. ACCORDINGLY, GROUND N OS. 3 & 4 OF THE ASSESSEE'S APPEAL ARE ALLOWED. 15. SIMILARLY THE HON'BLE DELHI HIGH COURT IN THE C ASE OF PR. CIT VS MITCHELL DRILLING INTERNATIONAL PVT. LTD. (2016) 380 ITR 130 HELD AS UNDER: THAT FOR THE PURPOSES OF COMPUTING THE PRESUMPTIVE INCOME OF THE ASSESSEE FOR THE PURPOSES OF SECTION 44BB 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 SECTI ON 44BB(2) READ WITH 4 ITA NO.-5824/DEL/2011. BAKER HUGHES SINGAPORE PTE. SECTION 44BB(1) . THE SERVICE TAX IS NOT AN AMOUNT PAID OR PAYABLE, OR RECEIVED OR DEEMED TO BE RECEIVED BY THE ASSESSEE F OR THE SERVICES RENDERED BY IT. THE ASSESSEE ONLY COLLECTED THE SER VICE TAX FOR PASSING IT ON TO THE GOVERNMENT.' 16. SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATIO N ARE SIMILAR TO THE FACTS INVOLVED IN ASSESSMENT YEAR 2009-10, SO RESPECTFULL Y FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 05.09.2014 IN ASSESSEE'S OW N CASE IN ITA NO. 6476/DEL/2012, WE DO NOT SEE ANY MERIT IN THE DEPAR TMENTAL APPEAL ON THIS ISSUE. 6. THERE IS NO DISPUTE ON THE FACTS OR THE ISSUE BE ING DECIDED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING ASSESSMENT YEARS. NO CHANGE OF CIR CUMSTANCES IS PLEADED OR PROVED BY THE REVENUE. WHEN THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE WHILE FOLLOWING THE BINDING PRECEDENT OF THE JURISDICTIONAL HIGH COURT AND ALSO THAT IN ASSESSEE'S OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE TR IBUNAL HELD THE ISSUE IN FAVOUR OF THE ASSESSEE, IN THE ABSENCE OF ANY CHANGE OF CIRCU MSTANCES COMPELLING US TO TAKE A DIFFERENT VIEW, WE FIND IT DIFFICULT TO HOLD THAT T HERE IS ANY ILLEGALITY OR IRREGULARITY IN THE IMPUGNED ORDER SO THAT IT HAS TO BE RECTIFIED AT OU R END. WE, THEREFORE, FIND THAT THE ORDER OF THE LD. CITA IS LEGAL AND JUSTIFIABLE AND ACCORDINGLY UPHOLD THE SAME. CONSEQUENTLY WE FIND THAT THIS APPEAL IS DEVOID OF MERITS AND IS LIABLE TO BE DISMISSED. APPEAL OF THE REVENUE IS, THEREFORE, DISMISSED. 4. FURTHER, THE MATTER STANDS DECIDED IN THE FAVOUR OF THE ASSESSEE BY ORDER OF THE TRIBUNAL IN ITA NO. 6584/DEL/2014 ORDER DATED 21.03 .2017, BASED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. MITCHELL DRILLING INTERNATIONAL PVT. LTD. (2016) 380 ITR 130 WHEREIN IT WAS HELD AS UNDER:- THAT FOR THE PURPOSES OF COMPUTING THE PRESUMPTIV E INCOME OF THE ASSESSEE FOR THE PURPOSES OF SECTION 44BB THE SERVICE TAX COLLEC TED 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) READ WITH SECT ION 44BB(1). THE SERVICE TAX IS NOT AN AMOUNT PAID OR PAYABLE, OR RECEIVED OR DE EMED TO BE RECEIVED BY THE 5 ITA NO.-5824/DEL/2011. BAKER HUGHES SINGAPORE PTE. ASSESSEE FOR THE SERVICES RENDERED BY IT. THE ASSE SSEE ONLY COLLECTED THE SERVICES TAX FOR PASSING IT ON TO THE GOVERNMENT. 5. THE LD. DR RELIED ON THE ORDERS OF THE LD. CIT(A ). 6. SINCE, THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE IN THE EARLIER YEARS ON MERITS, WE HEREBY ALLOW THE GROUND OF THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/7/2018 SD/- SD/- (S.K. YADAV) (B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06.07.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO.-5824/DEL/2011. BAKER HUGHES SINGAPORE PTE. DATE OF DICTATION 5/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 5/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 6/7/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 6 /7/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 6/7/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER