ORIENT OVERSEAS CONTAINER LINE LTD., MUMBAI V. ACIT (IT) 3 (2)(2), MUMBAI

ITA 6796/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8029 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2015-2016
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVANEESH TIWARI
• Assessee Lawyers: JINIT RATHOD
• Keywords: Presumptive income; TDS
• Section: 271(1)(c); 143(3); 27; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I, BENCH MUM BAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.6796/MUM/2018 ( ASSESSMENT YEAR: 2015-16 ) ORIENT OVERSEAS CONTAINER LINE LTD. C/O OOCL (INDIA) PVT.LTD. ICC CHAMBERS, 5 TH FLOOR SAKI VIHAR ROAD OPP. SANTOGEN SILK MILLS POWAI MUMBAI-400 072 VS. ACIT(IT)-3(2)(2) ROOM NO.1615, 16 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021 PAN/G IR NO. AA AC O5679E ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI AVANEESH TIWARI, SR.DR ASSESSEE BY SHRI.JINIT RATHOD, AR DATE OF HEARING 19/12 /2019 DATE OF PRONOUNCEME NT 15 / 01 /20 20 / O R D E R PER G.MANJUNATHA : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST FINAL ASSESSMENT ORDER PASSED BY THE LD. AO U/S 143(3) R. W.S. 144C(13) OF THE I.T.ACT, 1961 DATED 27/09/2018, IN PURSUANCE OF DIRECTIONS OF THE DISPUTE RESOLUTION PANEL (DRP)-2, MUMBAI DATED 28/08/2018 U/S 144C(5) OF THE I.T.ACT, 1961 FOR THE AY 2015-16 . ITA NO.6796/MUM/2018 ORIENT OVERSEAS CONTAINER LINE LTD. 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. GROUND 1: INCLUSION OF SERVICE TAX FOR THE PURPO SE OF COMPUTING PRESUMPTIVE INCOME UNDER SECTION 44B OF THE INCOME- TAX ACT, 1961 (THE ACT) 1 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED ACIT HAS ERRED IN INCLUDING AN AMOUNT OF R S.57.45,67,721, BEING THE AMOUNT OF SERVICE TAX CHARGED, TO THE TOT AL REVENUE FOR THE PURPOSE OF COMPUTING PRESUMPTIVE INCOME UNDER SECTI ON 44B OF THE ACT. 1.2 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ACIT HAS ERRED IN NOT FOLLOWING THE ORDER P ASSED BY THE MUMBAI BENCH OF HON'BLE INCOME TAX APPELLATE TRIBUN AL ('ITAT) IN APPELLANT'S OWN CASE FOR AY 2007-08, AY 2008-09, AY 2010-11 AND AY 2011-12 WHEREIN IT HAS BEEN HELD THAT SERVICE TA X COLLECTED AND PAID TO THE GOVERNMENT BY THE APPELLANT IS NOT INCL UDIBLE FOR THE PURPOSE OF COMPUTING PRESUMPTIVE INCOME UNDER SECTI ON 44B OF THE ACT 1.3 THE APPELLANT HUMBLY PRAYS; THAT THE LEARNE D ACIT BE DIRECTED NOT TO INCLUDE SERVICE TAX CHARGED FOR THE PURPOSE OF C OMPUTING THE PRESUMPTIVE INCOME UNDER SECTION 44B OF THE ACT. 2. GROUND 2: SHORT GRANT OF CREDIT OF PREPAID TAXES (I.E. ADVANCE TAX AND SELF-ASSESSMENT TAX) 2.1 ON THE FACTS AND THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED ACIT HAS ERRED IN RESTRICTING THE CREDIT OF PREPAID TAXES (I.E. ADVANCE TAX AND SELF-ASSESSMENT TAX) TO RS. 36,09,51,356 AS AGAINS T AN AMOUNT OF RS.36,10,99,795 AS CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOME ('ROI') FILED FOR AY 2015-16, THEREBY RESULTING INTO A SHOR T CREDIT FOR PREPAID TAXES OF RS.1,48,439/-. 2.2 FURTHER, THE APPELLANT IS IN THE PROCESS OF FILING AN APPLICATION UNDER SECTION 154 OF THE ACT FOR RECTIFICATION OF THE AFO RESAID MISTAKE APPARENT FROM RECORD BEFORE THE LEARNED ACIT. 2. 3 THE APPELLANT PRAYS THAT THE LEARNED ACIT B E DIRECTED TO GRANT THE FULL CREDIT OF PREPAID TAXES. 3. GROUND 3. INITIATION OF PENALTY PROCEEDING FOR THE LEVY OF PENALTY UNDER SECTION 271(1)(C) 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ACIT ERRED IN INITIALING PENALTY PROCEEDING UNDER S ECTION 27 1(1)(C) OF THE ACT. 3.2 IT IS PRAYED THAT THE LEARNED ACIT BE DIREC TED TO DROP THE PENALTY PROCEEDING UNDER SECTION 271(L)) OF THE ACT. ITA NO.6796/MUM/2018 ORIENT OVERSEAS CONTAINER LINE LTD. 3 THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, VARY, OMIT OR SUBSTITUTE THE AFORESAID GROUNDS OF APPEAL OR ADD A NEW GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THIS A PPEAL AS IT MAY HE ADVISED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS INCORPORATED UNDER THE COMPANIES ORDINANCE OF HONG KONG AND IT IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF CARGO AND OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC. ITS INCOME COMPRISE S OF FREIGHT INCOME AND ANCILLARY DETENTION CHARGES SUCH AS TERMINAL HA NDLING CHARGES, INLAND HAULAGE CHARGES, DEMURRAGE AND DETENTION CHA RGES ETC. IN THE ABSENCE OF A DOUBLE TAXATION AVOIDANCE AGREEMEN T (DTAA) BETWEEN INDIA AND HONG KONG, THE ASSESSEE HAS OFFER ED ITS ENTIRE INCOME TO TAX ON PRESUMPTIVE SCHEME OF TAXATION AS PER PROVISION OF SECTION 44B OF THE I.T.ACT, 1961. THE ASSESSEE HAS FILED RETURN OF INCOME FOR AY 2015-16 ON 30/11/2015, DECLARING TOTA L TAXABLE INCOME OF RS. 77,53,51,510/-. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO NOTICED THAT THE ASSESEE HAS COLLECTED SERVICE TAX OF RS. 5 7,45,67,721/- AND THE SAME HAS BEEN EXCLUDED FROM TOTAL INCOME RECEIV ED FROM OPERATIONS FOR THE PURPOSE OF COMPUTING PRESUMPTIV E INCOME AS PER PROVISIONS OF SECTION 44B OF THE I.T.ACT, 1961. THEREFORE, THE LD. AO AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE AS SESSEE AND AFTER TAKEN NOTE OF PROVISION OF SECTION 44B OF THE I.T.A CT, 1961, INCLUDED SERVICE TAX COLLECTED AMOUNTING TO RS. 57,45,67,721 /- IN THE TOTAL INCOME FROM OPERATIONS AND ESTIMATED PROFIT @ 7.5.% U/S. 44B OF THE I.T.ACT 1961. THE ASSESSEE HAS FILED ITS OBJECTIONS AGAINST DRAFT ASSESSMENT ORDER PASSED BY THE LD. AO BEFORE THE DR P-2 MUMBAI. THE DRP-2 MUMBAI, VIDE ITS ORDER DATED 28/08/2018 U/S 144C(5) OF THE I.T.ACT, 1961 REJECTED THE ARGUMENTS OF THE ASS ESSEE AND CONFIRMED THE FINDINGS OF THE LD. AO, IN RESPECT OF INCLUSION OF SERVICE TAX IN GROSS RECEIPTS FOR THE PURPOSE OF ESTIMATION OF PROFIT ITA NO.6796/MUM/2018 ORIENT OVERSEAS CONTAINER LINE LTD. 4 U/S 44B OF THE I.T.ACT, 1961. THE LD. AO, IN PURSUA NCE OF DIRECTIONS OF THE LD. DRP PASSED FINAL ASSESSMENT ORDER U/S 14 3(3) R.W.S. 144C(13) OF THE I.T.ACT, 1961 ON 27/09/2018 AND MAD E ADDITIONS TOWARDS @ 7.5% PROFIT ESTIMATED ON SERVICE TAX COLL ECTED FROM RENDERING SERVICES TO THE CUSTOMERS AND MADE ADDITI ONS OF RS. 4,30,92,579/-. AGGRIEVED BY THE FINAL ASSESSMENT OR DER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO. 1 OF ASSESSEE APPEAL IS INCLUSION OF SERVICE TA X FOR THE PURPOSE OF COMPUTING PRESUMPTIVE INCOME U/S 44B OF THE I.T. ACT, 1961. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF HEARING, SU BMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF ITAT, MUMBAI BENCH IN ASSESSEES OWN CASE FOR AY 2007-08 TO 2013-14, WHEREIN UNDER IDENTICAL SET OF FACTS, THE TRIBUNAL HELD THAT SERVICE TAX COMPONENT SHALL NOT BE INCLUDED IN GROS S RECEIPTS FROM OPERATIONS FOR THE PURPOSE OF COMPUTATION OF PRESUM PTIVE INCOME U/S 44B OF THE I.T.ACT, 1961. THE LD. AR, FURTHER SUBMI TTED THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF HONBLE BO MBAY HIGH COURT, IN THE CASE OF PCIT(IT)-1, MUMBAI VS BOSKALIS INTER NATIONAL DREDGING INTERNATIONAL CV IN ITA NO.55 OF 2017, DATED 25/03/ 2019. 5. THE LD. DR, ON THE OTHER HAND, FAIRLY ACCEPTED T HAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESEE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR EARLIER YEARS. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW ALONG WITH CASE LAWS CITED BY THE LD. AR FOR THE ASSESSEE . WE FIND THAT THE ITA NO.6796/MUM/2018 ORIENT OVERSEAS CONTAINER LINE LTD. 5 ISSUE INVOLVED IN THE PRESENT APPEAL I.E. WHETHER S ERVICE TAX COLLECTED FROM SERVICE CHARGES IS INCLUDIBLE IN GR OSS INCOME FROM OPERATIONS FOR THE PURPOSE OF COMPUTATION OF PRESUM PTIVE PROFIT AS PER PROVISION OF SECTION 44B OF THE I.T.ACT 1961 IS NO LONGER A RES- INTEGRA. THE CO-ORDINATE BENCH OF ITAT, IN ASSESSEE OWN CASE FOR AY 2007-08 TO 2013-14 HAD CONSIDERED AN IDENTICAL I SSUE AND HELD THAT SERVICE TAX COLLECTED BY THE ASSESSEE DOES NOT HAVE ANY ELEMENT OF INCOME, THEREFORE, IT CANNOT FORM PART OF GROSS RECEIPTS FOR THE PURPOSE OF COMPUTATION OF PRESUMPTIVE INCOM E U/S 44B OF THE I.T.ACT, 1961. WE FURTHER NOTED THAT AN IDENTICAL I SSUE HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT, IN THE CASE OF PCIT(IT) VS BOSKALIS INTERNATIONAL DREDGING INTERNA TIONAL CV. (SUPRA), WHERE THE HONBLE HIGH COURT BY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT, IN THE CASE OF DIT-I VS. MITCHELL DRILLING INTERNATIONAL PVT.LTD. AND OTHER CASES HELD THAT SE RVICE TAX COLLECTED BY THE ASSESSEE ON THE AMOUNT RECEIVED BY IT FOR RE NDERING SERVICES IS NOT TO BE INCLUDED IN THE GROSS RECEIPTS IN TERM S OF SECTION 44BB(2) R.W.S. 44BB(1) OF THE I.T.ACT, 1961. 7. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLLOWING THE CASE LAWS DISCUSSED HEREINABOVE, WE DIRECT THE LD. AO TO EXCLUDED SERVICE TAX COLLECTED FROM GROSS RECEIPTS FROM OPER ATIONS FOR THE PURPOSE OF COMPUTATION OF PRESUMPTIVE INCOME UNDER THE PROVISION OF SECTION 44B OF THE I.T.ACT, 1961. 8. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM GROUND NO.2 OF ASSESSEE APPEAL IS SHORT GRANT OF CREDIT FO R PREPAID TAXES, INCLUDING ADVANCE TAX AND SELF ASSESSMENT TAX. WE F IND THAT THE ASSESSEE HAS TAKEN A GROUND CHALLENGING THE FINDING S OF THE LD. AO IN SHORT GRANTING CREDIT FOR PREPAID TAXES TO THE T UNE OF RS. 1,48,439/- ITA NO.6796/MUM/2018 ORIENT OVERSEAS CONTAINER LINE LTD. 6 THE ISSUE OF CREDIT FOR TDS IS BASED ON MATERIAL EV IDENCES PLACED BY THE ASSESSEE BEFORE THE LD. AO. THEREFORE, WE SE T ASIDE THE ISSUE TO THE FILE OF THE LD. AO AND DIRECT HIM TO R ECONSIDER THE ISSUE, IN LIGHT OF THE EVIDENCES FILED BY THE ASSESSEE AND IF, THE LD. AO FOUND THAT THE CLAIM OF THE ASSESEE IS CORRECT WITH REFERENCE TO EVIDENCES FILED BEFORE HIM, THEN THE LD. AO IS DIRE CTED TO ALLOW CREDIT FOR PREPAID TAXES AS CLAIMED BY THE ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 /01/ 2020 SD/- (MAHAVIR SINGH) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 /01/2020 T HIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//