DCIT (International Taxation), Dehradun V. M/s. Schlumberger Asia Services Ltd., Dehradun

ITA 79/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1464 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 04-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL KAPOOR MS SOUMYA SINGH
• Assessee Lawyers: DR PRABHA KANT
• Keywords: Capital asset; Business income; Depreciation; Capital receipt
• Section: 44BB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO.79/DEL/2017 ASSESSMENT YEAR: 2012-13 DCIT (INTERNATIONAL TAXATION) CIRCLE-II DEHRADUN VS SCHLUMBERGER ASIA SERVICES LTD. C/O. M/S. NANGIA & CO. 3 RD FLOOR, NCR PLAZA, MUNICIPAL NO.24A, NEW CANTT ROAD, DEHRADUN PAN NO. AADCS1107J (APPELLANT) (RESPONDENT) APPELLANT BY SH. SALIL KAPOOR, ADVOCATE MS. SOUMYA SINGH, ADVOCATE RESPONDENT BY DR. PRABHA KANT, CIT DATE OF HEARING: 01/07/2021 DATE OF PRONOUNCEMENT: 01/07/2021 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A)-2, NOIDA DATED 31.10.2016 PERTAINING TO A.Y. 2012-13. 2 2. THE GRIEVANCE OF THE REVENUE READ AS UNDER :- (I) WHETHER THE CIT (A) HAS EARED, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, IN HOLDING THAT THE AMOU NT RECEIVED BY THE ASSESSEE ON ACCOUNT OF EQUIPMENT LOST IN HOLE IS NOT INCLUDIBLE IN THE GROSS REVENUE FOR THE PURPOSE OF COMPUTATION OF PRO FITS UNDER THE PRESUMPTIVE PROVISIONS OF SECTION 44BB OF THE ACT, WHEN THE SAID PROVISIONS ARE A COMPLETE CODE OF TAXATION IN THEMS ELVES AND DO NOT DISTINGUISH BETWEEN REVENUE AND CAPITAL RECEIPTS HA VING MADE ALLOWANCE FOR EXPENDITURE INCLUDING DEPRECIATION ON CAPITAL ASSETS TO THE EXTENT OF 90% OF GROSS REVENUE. (II) WHETHER THE CIT (A) HAS ERRED IN NOT APPRECIAT ING THE FACT THAT THE AMOUNT RECEIVED BY THE ASSESSEE ON ACCOUNT OF EQUI PMENT LOST IN HOLE IS INFACT THE REIMBURSEMENT OF EXPENSES AND H ENCE INCLUDIBLE IN THE GROSS REVENUE FOR THE PURPOSE OF COMPUTATION OF PROFITS AS PER THE PROVISIONS OF SECTION 44BB OF THE ACT IN ACCORDANCE WITH THE SPIRIT OF THE RATIO OF THE JUDGMENT OF HONBLE UTTARAKHAND HI GH COURT IN THE CASE OF CIT VS. HALLIBURTON OFFSHORE SERVICES INC. (300 ITR 265). (III) WHETHER THE CIT (A) HAS ERRED IN PLACING RELI ANCE ON THE ORDER OF HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF ASSES SEE FOR THE AY 1996-97, WHEN THE SLP FILED BY THE REVENUE AGAINST THE SAID JUDGMENT IS STILL PENDING BEFORE THE HONBLE SUPREM E COURT. (IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW, THE CIT (A) HAS ERRED IN HOLDING THAT RECEIPTS ON A CCOUNT OF SERVICES TAX ARE NOT INCLUDIBLE IN GROSS REVENUE OF THE ASSE SSEE FOR THE PURPOSE OF COMPUTATION OF PROFITS UNDER THE PROVISI ONS OF SECTION 44BB OF THE IT ACT, 1961. (V) WHETHER THE CIT (A) HAS ERRED IN NOT APPRECIATI NG THE FACT THAT SECTION 44BB OF THE ACT IS SELF-CONTAINED CODE PROV IDING FOR COMPUTATION OF PROFIT AT A FIXED PERCENTAGE OF GROS S RECEIPTS OF THE 3 ASSESSEE AND ALL THE DEDUCTIONS AND EXCLUSIONS FROM THE GROSS RECEIPTS ARE DEEMED TO HAVE BEEN ALLOWED TO THE ASS ESSEE. (VI) WHETHER THE CIT (A) HAS ERRED IN NOT APPRECIAT ING THE FACT THAT ONCE THE RECEIPTS ARE OFFERED TO TAX U/S 44BB OF TH E ACT WHICH PROVIDES FOR COMPUTATION OF PROFITS ON GROSS BASIS, THERE IS NO SCOPE FOR COMPUTING OR RE-COMPUTING THE PROFITS BY EXCLUD ING ANY PART OF THE RECEIPTS FROM THE TOTAL TURNOVER AS THE SAME WO ULD AMOUNT TO DEFEATING THE VERY PURPOSE OF PROVIDING FOR A PRESU MPTIVE SCHEME OF TAXATION U/S 44BB OF THE ACT AND OBVIATING THE NEED FOR MAINTAINING ACCOUNTS FOR INDIVIDUAL RECEIPTS, PAYMENTS ETC. (VII) WHETHER THE CIT (A) HAS ERRED IN IGNORING THE RATIO OF THE JUDGMENT IN THE CASE OF M/S CHOWRINGHEE SALES BUREA U (P) LTD. (82 ITR 542, SC) WHEREIN THE HONBLE APEX COURT HAS HEL D THAT THE SALES TAX COLLECTED BY AN ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS FORMS PART OF ITS BUSINESS RECEIPTS. OWING TO THE I NHERENT SIMILARITY IN THE NATURE OF SALES TAX AND SERVICE TAX, THE RAT IO OF THE JUDGMENT IN THE SAID CASE IS DIRECTLY APPLICABLE TO THE INST ANT CASE. (VIII) THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OF OR BEFORE THE HEARING OF THE APPEAL. 3. THE GRIEVANCE CAN BE SUMMARIZED IN FOLLOWING TWO CATEGORIES :- (I) WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE ON ACCOUNT OF EQUIPMENT LOST IN HOLE IS NOT INCLUDIBLE IN THE G ROSS REVENUE FOR THE PURPOSE OF COMPUTATION OF PROFITS UNDER THE PRE SUMPTIVE PROVISION OF SECTION 44BBOF THE ACT. (II) WHETHER RECEIPTS ON ACCOUNT OF SERVICE TAX ARE NOT INCLUDIBLE IN GROSS REVENUE. 4 4. AT THE VERY OUTSET, THE COUNSEL FOR THE ASSESSEE STATED THAT THE IMPUGNED ISSUES ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE UTTARAKHAND HIGH COURT WHICH HAS BEEN FOLLOWED BY T HE FIRST APPELLATE AUTHORITY. 5. PER CONTRA THE DR COULD NOT BRING ANY DISTINGUIS HING DECISION IN FAVOUR OF THE REVENUE. 6. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW QUA ISSUE. 7. THE UNDERLYING FACTS IN THE FIRST ISSUE ARE THAT THE AO HAS CONSIDERED THE RECEIPTS ON ACCOUNT TOOLS LOST IN HO LD AS INCLUDIBLE IN THE GROSS RECEIPTS. THE CASE OF THE ASSESSEE IS THAT THE SAID RECEIPT IS OF CAPITAL IN NATURE AND HENCE NOT CHARG EABLE TO TAX. THIS ISSUE HAS BEEN DECIDED BY THE HONBLE UTTARAKH AND HIGH COURT IN ASESSEES OWN CASE WHICH HAS BEEN CONFIRME D BY THE HONBLE SUPREME COURT IN 399 ITR 1. THE RELEVANT F INDINGS OF THE HONBLE SUPREME COURT READ AS UNDER :- 5 8. AS THE CIT(A) HAS FOLLOWED THE EARLIER ORDER OF THIS TRIBUNAL WHICH HAS BEEN UPHELD BY THE HONBLE UTTARAKHAND HI GH COURT AND SUBSEQUENTLY BY THE HONBLE SUPREME COURT WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE CIT(A ) GROUNDS RELATING TO THE FIRST ISSUE ARE DISMISSED. 9. FACTS RELATING TO THE SECOND ISSUE ARE THAT THE ASSESSEE HAS CLAIMED THAT SERVICE TAX HAS NO PROFIT ELEMENT IN I T AND IS COLLECTED ON ACCOUNT OF STATUTORY REQUIREMENT AND, THEREFORE, IT IS NOT TAXABLE U/S.44 BB OF THE ACT. THE AO TOOK THE V IEW THAT SERVICE TAX HAS THE PROFIT ELEMENT AND, THEREFORE, INCLUDIBLE IN THE GROSS TURNOVER OF THE ASSESSEE. THIS ISSUE HAS ALSO BEEN CONSIDERED BY THE HONBLE UTTARAKHAND HIGH COURT IN ASSESSEES OWN CASE IN 104 TAXMANN.COM 353. THE RELEVANT FIND INGS READ AS UNDER :- 6 10. SINCE THE ISSUE IS NOW WELL SETTLED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE WE DO NOT FIND ANY REASON T O INTERFERE WITH THE FINDINGS OF THE CIT(A). THE GROUNDS RELAT ING TO THIS ISSUE ARE ALSO DISMISSED. 7 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 12. DECISION ANNOUNCED IN THE OPEN COURT IN THE PR ESENCE OF BOTH THE REPRESENTATIVES ON 01.07.2021. SD/- SD/- (SUDHANSHU SRIVASTAVA) ( N. K. BILLAIYA) JUDICIAL MEMBER A CCOUNTANT MEMBER *NEHA* DATE:-01.07.2021 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI DATE OF DICTATION 01.07.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01.07.2021 DATE ON WHICH THE TYP ED DRAFT IS PLACED BEFORE THE OTHER MEMBER 01.07.2021 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 01.07.2021 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 01.07.2021 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 01.07.2021 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 01.07.2021 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATC H OF THE ORDER 8