ISLAMIC REPUBLIC OF IRAN SHIPPING LINES, MUMBAI V. DDIT (IT) 3(*1) SCINIDA HOUSE, MUMBAI

ITA 8845/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48498 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHOK J PATIL
• Assessee Lawyers: S N INMADAR
• Keywords: Presumptive income; Business income; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH BEFORE SHRI R.V.EASWAR (PRESIDENT) & SHRI T.R.SOOD, ACCOUNTANT MEMBER I.T.A.NO.8845/MUM/2010 A.Y 2007-08 ISLAMIC REPUBLIC OF IRAN SHIPPING LINES, C/O. SAMSARA SHIPPING PRIVATE LTD., 101/102 TECHNOPOLIS KNOWLEDGE PARK, MAHAKALI CAVES ROAD, ANDHERI (E), MUMBAI 400 093. PAN: AABCLI 2640 C VS. DY. COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) 3(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. S.N.INMADAR. RESPONDENT BY : MR. ASHOK J. PATIL. O R D E R PER T.R.SOOD, AM: IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATI ON -3(1), MUMBAI ERRED IN ASSESSING THE INCOME OF THE APPELLANT AT 1 0% OF THE GROSS RECEIPTS AS PER RULE 10 OF THE INCOME TAX RULES, 19 64, AS AGAINST ASSESSING THE APPELLANT U/S.44B. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATI ON -3(1), MUMBAI FAILED TO APPRECIATE ALL THE EVIDENCES FILED WITH R EFERENCE TO THE APPELLANTS OWNERSHIP AND CHARTER OF SHIPS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATI ON -3(1), MUMBAI HAS ERRED IN INCLUDING THE AMOUNT OF SERVICE TAX CO LLECTED IN COMPUTING THE INCOME BY INCLUDING THE SERVICE TAX COLLECTED I N THE GROSS RECEIPTS OF THE APPELLANT FOR THE RELEVANT YEAR UNDER CONSID ERATION FOR DETERMINING THE TAXABLE INCOME OF THE APPELLANT. 2. GROUND NOS.1 & 2 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASSESSEE FILED A RETURN DECLARING AN INCOME OF RS.7 ,16,28,050/- AT THE RATE OF 7% PROFIT OF TOTAL COLLECTION OF RS.95,50, 40,194/- AS PER THE PROVISIONS OF SEC.44B R.W.S. 172 OF THE I. T. ACT. THE ASSESSING OFFICER 2 OBSERVED THAT SINCE THE PROVISIONS OF SEC.44B ARE A PPLICABLE IN THE CASE OF THE ASSESSEE WHO WAS ENGAGED IN THE OPERATIONS O F SHIPS, THEREFORE, ASSESSEE WAS REQUIRED TO SUBSTANTIATE ITS CLAIM THA T IT WAS ENGAGED IN THE BUSINESS OF OPERATION OF SHIPS BY FILING THE CO PIES OF SHIP REGISTER CERTIFICATES IN RESPECT OF SHIPS OWNED/CHARTERED BY THE ASSESSEE AND EMPLOYED IN THE INTERNATIONAL TRAFFIC. IN RESPONSE, ASSESSEE FILED THE COPY OF TWO SHIPS REGISTER STATING THAT THESE CERTI FICATES FOR TWO OWNED VESSELS. HOWEVER, ON PURSUANCE OF THE CERTIFICATES IT WAS NOTED BY THE ASSESSING OFFICER THAT THEY ARE NOT SHIPS REGISTER CERTIFICATES BUT THEY ARE BOTH CHARTERED REGISTER CERTIFICATES. SINCE TRU E DETAILS WERE NOT FILED ASSESSEE WAS AGAIN REQUESTED TO FILE THE REMAINING DOCUMENTS IN RESPONSE TO WHICH THREE MORE SHIPS REGISTER CERTIFI CATES WERE FILED AND IT WAS NOTED BY THE ASSESSING OFFICER THAT ONE CERT IFICATE WAS PROVISIONAL CERTIFICATE OF MALTA REGISTRY AND THE OTHER TWO CERTIFICATES WERE AGAIN ONLY BAREBOAT CHARTER REGISTRY CERTIFIC ATES. FROM THE OTHER DETAILS FILED, IT WAS OBSERVED THAT ASSESSEE HAS SHOWN INCOME OF MORE THAN 50 VESSELS THOUGH SOME OF THEM ARE NOT OW NED BY THE ASSESSEE. THE ASSESSEE AGAIN WAS REQUESTED TO FILE DETAILS OF VESSELS CHARTERED AND POOLED WITH SUPPORTING EVIDENCE. NO F URTHER DETAILS WERE FILED. ACCORDINGLY, ASSESSING OFFICER OBSERVED AS U NDER: IN THIS CASE THE COPIES OF THE SHIP REGISTRATION C ERTIFICATES, CHARTER PARTY AGREEMENTS, AGREEMENTS FOR POOL ARRANGEMENT/L OT ARRANGEMENTS ARE NOT PROVIDED BY THE ASSESSEE. THE DETAILS REGAR DING THE NUMBER OF VOYAGES FROM VARIOUS INDIAN PORTS AND SHIP REGISTRA TION CERTIFICATES IN RESPECT OF ALL THE VOYAGES ARE ALSO NOT FILED BY TH E ASSESSEE. THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH THE INDEPENDE NT EVIDENCES LIKE CERTIFICATES ISSUED BY THE PORT AUTHORITIES AND THE DECLARATION BY THE PORT AUTHORITIES IN RESPECT OF BERTHING OF THE VESS ELS. IMPORT GENERAL MANIFEST/EXPORT GENERAL MANIFEST DECLARES THE DESTI NATION OF CARGO. 3 THE LOADING PORT AND THE DESTINATION PORT ARE GIVEN IN THESE MANIFESTS. THE SAME HAS ALSO NOT BEEN PROVIDED BY THE ASSESSEE . THE ASSESSEE HAS NOT ESTABLISHED THAT THE VESSELS EMPLOYED IN VOYAGES HAVE ACTUALLY COME TO INDIA BEING CARRIAGE VESSELS AND THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO LINK THESE VESSELS TO THE VESSELS SHOWN TO HAVE VISITED INDIA. IT HAS FAILED EVEN TO LINK AND ESTABLISH VOYAGE WISE THAT ITS FEEDER VESS ELS WERE ACTUALLY LOADING THE GOODS IN TO THE MOTHER VESSELS CLAIMED AND IT WAS OPERATION ALL THE MOTHER VESSELS. THE ASSESSEE HAS COMPLETELY FAILED TO DISCHARGE ITS ONUS TO ESTABLISH THAT IT IS OPERATING THE SHIP S. IN THE ABOVE BACKGROUND OF ABOVE OBSERVATIONS THE A SSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS NOT PROVED THAT IT WAS DERIVING INCOME FROM OPERATION OF SHIPS AND, THEREFORE, HE I NVOKED RULE 10 OF I.T.RULES AND ESTIMATED THE INCOME @ 10% OF THE GRO SS RECEIPTS SHOWN BY THE ASSESSEE. 3. THE MATTER WENT TO DRP AND ASSESSEE OBJECTED TO THE DRAFT ORDER. THE LEARNED DRP DECIDED THE ISSUE VIDE PARA- 3 WHICH IS AS UNDER: 3. DIRECTIONS: A OBJECTION NO.1 1. THE ASSESSEE HAS OBJECTED TO DENYING THE ASSESSMENT OF SHIPPING BUSINESS INCOME U/S.44B/172 OF THE INCOME TAX ACT, 1961 AND WRONGLY APPLYING RULE 10D OF THE INCOME TA X ACT, 1961. WHILE REJECTING THE APPLICATION U/S.44B, THE AO HAS GIVEN DETAILED REASONING IN HIS ASSESSMENT ORDER, A CCORDING TO WHICH, THE ASSESSEE FAILED TO FILE ALL THE RELEVANT DOCUMENTS RELATING TO OWNERSHIP OF THE VESSELS, EVIDENCE OF M OVEMENT OF VESSELS AND VARIOUS OTHER DOCUMENTS RELATING TO THE VESSELS. BEFORE THE DRP. THE ASSESSEE CONTENDED THAT SHIP RE GISTRY FOR ONE VESSEL WAS FILED AND OTHER BARE BOAT CHARTER CE RTIFICATES FOR FOUR VESSELS WERE ALSO FILED, THE DETAILS OF INCOME FROM SHIPPING ON ACCOUNT OF SLOT CHARGES WAS ALSO FILED. THE AO HAS APPLIED AN ESTIMATED NET PROFIT OF 10% ON THE TOTAL RECEIPTS BY INVOKING RULE 10. THE ASSESSEE HAS ALSO OBJECTED TO ESTIMATION OF 10% INVOKING RULE 10. THE ASSESSEE HAS ALSO OBJE CTED TO ESTIMATION OF 10% PROFIT AGAINST 7.5% MENTIONED IN SECTION 44B OF THE INCOME TAX ACT, 1961. 2. THE DRP HAS CAREFULLY CONSIDERED THE EVIDENCE FILED BEFORE THE AO AND SUBMISSION MADE BEFORE THE DRP AND IT IS FOU ND THAT THE ASSESSEE HAS NOT BEEN ABLE TO FILE PROPER EVIDE NCE RELATING TO THE SHIPPING BUSINESS ALONG WITH THE ENTIRE DOCUMEN TATION 4 RELATION TO OWNERSHIP, HIRED VESSELS AND OTHER MOVE MENT DETAILS ALONG WITH THE REVENUE RECEIVED FROM EACH ONE. THE DETAILS OF SLOTTING BUSINESS COULD NOT BE FILLED. ACCORDINGLY, INVOKING OF RULE 10 OF THE ACT, BY THE ASSESSING OFFICER IS JUS TIFIED AND CONFIRMED. 3. AS FAR AS ESTIMATION OF NET PROFIT AT 10% AGAINST 7 .5% PROFIT MENTIONED IN SECTION 44B, THE ESTIMATION MADE BY TH E AO APPEARS TO BE REASONABLE AND CONFIRMED. 4. BEFORE US, LD.COUNSEL OF THE ASSESSEE SUBMITTED THAT DURING THE RELEVANT POINT OF TIME THERE WERE INTERNAL DISTURBA NCES IN IRAN AND THAT IS WHY SOME OF THE DOCUMENTS COULD NOT BE FILED. HE FURTHER SUBMITTED THAT, HOWEVER, MANY DOCUMENTS WERE FILED BEFORE THE DRP WHICH HAVE BEEN LISTED IN THE PAPER BOOK AT SR.NO.6 AND IT HAS BEEN CERTIFIED THAT THEY WERE FILED BEFORE THE DRP. HOWEVER, DRP HAS NO T CONSIDERED ANY OF THOSE DOCUMENTS AND MERELY REPEATED THE CONCLUSI ON REACHED BY THE ASSESSING OFFICER. HE ARGUED THAT EVEN IF THESE DOCUMENTS WERE CONSIDERED AS ADDITIONAL DOCUMENTS, EVEN THEN DRP W AS BOUND TO CONSIDER THEM AND IN THIS REGARD HE REFERRED TO INC OME TAX (DISPUTE RESOLUTION PANEL) RULES, 2009, INVITING OUR ATTENTI ON TO RULE 9 WHICH PROVIDES THAT WHENEVER PANEL DEEM IT NECESSARY IT H AS THE POWER TO CALL ANY DOCUMENT OR WITNESSES FOR ISSUANCE OF PROP ER DIRECTIONS. THEREFORE, THE DOCUMENTS FILED BEFORE THE DRP COULD HAVE BEEN CONSIDERED AND ONLY AFTER CONSIDERATION OF SUCH DOC UMENTS SOME DIRECTIONS COULD HAVE BEEN ISSUED. IN ANY CASE, PRO CEEDINGS BEFORE DRP ARE ONLY A CONTINUATION OF ASSESSMENT PROCEEDIN GS BECAUSE THE PANEL WAS REQUIRED TO CONFIRM THE DRAFT ASSESSMENT ORDER AND, THEREFORE, HAD PLENARY POWERS EQUIVALENT TO THOSE O F CIT(A), THEREFORE, HE SHOULD HAVE REACHED HIS CONCLUSION AFTER EXAMINI NG THE DOCUMENTS FILED BEFORE IT. 5 5. HE ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS ULTIMATELY INVOKED RULE 10 AND ESTIMATED THE PROFIT @ 10% OF T HE SAME RECEIPTS WHICH HAVE BEEN DECLARED BY THE ASSESSEE. IT HAS AL SO BEEN MENTIONED BY THE ASSESSING OFFICER THAT THE ESTIMATE IS ON TH E BASIS OF FREIGHT RECEIPTS. HE WONDERED IF ESTIMATION WAS ON FREIGHT RECEIPTS, THEN FREIGHT HAD TO BE GENERATED ONLY FROM OPERATIONS OF SHIPS OTHERWISE IT CANNOT BE TERMED AS FREIGHT AND THEN IN THAT CASE H OW HE COULD REACH THE ASSUMPTION THAT ASSESSEE WAS NOT RUNNING THE SH IPS. ONCE THE PARLIAMENT HAS PROVIDED A SPECIFIC METHOD FOR TAXAT ION, THEN THE ASSESSING OFFICER COULD NOT HAVE IGNORED THE SAME B Y INVOKING RULE 10. HE POINTED OUT THAT IN THE IMMEDIATE PREVIOUS YEAR ASSESSEES INCOME WAS ACCEPTED AS INCOME FROM SHIPPING BUSINESS U/S.4 4B IN THE ASSESSMENT ORDER PASSED U/S.143[3] AND EVEN IN LATE R YEAR IN THE ORDER PASSED U/S.143[1] THE INCOME HAS BEEN ACCEPTED AS I NCOME FROM SHIPPING U/S.44B. THEREFORE, IN THIS YEAR THERE WAS NO MATERIAL BEFORE THE ASSESSING OFFICER TO PASS A CONTRARY ORDER. HE ALSO POINTED OUT THE ASSESSING OFFICER HAS MENTIONED ABOUT THE DOCUMENTS LIKE CERTIFICATES ISSUED BY THE PORT AUTHORITIES IN RESPECT OF BIRTHI NG OF VESSELS, BUT NO SUCH CERTIFICATES ARE EVER ISSUED BY THE PORT AUTHO RITIES. WHILE CONCLUDING HIS ARGUMENTS, HE SUBMITTED THAT IN VIEW OF THE ABOVE DETAILED ARGUMENTS, THE MATTER MAY BE RESTORED TO T HE DRP FOR FRESH ADJUDICATION. 6. ON THE OTHER HAND, LD.DR SUBMITTED THAT THE ASSE SSING OFFICER HAS POINTED OUT IN HIS DRAFT ASSESSMENT ORDER THAT ASSESSEE HAD OPERATED ABOUT 50 VESSELS, WHEREAS PROOF OF OWNERSH IP WAS FILED ONLY 6 IN RESPECT OF THREE SHIPS. SINCE, RELEVANT DOCUMENT S WERE NOT FILED IT WAS DIFFICULT FOR THE ASSESSING OFFICER TO REACH TH E CONCLUSION THAT ASSESSEE WAS OPERATING SHIPS AND INCOME OFFERED BY THE ASSESSEE WAS ASSESSABLE U/S.44B. THEN HE REFERRED TO THE ADDITIO NAL DOCUMENTS AND POINTED OUT THAT SOME OF THE DOCUMENTS FILED BEFORE THE DRP ARE EXACTLY THE SAME AS FILED BEFORE THE ASSESSING OFFI CER. FOR EXAMPLE, BAREBOAT CHARTER REGISTER CERTIFICATE AT PAGE-53 IS IDENTICAL TO THE CERTIFICATE FILED AT PAGE 88 OF THE PAPER BOOK, WHI CH ONLY SHOWS THAT NOTHING FRESH WAS FILED BEFORE THE DRP AND THAT IS WHY DRP HAD AGREED WITH THE CONCLUSION OF THE ASSESSING OFFICER . HE ARGUED THAT EVEN BEFORE THE DRP OR BEFORE US NO MEANINGFUL DOCU MENTS HAVE BEEN FILED AND NO PURPOSE WOULD BE SERVED IN SENDING THE MATTER BACK. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND AGREE WITH THE SUBMISSIONS OF THE LD.COUNSEL OF THE ASSES SEE. IF THE ASSESSEE COULD NOT FILE CERTIFICATE, DOCUMENTS BECAUSE OF IN TERNAL DISTURBANCES IN ITS COUNTRY IRAN, THEN AT LEAST DRP COULD HAVE EXAM INED THE DOCUMENTS WHICH WERE FILED BEFORE IT. MAY BE ONE OR TWO DOCUM ENTS ARE IDENTICAL, BUT IT DOES NOT MEAN THAT ALL THE DOCUMENTS ARE SAM E. MOREOVER, THESE DOCUMENTS HAVE TO BE EXAMINED IN THE LIGHT OF THE D EPARTMENTS OWN DECISION IN THE EARLIER YEARS WHEN ASSESSEES INCOM E HAS BEEN ACCEPTED AS INCOME FROM OPERATION OF SHIPS U/S.44 B IN THE ASSESSMENT ORDER PASSED U/S.143[3]. IF SOME OF THE DOCUMENTS M ENTIONED BY THE ASSESSING OFFICER LIKE CERTIFICATE FOR BIRTHING OF THE VESSELS ARE NOT ISSUED AT ALL BY THE PORT AUTHORITIES, THEN SUCH DO CUMENTS SHOULD NOT HAVE BEEN DEMANDED OR IT SHOULD BE BROUGHT ON RECOR D THAT HOW SUCH 7 CERTIFICATES ARE ISSUED BY THE AUTHORITIES. THEREFO RE, IN THE INTERESTS OF JUSTICE, WE SET ASIDE THE ORDER PASSED BY THE DRP A ND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DI RECTION TO EXAMINE ALL THE DOCUMENTS FILED EVEN BEFORE THE DRP OR ASSESSEE MAY BE REQUIRED TO FILE FRESH DOCUMENTS WHICH MAY PROVE THAT ASSESS EE WAS OPERATING SHIPS. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE PROV IDED AN ADEQUATE OPPORTUNITY BEFORE COMING TO A CONCLUSION. 8. GROUND NO.3 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTED THAT ASSESSEE HAD ALSO RECEIVED A SUM OF RS.3,12,20,008/- AS SERVICE TAX A ND HE PROPOSED TO INCLUDE THE SAME IN THE GROSS RECEIPTS FOR ARRIVING AT THE PROFIT RATE OF 10%. IT WAS ARGUED THAT THE SAME COULD NOT BE INCLU DED IN THE GROSS RECEIPTS FOR ARRIVING AT A PARTICULAR PRESUMPTIVE I NCOME AND IN THIS REGARD VARIOUS CASE LAWS WERE CITED. THE ASSESSING OFFICER DID NOT FIND FORCE IN THE SUBMISSIONS AND SIMPLY OBSERVED THAT T HESE JUDGMENTS PERTAINED TO THE ISSUE OF CUSTOMS DUTY. ULTIMATELY, BE INCLUDED THE SUM OF RS.3,12,20,008/- IN THE GROSS RECEIPTS AND APPLI ED THE RATE OF 10% AS INCOME. 9. ON APPEAL, THE LD. DRP CONFIRMED THE ORDER OF TH E ASSESSING OFFICER BY RELYING ON THE DECISION OF THE DELHI BEN CH OF THE TRIBUNAL IN THE CASE OF DDIT [I.T.] VS. TECHIP OFFSHORE CONTACT ING BV IN I.T.A.NO.4613/DEL/07. 10. BEFORE US, LD.COUNSEL OF THE ASSESSEE SUBMITTED THAT SERVICE TAX WAS A STATUTORY LEVY AND ASSESSEE PERHAPS CANNOT MA KE ANY PROFIT ON THIS AMOUNT AS ASSESSEE IS COLLECTING THE SAME ON B EHALF OF THE 8 GOVERNMENT OF INDIA AND IS DEPOSITING THE SAME WITH THE GOVERNMENT. IN THIS REGARD, HE RELIED ON THE DECISION OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SUDERSHAN CHEMICAL IND S. [245 ITR 769]. IN THIS CASE THE ISSUE WAS WHETHER EXCISE DUTY AND SALES TAX WOULD BE INCLUDED IN THE TOTAL TURNOVER. HE POINTED OUT THAT THE HONBLE HIGH COURT HAD OBSERVED THAT EXCISE DUTY AND SALES TAX C OULD NOT BE INCLUDED IN THE TOTAL TURNOVER BECAUSE WHAT WOULD R EDUCE THE PROFITS AND GAINS FROM EXPORT BUSINESS ARTIFICIALLY BECAUSE THERE CANNOT BE ANY ELEMENT OF PROFIT INVOLVED IN LEVY OF SALES TAX AND EXCISE DUTY. HE ALSO RELIED ON THE DECISION OF THE HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF DIT [INTERNATIONAL TAXATION] VS. SCHLUMBERG ER ASIA SERVICES LTD. [317 ITR 156], WHEREIN WHILE DEALING WITH THE ISSUE REGARDING PROFIT U/S.44B IN RESPECT OF CUSTOMS DUTY COULD NOT BE INCLUDED IN PART OF THE AMOUNT FOR THE PURPOSES OF DEEMED PROFIT. 11. ON THE OTHER HAND, LD.DR SUBMITTED THAT THE DEC ISION HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF DIT [IT] VS. SCHLUMBERGER ASIA SERVICES LTD. [SUPRA] WAS RENDERED IN RESPECT OF CU STOMS DUTY AND, THEREFORE, SAME CANNOT BE APPLIED IN THE CASE BEFOR E US. IN ANY CASE, THERE IS A DIRECT DECISION IN RESPECT OF SERVICE TA X IN THE CASE OF DDIT VS. TECHNIP OFFSHROE CONTRACTING BV [29 SOT 33], WH EREIN WHILE DEALING WITH THE COMPUTATION OF PROFIT U/S.44B, IT WAS HELD THAT SERVICE TAX WOULD BE INCLUDED IN THE AMOUNT FOR DETERMINING THE INCOME U/S.43B. 12. IN THE REJOINDER, LD.COUNSEL OF THE ASSESSEE SU BMITTED THAT IN THE CASE OF DDIT [I.T.] VS. TECHIP OFFSHORE CONTACT ING BV [SUPRA] THE 9 DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. SUDERSHAN CHEMICAL INDS. [SUPRA] WAS NOT CONSIDERED . 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD.COUNSEL OF THE A SSESSEE. NO DOUBT, IN THE CASE OF DDIT [I.T.] VS. TECHIP OFFSHORE CONT ACTING BV [SUPRA], IT WAS HELD THAT SERVICE TAX WOULD BE INCLUDED IN THE TURNOVER FOR COMPUTING THE PROFITS FOR THE PURPOSE OF SECTION 44 BB. HOWEVER, IN THIS CASE THE DECISION OF HONBLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS. SUDERSHAN CHEMICAL INDS. [SUPRA] HAS NOT BEEN CONSI DERED. IN THAT CASE THE ISSUE WAS WHETHER SALES TAX AND EXCISE DUT Y WAS TO BE INCLUDED IN THE TOTAL TURNOVER FOR THE PURPOSE OF C OMPUTING DEDUCTION U/S.80HHC. IT WAS OBSERVED BY THE HONBLE COURT THA T SINCE NO EXCISE DUTY AND SALES TAX WERE LEVIABLE IN RESPECT OF EXPO RTS, THEREFORE, WHILE CALCULATING THE DEDUCTION U/S.80HHC BY THE FORMULA - PROFITS OF BUSINESS X EXPORT TURNOVER TOTAL TURNOVER IT WOULD NOT BE PROPER TO INCLUDE THE SALES TAX AND EXCISE DUTY IN THE TOTAL TURNOVER, BECAUSE THERE CANNOT BE ANY ELEMENT OF PROFIT IN SALES TAX AND EXCISE DUTY. IN OUR VIEW, THIS PRINCIPLE IS EQUALLY APPLICABLE TO THE SERVICE TAX ALSO. AGAIN THE HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF DIT [IT] VS. SCHLUMBERGER ASIA SERVICES LTD . [SUPRA], WHEREIN THE QUESTION WAS WHETHER THE AMOUNT OF CUSTOMS DUTY PAID WAS INCLUDIBLE IN THE TOTAL TURNOVER FOR COMPUTING PROF ITS U/S.44BB. THE HONBLE HIGH COURT HAS OBSERVED AT PLACITUM-8 AS UN DER: HAVING CONSIDERED THE SUBMISSIONS OF THE LEARNED C OUNSEL FOR THE PARTIES, WE ARE OF THE VIEW THAT REIMBURSEMENT TOWA RDS THE CUSTOMS 10 DUTY, PAID BY THE ASSESSEE, BEING STATUTORY IN NATU RE, CANNOT FORM PART OF AMOUNT FOR THE PURPOSES OF DEEMED PROFITS UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. THEREFORE, WE DO NO T FIND ANY SUFFICIENT REASON TO INTERFERE WITH THE IMPUGNED OR DERS, PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, WHICH HAS AFFIRMED T HE VIEW TAKEN BY THE COMMISSIONER OF INCOME TAX [APPEALS]. THE QUEST ION OF LAW STANDS ANSWERED ACCORDINGLY. THEREFORE, WE ARE OF THE VIEW, THAT SERVICE TAX WHI CH IS A STATUTORY LIABILITY, WOULD NOT INVOLVE ANY ELEMENT OF PROFITS AND A SERVICE PROVIDER IS COLLECTING THE SAME FROM ITS CUSTOMERS ON BEHALF OF THE GOVERNMENT AND, ACCORDINGLY, SAME CANNOT BE INCLUDED IN THE TO TAL RECEIPTS FOR DETERMINING THE PRESUMPTIVE INCOME. THEREFORE, WE S ET ASIDE THE ORDER OF THE DRP IN THIS REGARD AND DIRECT THE ASSESSING OFFICER NOT TO INCLUDE THE AMOUNT OF SERVICE TAX IN THE TOTAL RECEIPTS FOR DETERMINING THE INCOME U/S.44B. 14. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 0/4/2011. SD/- SD/- (R.V.EASWAR) (T.R.SOOD) PRESIDENT ACCOUNTANT MEMBER MUMBAI: 20/4/2011. P/-*