DCIT (International Taxation), Dehradun V. M/s. Triton Holding Ltd., Mumbai

ITA 911/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3404 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAN CHAUDHRY
• Assessee Lawyers: VI SHAL MISHRA
• Keywords: Presumptive income; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.898/DEL./2016 (ASSESSMENT YEAR : 2011-12) DCIT, CIRCLE 2, VS. M/S. TRANSOCEAN OFFSHORE INTER NATIONAL INTERNATIONAL TAXATION, VENTURES LIMITED, DEHRADUN. LAKE BOULEVARD ROAD, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI 400 076. (PAN : AABCT7316B) ITA NO.911/DEL./2016 (ASSESSMENT YEAR : 2011-12) DCIT, CIRCLE 2, VS. M/S. TRITON HOLDINGS LIMITED, INTERNATIONAL TAXATION, LAKE BOULEVARD ROAD, DEHRADUN. HIRANANDANI BUSINESS PARK, POWAI, MUMBAI 400 076. (PAN : AABCT5272D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT ARORA, CA AND SHRI VISHAL MISHRA, CA REVENUE BY : SHRI RAMAN CHAUDHRY, CIT DR DATE OF HEARING : 07.02.2018 DATE OF ORDER : 19.02.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS, THE SAME ARE BEING D ISPOSED OF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DI SCUSSION. ITA NO.898/DEL./2016 ITA NO.911/DEL./2016 2 2. THE APPELLANT, M/S. TRANSOCEAN OFFSHORE INTERNAT IONAL VENTURES LIMITED (HEREINAFTER REFERRED TO AS THE T AXPAYER) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE I MPUGNED ORDER DATED 29.12.2015, PASSED BY THE AO IN CONSONANCE WI TH THE ORDERS PASSED BY THE LD. DRP UNDER SECTION 143 (3) READ WI TH SECTION 144C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE AC T) QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA T HAT I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE DRP HAS ERRED IN HOLDING T HAT RECEIPTS ON ACCOUNT OF SERVICE TAX ARE NOT INCLUDIB LE IN GROSS REVENUE OF THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF PROFITS UNDER THE PROVISIONS OF SECT ION 44BB OF THE I.T ACT, 1961. II) WHETHER THE DRP HAS ERRED IN NOT APPRECIATING THE FACT THAT SECTION 44BB OF THE ACT IS A SELF-CON TAINED CODE PROVIDING FOR COMPUTATION OF PROFIT AT A FIXED PERCENTAGE OF GROSS RECEIPTS OF THE ASSESSEE AND AL L THE DEDUCTIONS AND EXCLUSIONS FROM THE GROSS RECEIPTS A RE DEEMED TO HAVE BEEN ALLOWED TO THE ASSESSEE. III) WHETHER THE DRP HAS ERRED IN NOT APPRECIATING THE FACT THAT ONCE THE RECEIPTS ARE OFFERED TO TAX U/S 44BB OF THE ACT WHICH PROVIDES FOR COMPUTATION OF PROFITS ON GROSS BASIS, THERE IS NO SCOPE FOR COMPU TING OR RE-COMPUTING THE PROFITS BY EXCLUDING ANY PART O F THE RECEIPTS FROM THE TOTAL TURNOVER AS THE SAME WOULD AMOUNT TO DEFEATING THE VERY PURPOSE OF PROVIDING F OR A PRESUMPTIVE SCHEME OF TAXATION U/S 44BB OF THE ACT AND OBVIATING THE NEED FOR MAINTAINING ACCOUNTS FOR INDIVIDUAL RECEIPTS, PAYMENTS ETC. IV) WHETHER THE DRP HAS ERRED IN IGNORING THE RATI O OF THE JUDGMENT IN THE CASE OF M/S CHOWRINGHEE SALE S BUREAU (P) LTD. (82 ITR 542, SC) WHEREIN THE HON'BL E ITA NO.898/DEL./2016 ITA NO.911/DEL./2016 3 APEX COURT HAS HELD THAT THE SALES TAX COLLECTED BY AN ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS FOR MS PART OF ITS BUSINESS RECEIPTS. OWING TO THE INHEREN T SIMILARITY IN THE NATURE OF SALES TAX AND SERVICE T AX, THE RATIO OF THE JUDGMENT IN THE SAID CASE IS DIRECTLY APPLICABLE TO THE INSTANT CASE. 3. THE APPELLANT, M/S. TRITON HOLDINGS LIMITED (HER EINAFTER REFERRED TO AS THE TAXPAYER) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 28.12.2015, PASS ED BY THE AO IN CONSONANCE WITH THE ORDERS PASSED BY THE LD. DRP UNDER SECTION 143 (3) READ WITH SECTION 144C OF THE INCOME-TAX AC T, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA THAT I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE DRP HAS ERRED IN HOLDING T HAT RECEIPTS ON ACCOUNT OF SERVICE TAX ARE NOT INCLUDIB LE IN GROSS REVENUE OF THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF PROFITS UNDER THE PROVISIONS OF SECT ION 44BB OF THE I.T ACT, 1961. II) WHETHER THE DRP HAS ERRED IN NOT APPRECIATING THE FACT THAT SECTION 44BB OF THE ACT IS A SELF-CON TAINED CODE PROVIDING FOR COMPUTATION OF PROFIT AT A FIXED PERCENTAGE OF GROSS RECEIPTS OF THE ASSESSEE AND AL L THE DEDUCTIONS AND EXCLUSIONS FROM THE GROSS RECEIPTS A RE DEEMED TO HAVE BEEN ALLOWED TO THE ASSESSEE. III) WHETHER THE DRP HAS ERRED IN NOT APPRECIATING THE FACT THAT ONCE THE RECEIPTS ARE OFFERED TO TAX U/S 44BB OF THE ACT WHICH PROVIDES FOR COMPUTATION OF PROFITS ON GROSS BASIS, THERE IS NO SCOPE FOR COMPU TING OR RE-COMPUTING THE PROFITS BY EXCLUDING ANY PART O F THE RECEIPTS FROM THE TOTAL TURNOVER AS THE SAME WOULD AMOUNT TO DEFEATING THE VERY PURPOSE OF PROVIDING F OR A ITA NO.898/DEL./2016 ITA NO.911/DEL./2016 4 PRESUMPTIVE SCHEME OF TAXATION U/S 44BB OF THE ACT AND OBVIATING THE NEED FOR MAINTAINING ACCOUNTS FOR INDIVIDUAL RECEIPTS, PAYMENTS ETC. IV) WHETHER THE DRP HAS ERRED IN IGNORING THE RATI O OF THE JUDGMENT IN THE CASE OF M/S CHOWRINGHEE SALE S BUREAU (P) LTD. (82 ITR 542, SC) WHEREIN THE HON'BL E APEX COURT HAS HELD THAT THE SALES TAX COLLECTED BY AN ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS FOR MS PART OF ITS BUSINESS RECEIPTS. OWING TO THE INHEREN T SIMILARITY IN THE NATURE OF SALES TAX AND SERVICE T AX, THE RATIO OF THE JUDGMENT IN THE SAID CASE IS DIRECTLY APPLICABLE TO THE INSTANT CASE. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : THE REVENUE HAS CHALLENGED THE FINDINGS RETURNED BY THE LD. DRP; THAT SERVICE TAX ELEMENT C ANNOT BE INCLUDED WITH GROSS RECEIPTS FOR THE PURPOSE OF COM PUTING TAXPAYER PROFIT U/S 44BB OF THE INCOME-TAX ACT, 1961 (FOR SH ORT THE ACT), AND CONSEQUENTLY THE AO WAS ORDERED TO EXCLUDE THE ELEMENT OF SERVICE TAX FROM GROSS CONTRACTUAL RECEIPTS IN RESP ECT OF ALL THE CONTRACTORS I.E. OIL & NATURAL GAS CORPORATION (ONG C), RELIANCE INDUSTRIES LIMITED (RIL) AND TRANSOCEAN DRILLING SE RVICES (INDIA) LTD. (TDSIPL). 5. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFOR E THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ITA NO.898/DEL./2016 ITA NO.911/DEL./2016 5 ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE REVENUE AUTHORITIES BELOW AND THE GRO UNDS RAISED BY THE REVENUE, THE SHORT QUESTION ARISES FOR DETERMIN ATION IN THIS CASE IS :- AS TO WHETHER SERVICE TAX ELEMENT IS INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING TAXAB LE INCOME OF THE ASSESSEE U/S 44BB OF THE ACT? 8. THE LD. AR FOR THE ASSESSEE CONTENDED THAT THE I SSUE IN CONTROVERSY HAS ALREADY BEEN COVERED IN ASSESSEES OWN CASE IN ITA NO.698/DEL/2012 FOR AY 2008-09 ORDER DATED 31.0 8.2012 . THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE HONBLE DELHI HIGH COURT IN CASE CITED AS DIRECTOR OF INCOME-TAX VS. MITCHELL DRILLING INTERNATIONAL PVT. LTD. (2016) 380 ITR 130 (DEL.) IN FAVOUR OF THE ASSESSEE. FOR FACILITY OF REFERENCE, OPERATIVE PART OF THE JUDGMENT IS REPRODUCED AS UNDER :- NON RESIDENT-SPECIAL PROVISION FOR COMPUTING PROFI TS AND GAINS IN CONNECTION WITH THE BUSINESS OF EXPLORATION, ETC ., OF MINERAL OILS-COMPUTATION OF THE 'PRESUMPTIVE' INCOME-MERE C OLLECTION OF SERVICE TAX NOT PART OF THE GROSS RECEIPTS-ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF PROVIDING EQUIPMENT ON H IRING AND MANPOWER ETC FOR EXPLORATION AND PRODUCTION OF MINE RAL OIL AND NATURAL GAS HAD FILED ITS INCOME FOR THE AY DECLARI NG AN INCOME OF RS.49,31,260 AS PER PROVISIONS OF S 44BB(3)-IN C OMPUTING THE GROSS RECEIPTS FOR THE PURPOSES OF DETERMINING THE TAXABLE INCOME, THE ASSESSEE HAD NOT INCLUDED A SUM OF RS.2 ,09,24,553 BEING THE SERVICE TAX RECEIVED FROM ITS CUSTOMERS-A O INCLUDED THE CONCERNED SUM COLLECTED BY THE ASSESSEE AS SERVICE TAX IN THE ITA NO.898/DEL./2016 ITA NO.911/DEL./2016 6 GROSS RECEIPTS FOR COMPUTING THE TAXABLE INCOME U/S 44BB-CIT ALLOWED ASSESSEE'S APPEAL-ITAT DISMISSED REVENUE'S APPEAL-ISSUE WAS WHETHER THE SERVICE TAX COLLECTED BY THE ASSESS EE AND PASSED ON TO THE GOVERNMENT FROM THE PERSON TO WHOM IT HAD PROVIDED THE SERVICES CAN LEGITIMATELY BE CONSIDERED TO FORM PART OF THE GROSS RECEIPTS FOR THE PURPOSES OF COMPUTATION OF T HE ASSESSEE'S 'PRESUMPTIVE INCOME' U/S 44BB-HELD, POSITION WAS MA DE EXPLICIT BY THE CBDT ITSELF IN TWO OF ITS CIRCULARS-PURPOSE OF S 44BB WAS TO TAX WHAT CAN BE LEGITIMATELY CONSIDERED AS INCOM E- OF THE ASSESSEE EARNED FROM ITS BUSINESS AND PROFESSION-ON LY SUCH AMOUNTS WHICH WERE PAID OR PAYABLE FOR THE SERVICES PROVIDED BY THE ASSESSEE CAN FORM PART OF THE GROSS RECEIPTS FO R THE PURPOSES OF COMPUTATION OF THE GROSS INCOME U/S 44BB(1) READ WITH S 44BB(2)-IN CIRCULAR NO 4/2008 DATED 28TH APRIL 2008 IT WAS CLARIFIED THAT 'SERVICE TAX PAID BY THE TENANT DOES N'T PARTAKE THE NATURE OF 'INCOME' OF THE LANDLORD AND THE LANDLORD ONLY ACTS AS A COLLECTING AGENCY FOR GOVERNMENT FOR COLLECTION O F SERVICE TAX- THAT TAX DEDUCTION AT SOURCE U/S 194-1 OF INCOME TA X ACT WOULD BE REQUIRED TO BE MADE ON THE AMOUNT OF RENT PAID/P AYABLE WITHOUT INCLUDING THE SERVICE TAX'-FURTHER IN CIRCU LAR NO. 1/2014 DATED 13TH JANUARY 2014, IT HAD BEEN CLARIFIED THAT SERVICE TAX WAS NOT TO BE INCLUDED IN THE FEES FOR PROFESSIONAL SERVICES OR TECHNICAL SERVICES AND NO TDS WAS REQUIRED TO BE MA DE ON THE SERVICE TAX COMPONENT U/S 194J-IN THE PRESENT CASE THE SERVICE TAX WAS NOT AN AMOUNT PAID OR PAYABLE, OR RECEIVED OR DEEMED TO BE RECEIVED BY THE ASSESSEE FOR THE SERVICES RENDER ED BY IT AND ASSESSEE WAS ONLY COLLECTING THE SERVICE TAX FOR PA SSING IT ON TO THE GOVERNMENT- SERVICE TAX COLLECTED BY THE ASSESS EE DOES NOT HAVE ANY ELEMENT OF INCOME AND THEREFORE CANNOT FOR M PART OF THE GROSS RECEIPTS FOR THE PURPOSES OF COMPUTING TH E 'PRESUMPTIVE INCOME' OF THE ASSESSEE U/S 44 BB-QUESTION WAS THER EFORE, ANSWERED IN THE NEGATIVE I.E. FAVOUR OF THE ASSESSE E AND AGAINST THE REVENUE-REVENUES APPEAL'S DISMISSED 9. IN ASSESSEES OWN CASE FOR AY 2008-09, THE IDENT ICAL ISSUE HAS BEEN DECIDED IN ITS FAVOUR. SO, FOLLOWING THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN DIRECTOR OF INCOME-TAX VS. MITCHELL DRILLING INTERNATIONAL PVT. LTD. (SUPRA) AND DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE ARE OF THE CONSIDERED VIEW THAT THE SERVIC E TAX COLLECTED BY THE ASSESSEE SHALL NOT FORM PART OF THE GROSS RECEI PTS FOR THE PURPOSE ITA NO.898/DEL./2016 ITA NO.911/DEL./2016 7 OF DETERMINING INCOME FOR TAXABLE PURPOSE U/S 44BB OF THE ACT. CONSEQUENTLY, QUESTION FRAMED IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE, BOTH THE APPEALS BEARING ITA NOS.898/DEL/2016 & 911/DEL/2016 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.