Income Tax Appellate Tribunal - Delhi
Dcit, New Delhi vs M/S. Mitchell Drilling International ... on 26 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "E", NEW DELHI
BEFORE SH.BHAVNESH SAINI, JUDICIAL MEMBER
AND
SH.O.P.KANT, ACCOUNTANT MEMBER
ITA No.1737/Del/2015
[Assessment Year: 2010-11]
DCIT, vs Mitchell Drilling
Circle-Gurgaon, International Pty. Ltd.,
International Taxation, C/o-M/s. Nangia & Co.,
Room No.411, Civic CAs, Suit 4A, Plaza M-6,
Centre, New Delhi. Jasola, New Delhi
PAN-AADCM9904H
(Applicant) (Respondent)
Applicant by Sh.Surender Pal, Sr.DR (Int. Taxation)
Respondent by Sh.Piyush Kaushik, Adv. &
Sh. Amit Arora, CA
Date of Hearing 25.04.2018
Date of Pronouncement 26.04.2018
ORDER
PER BHAVNESH SAINI, JUDICIAL MEMBER
This appeal by the Revenue has been directed against the order of Ld.CIT(A)-43, New Delhi dated 16.01.2015 for AY 2010-11, challenging the order of Ld.CIT(A) in holding 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 presumption income ignoring thereby provisions of section 44BB of the Income Tax Act, 1961 (in short "Act").
2. Briefly, the facts of the case are that the assessee is a company incorporated in Australia and is engaged in business of providing equipment on hiring and manpower etc. for exploration and production of mineral oil and natural gas. During the year under appeal, the assessee has earned gross ITA No.1737/Del/2015 receipts of Rs.22.39 crores and has offered it for taxation u/s 44BB of the Act. Accordingly, the assessee has filed the return of income declaring therein taxable income of Rs.2.26 crores including the income from other sources at Rs.2,31,845/-. The AO accepted the applicability of section 44BB of the Act. The only issue involved was that the assessee has not included service tax amounting to Rs.2,40,79,785/- in the gross receipts for the purposes of computation of income u/s 44BB of the Act. The AO has brought this amount of service tax within the ambit of section 44BB of the Act and assessed the income at Rs.2.50 crores.
3. The assessee challenged the addition before Ld.CIT(A) and it was submitted that the service tax collected by the assessee for and on behalf of the Central Government by itself cannot be said to have been received in return of providing any service or facilities in terms of section 44BB of the Act. It was submitted that similar issue was involved in AYs 2008-09 & 2009-10 and Ld.CIT(A) has decided the issue in favour of the assessee which is confirmed by the Tribunal. Ld. CIT(A) accepted the explanation of the assessee because same issue was decided by the ITAT in faovur of the assessee in earlier years. The appeal of the assessee was allowed.
4. Ld. Sr. DR relied upon the order of the AO and also relied upon the judgement of the Hon'ble Supreme Court in the case of M/s. Chowringhee Sales bureau (P)...vs CIT, West Bengal 1973 AIR 376. On the other hand, Ld. Counsel for the assessee reiterated the submissions made before Ld. CIT(A) and further submitted that order of the Tribunal in earlier years i.e. AYs 2008- 09 & 2009-10 have been confirmed by the Hon'ble Delhi High Court in the case Page | 2 ITA No.1737/Del/2015 of the same assessee in DIT vs Mitchell Drilling International Pvt. Ltd. [2016] 380 ITR 130 (Del.) in which it was held as under:-
"Held, dismissing the appeals, (i) 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 section 44BB(2) read with section 44BB(1). The service tax is not an amount paid or payable, or received or deemed to be received by the assessee for the services rendered by it. The assessee only collected the service tax for passing it on to the Government.
(ii) That Circular No.4 of 2008, dated April 28, 2008, clarified that service tax paid by the tenant does not partake of the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Circular No.1 of 2014, dated January 13, 2014, also clarified that service tax is not to be included in the fees for professional services or technical services."
5. He has further submitted in the same judgement, Hon'ble Delhi High Court also considered the judgement of the Hon'ble Supreme Court in the case of M/s. Chowringhee Sales bureau (P)...vs CIT, West Bengal (supra) relied upon by the Ld. Sr. DR.
6. After considering rival submissions, we do not find any merit in the departmental appeal. The ITAT in the case of same assessee for AY 2008-09 held that "the service tax paid by the assessee could not form part of the amount for the purpose of deemed profit u/s 44BB of the Act unlike the other amounts received................" The judgement of the Tribunal have been confirmed by the Hon'ble Delhi High Court in the case of same assessee (supra). The issue Page | 3 ITA No.1737/Del/2015 is, therefore, covered in favour of the assessee by the judgement of the Hon'ble Delhi High Court.
7. In the result, the appeal of the Revenue stands dismissed.
Order pronounced in the open court.
Sd/- Sd/-
(O.P.KANT) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
*Amit Kumar*
Date:-26.04.2018
Copy forwarded to:
1. Applicant
2. Respondent
3. CIT
4. CIT(Appeals) concerned
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
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