2013 (11) TMI 421 - AT - Income Tax

Tribunal grants appellant's challenges for 2007-08 assessment, emphasizes detailed legal arguments & fair opportunity.

M/s. Marubeni Corporation, C/o Marubeni India Pvt. Ltd. Versus Addl Director of Income Tax (International Taxation)

The tribunal allowed the appellant's challenges for the assessment year 2007-08, directing the Assessing Officer to reconsider various issues including ... Service tax to be included as part of the trading receipts – Held that:- Reliance has been placed upon the judgment in the case of ADIT v Haldor Topsoe A/c 2013 (11) TMI 419 - ITAT MUMBAI], wherein it was held that reimbursement of service tax could not form part of taxable income of the assessee. Fee for technical services is for the services rendered by the assessee and service tax would not form part of fee for technical services. That service tax is not expenditure incurred by the assessee and it is a statutory levy on the person who avail services from the assessee – Service tax receipt cannot be treated as a trading receipt. Hence, reimbursement of service tax cannot form part of total income of the assessee – Relying upon the above judgment, the issue has been decided in favor of Assessee. Issues involved:1. Assessment year 2007-08: Disallowance of set off of assessed brought forward loss and Depreciation, recomputation of income of preceding years, tax treatment of received amounts, tax rate on technical service, treatment of service tax as receipts, tax rate on bank interest, and attribution of bank interest to permanent establishment.2. Assessment year 2008-09: Similar issues as in 2007-08.Analysis of the judgment for each issue:1. For the assessment year 2007-08, the appellant challenged various aspects of the assessment, including disallowance of set off of brought forward loss and Depreciation, recomputation of income of preceding years, tax treatment of received amounts, tax rate on technical service, treatment of service tax as receipts, tax rate on bank interest, and attribution of bank interest to permanent establishment. The tribunal set aside the order of the CIT(A) and directed the Assessing Officer (AO) to decide the issues afresh, providing the appellant with a reasonable opportunity to present its case. Grounds 1 and 2 were allowed and dismissed, respectively, for statistical purposes. The tribunal also addressed issues related to TDS adjustment, rate of tax applicability, inclusion of service tax as part of trading receipts, and taxability of interest on FDRs, providing detailed reasoning for each decision.2. In the assessment year 2008-09, similar issues were raised by the appellant as in 2007-08. The tribunal followed the same order as in the assessment year 2007-08 for grounds related to disallowance of set off, treatment of service tax, and taxability of interest on FDRs. The appeals for both assessment years were partly allowed, with the tribunal pronouncing the order on 28th August 2013. The judgment highlighted the importance of providing detailed arguments supported by legal provisions and precedents to support the appellant's case. The tribunal emphasized the need for the AO to reexamine the issues in accordance with the law and relevant judicial decisions, ensuring a fair opportunity for the appellant to present their case effectively.