Service Tax Excluded from Income for Presumptive Profit Computation, Bombay HC Affirms ITAT's Decision.

The Bombay HC dismissed the Revenue's appeal, affirming that service tax should not be included in the Assessee's income for computing presumptive profit under Section 44BB of the Income Tax Act, 1962. The court upheld the ITAT's decision, aligning with previous rulings, that service tax is collected on behalf of the government and does not constitute income.

---

---

Issues: Interpretation of Section 44BB of the Income Tax Act regarding inclusion of service tax in the Assessee's income for computing presumptive profit.

In this judgment, the High Court of Bombay heard an appeal filed by the Revenue challenging the decision of the Income Tax Appellate Tribunal. The primary issue was whether service tax should be included in the income of the Assessee for computing presumptive profit under Section 44BB of the Income Tax Act, 1962. The Assessee, engaged in dredging for oil and gas extraction, contended that service tax should not be considered as part of its income. The Tribunal relied on previous court decisions and held that service tax should not form part of the Assessee's income. The Assessee cited a Delhi High Court decision supporting this view, which was based on Supreme Court precedents and upheld that service tax collected by the Assessee does not constitute income and should not be included in gross receipts for computing presumptive income under Section 44BB. The High Court concurred with this reasoning and dismissed the Income Tax Appeal, upholding the position that service tax should not be included in the Assessee's income for the purpose of Section 44BB.

This judgment clarifies the treatment of service tax in the context of computing presumptive profit under Section 44BB of the Income Tax Act. It emphasizes that service tax collected by the Assessee does not constitute income and should not be included in the gross receipts for determining presumptive income. The court's decision aligns with previous rulings and highlights that the Assessee merely collects service tax on behalf of the government, and it does not form part of the income earned by the Assessee. The judgment provides a clear interpretation of the law in this regard, settling the issue raised by the Revenue regarding the inclusion of service tax in the Assessee's income for tax assessment purposes under Section 44BB of the Act.

---