AI Drafter 
TaxTMI 
TaxTMI 
2016 (2) TMI 301
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....nt on merit. 3. A perusal of the record shows that the assessee company incorporated in France and is in the business of providing consulting, advisory and supervision services in the field of road infrastructure projects. During the year, the assessee as per record was working on 29 projects all over India. In the year under consideration the assessee returned an income of Rs. 5,69,72,993/- which was subsequently revised by filing a revised return declaring a total income of Rs. 7,95,38,692/-. The case was selected for scrutiny after issuance of notice 143(2). In the scrutiny assessment the assessee was required to furnish the details in respect of the service tax collected in relation to projects where the income was being offered to tax on gross basis u/s 44D r.w.s. 115A of the income Tax Act, 1961. The assessee was show caused to explain why it should not be added to the gross receipts offered for taxation. The assessee in reply submitted that the amount of service tax does not have element of income. The following details were furnished:- Name of the Project Amount of Service Tax * JPKG Rs. 3,61,943/- * NH 2 Rs.17,18,784/- * KSHIP Rs. 2,14,778/- T....
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....erer of the service for the convenience of its collection. Therefore, under statutory requirement, the appellant collected service tax from its clients and deposited the same to the respective authorities. There is no element of income comprised in the service tax collected and, therefore. it cannot be aggregated with FTS for taxation on gross basis. In no case, service tax can be the amount owned by the appellant even though it is the separately mentioned in the invoices raised by the appellant. The amount is payable to the government under statute and the appellant has no lien on this amount. The appellant has relied upon following rulings: (i) Islamic Republic of Iran Shipping Lines vs. DCIT (ii) ACIT vs. Louis Berger International Inc. 40 SOT 370 (Hyd.) 4.3. I have duly considered the submissions made by the appellant. It has been noted that on the similar issue, then CIT(A) has adjudicated that service tax is not includible in gross receipt of FTS and hence not subject to tax on gross basis. The relief granted by CIT(A) has been confirmed by Hon'ble Delhi ITAT vide order dated 18.12.2012. Since facts of the case in present appeal are identical to....
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....s: (i) Islamic Republic of Iran Shipping Lines vs. DCIT (ii) ACIT vs. Louis Berger International Inc. 40 SOT 370 (Hyd.) 8. On going through the order dated 18.12.2012, we find that the similarity facts and position of law is established as in the preceding assessment year also as the AO herein also has relied upon the decision of the Delhi Bench of the ITAT in the case of Technip Offshore Contracting BV [2009] 29 SOT 33 (Del.) as would be evident from the following extract in para 2.2 of the order of the Coordinate Bench. For ready-reference, we extracted herein the facts as under:- 2. "Facts of the case indicate that the assessee is a company having a permanent establishment in India. During the year under appeal, the assessee was involved in providing technical consultancy services in the infrastructure sector. The clients of the assessee were mainly government organizations, such as National Highway Authority of India and State Governments etc. The income derived by the assessee is taxable u/s 44D (projects entered into or before March 31, 2003) and u/s 44D (in respect of contracts entered into after 31.3.2003) read with section 115A of the Act, i.e....
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...., relying upon these decisions, it was pleaded for confirmation of the impugned order. 5. Ld.DR could not controvert this factual aspect and rather submitted that issue is squarely covered in favour of the assessee by various decisions of the tribunal and appeal may be disposed of accordingly." 8.2. A careful reading of the order of the Co-ordinate Bench further shows that the view taken by the CIT(A) in 2007-08 assessment year was upheld relying upon the view taken in the case of Mitchell Drilling international Pte. Ltd. (cited supra). As would be available from the following extract from the said order:- 6. "We have heard both the sides, considered the material on record and find that issue is squarely covered in favour of the assessee by various decisions of the benches including 'E' bench, ITAT, Delhi, in the case of DDIT vs. M/s Mitchell Drilling International Pty. Ltd. (supra) in which similar issue has been dealt with and concluded from para.5 onwards, which is reproduced as under: "5. Ld.CIT(A) while considering and accepting the plea of the assessee has concluded to allow the appeal of the assessee giving elaborately the basis and reasoning as....
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....hat reimbursement of custom duty paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement. Following the view in this decision, Mumbai Bench in their decision dated 20.4.2011 in I.T.A. no.8845/Mum/2010 in the case of Islamic Republic of Iran Shipping Lines Vs. DCIT,2011-TOII-77-MUMINTL, held that service tax being a statutory liability, would not involve any element of profit and a service provider having collected the amount on behalf of the Government, accordingly, the same could not be included in the total receipts for determining the presumptive income, the ld. AR added. On the other hand, the ld. DR supported the findings of the AO. 5. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions relied upon by the ld. AR. We find that Hon'ble jurisdictional High Court in their aforesaid decision Halliburton Offshore Services Inc. (supra) while adjudicating an identical issue relating to reimbursement of freight & transport charges in respect of equipment, concluded as under:- "5. Sec. 44BB provides that the deemed profits and ....
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....aggregate amount specified in sub-s. (2). It is not in dispute that the amount has been received by the assessee company. Therefore, the AO added the said amount which was received by the non-resident company rendering services as per provisions of s. 44BB to the ONGC and imposed the income-tax thereon. 5.1. In the light of view taken by the Hon'ble jurisdictional High Court in their aforesaid decision, especially when the ld. AR accepted the position that the issue is squarely covered by the aforesaid decision while no other contrary decision was brought to our notice nor the ld. AR placed any material before us, controverting the aforesaid findings of the DRP and the AO, we have no hesitation in upholding the findings of the AO in the light of directions of the DRP in para 3.2 of their order dated 2nd September, 2011 in respect of reimbursement of amount on account of fuel recharge. In view thereof, ground no. 2 in the appeal is dismissed. 6. As regards reimbursement of amount in respect of service tax, as pointed out by the ld. AR, the ITAT Delhi Bench in their decision in Technip Offshore Contracting BV(supra) concluded that service tax collected by the assess....