AI Drafter 
TaxTMI 
TaxTMI 
2022 (9) TMI 354
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....many as seven grounds have been taken relates to, whether service tax amounting to Rs.89,12,89,825/- forms part of the gross receipts of the assessee for the purpose of computing its total income on presumptive basis in terms of section 44BBA of the Act. 4. Brief facts of the case as culled out from records are that assessee is a non-resident company engaged in the business of airlines service for passengers and cargo. Assessee filed its original return of income on 28.09.2015 reporting total income of Rs.93,83,62,810/- computed on presumptive basis u/s. 44BBA of the Act. In the course of assessment proceedings, a revised computation was furnished showing the gross receipts at Rs.2042,43,00,466/- as against originally reported for an amount of Rs.1876,72,56,148/-. In the course of assessment proceedings, Ld. AO sought explanation in respect of gross receipts as disclosed in the revised computation and the gross receipts disclosed in the service tax return for which necessary details and explanation were furnished by the assessee. On this aspect, in para 7 of the assessment order, Ld. AO noted that "after considering the reply of the assessee it is observed that assessee has been....
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.... iii) DIT Vs. M/s. Schlumberger Asia Service ltd. (2009) 317 ITR 156 (Uttarkhand HC); iv) Sundowner Offshore International (Bermuda) Ltd. Vs. ADIT (2015) 70 SOT 656 (Delhi Trib.); v) Orient Overseas Container Line Ltd. Vs. ADIT (2013) 60 SOT 196 (Mum. Trib.); vi) ACIT Vs. Transocean Offshore Deep Water Drilling Inc. (2009) 176 Taxman 122 (Delhi)(MAG); vii) Hanjin Shipping Company Ltd. Vs. DDIT (ITA No. 5277/Mum/2014 dated 13.05.2016)(Mum. Trib.); viii) Veolia Eau-Compagnie Generale Des Eaux Vs. Addl. DIT (2011-TII-105-ITATMAD- INTL), (Chennai Trib.) 6. It was also contended by the assessee that it is liable to pay tax on the income embedded in only those receipts which are at its disposal. In the present case, it is submitted that the service tax collected by it is not at the disposal of the assessee but is a liability which is to be discharged by way of depositing the same with the exchequer of the Government and, therefore, the service tax collection cannot be included in the gross receipts for computing the deemed taxable income u/s. 44BBA of the Act. 6.1. By considering the submissions made by the assessee and placing relian....
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.... have any component of profit embedded in it, it has to be excluded from the turnovers while invoking presumptive tax provisions. In the emergent situation, I find the action of the Ld. AO to be unsustainable, and direct that the same be deleted, and the computation of the appellant be restored. This ground of appeal therefore stands allowed." 7. Aggrieved, revenue is in appeal before the Tribunal. Before us, Ld. CIT, DR referred to the statement of facts placed on record. He contended that section 44BBA of the Act opens with a non-obstante clause and thereby overrides the general computation mechanism denying the deduction for expenses otherwise available to the assessee. Thus, in the section, receipts means receipts before allowing any expenditure incidental to earning such income. Ld. CIT, DR referred to the findings given by the Ld. AO that section 44BBA(2) refers to the words "amounts paid and payable on account of carriage of passenger etc." and "amount received and deemed to be received on account of carriage of passenger etc." He pointed out that the word 'amount' is absolute and defies any qualification. He, thus stated that there is no scope for doing any arithmetic ca....
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....e have heard the rival submissions and perused the material available on record. Admittedly, it is a fact on record that assessee has collected and deposited service tax component of Rs.89,12,89,825/- as a service provider. The moot point before us for adjudication is whether this service tax component is includible in the gross receipts for computing the deemed taxable income u/s. 44BBA of the Act. In the present case before us, notably, assessee is a non-resident engaged in the business of operation of airlines and is subjected to income tax under the Act on presumptive basis in terms of section 44BBA of the Act. 8.1 Provisions of section 44BBA are reproduced as under: "Section-44BBA: Computing profits and gains of business of operation of aircraft in the case of non-residents. 44BBA. (1) Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, being a non-resident, engaged in the business of operation of aircraft, a sum equal to five per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains ....
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....of Delhi in the case of DCIT Vs. Mitchell Drilling International Pvt. Ltd. (supra) on which Ld. CIT(A) has based his finding and decision, we note that the substantial question framed on the issue was as under: "Whether the amount of service tax collected by the assessee from its various clients should have been included in gross receipt while computing its income under the provisions of section 44BB of the Act?" 9.3 While answering the above substantial question of law, Hon'ble High Court considered various decisions including the decision of Hon'ble Supreme Court in the case of Chowringhee Sales Bureau Pvt. Ltd. Vs. CIT (1973) 87 ITR 592 (SC), CIT Vs. Lakshmi Machine Works (2007) 290 ITR 667 (SC), DIT Vs. Schlumberger Asia Services Ltd. (2009) 317 ITR 156 (Uttarakhand) and Sedco Forex International Inc. Vs. CIT (2008) 299 ITR 238 (Uttarakhand). The Hon'ble High Court also referred to the Circular issued by CBDT vide Circular No. 4/2008 dated 28.04.2008 and Circular No. 1/2014 dated 13.01.2014 wherein CBDT clarified that service tax paid by the tenant does not partake the nature of 'income' of the landlord. The landlords only acts as a collecting agency for the Governm....