TaxTMI 
TaxTMI 
2024 (9) TMI 13
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....der passed by the Ld. Assessing Officer u/s 143(3) R.W.S. 144C(13), being passed not following the binding directions of the Hon'ble Dispute Resolution Panel, is in clear violation of the binding provisions of Section 144C(13) and is thus, illegal, and non-est. GROUND NO. 2 - Service-tax/GST receipts held chargeable to tax Without prejudice to the claim of the Appellant in ground no. 1, the Ld. Assessing Officer has erred in including service-tax/GST receipts aggregating to INR 29,90,86,874 in the receipts taxable under section 44BB(2) of the Act as opposed to Appellant's claim for that the same is not includible in the revenues taxable u/s 44BB(2) of the Act. Without prejudice to the claim of the Appellant in ground no. 1, the Ld. Assessing Officer has erred in holding (as an alternate argument) to include input tax credit of IN 2,89,99,837 utilized for payment of GST to be includible in the receipts taxable under section 44BB(2) of the Act. In doing so, the Ld. Assessing Officer has erred in not following the decision of the Full Bench of the Hon'ble Uttarakhand High Court in the case of Director of Income-tax vs Schlumberger Asia Services L....
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....taxation on account of ongoing contract entered with ONGC Ltd. The assessee, in its return of income, had claimed that the taxable revenues were to be computed in terms of section 44BB of the Income Tax Act, 1961.During the course of assessment proceedings, the Assessing Officer found that an amount of Rs.****** received on account of service tax had not been added to the gross revenue chargeable to tax u/s 44BB of the Act. It was the assessee's contention that statutory charges cannot form part of the amount for the purpose of deemed profit u/s 44BB of the Act. As per the assessee, service tax was in the nature of reimbursement and hence not includible in gross receipts for the purpose of taxation. The assessee contended that it had acted only as a collection agency for the Government for collection of service tax and as such, the collections on account of service tax could not be considered as income generating receipts in the hands of the assessee. It was further contended before the Assessing Officer that any receipt unconnected with the business of exploration, exploitation of oil etc. could not form part of the taxable receipts u/s 44BB of the Act. However, the Assessing Offi....
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....he amount mentioned in sub-section (2) of section 44BB clearly shows that the amount paid to the assessee on account of provision of services and facilities in connection with the extraction or production of mineral oil, whether paid in or outside India, are to be included. It was submitted by the Ld. DR that the service tax receipt squarely falls within the principle enunciated in Chowringhee Sales Bureau (P.) Ltd. v. CIT [1973] 87 ITR 542 (SC) wherein it was laid down that sales tax charged forms part of the trading receipts and is as such liable to be assessed to income tax. The Ld. DR submitted that since then the courts have consistently held similarly for all kinds of taxes or government receipts (that were received by the assessee during the relevant PY) that these are taxable receipts and he relied on the following judicial pronouncements: CITATION TAX / RECEIPT [1997] 228 ITR 112 (All) Jagdish Prasad Nigam Excise Duty [2006] 154 TAXMAN 266 (ALL) Mohan Shramic Udyog Ltd Central Sales Tax and Local Sales Tax 28 TAXMANN.COM 94 (CAL) Poddar Projects Surcharge is part of rent 35 taxmann.com 565 (Allahabad) UP Hotels Luxury Tax [1982]....
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.... a non-resident, engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten 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 of business or profession" : Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D or section 44DA or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. (2) The amounts referred to in sub-section (1) shall be the following, namely:- (a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India; and (b) the amount recei....
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....essee did not deposit the amount collected by it as sales tax in the State exchequer since it took the stand that the statutory provision creating that liability upon it was not valid. In the circumstances, the Supreme Court held that the sales tax collected, and not deposited with the treasury, would form part of the Assessee's trading receipt. 13. The decision in George Oakes (P) Ltd. (supra) was concerned with the constitutional validity of the Madras General Sales (Definition of Turnover and Validation of Assessments) Act, 1954 on the ground that the word turnover was defined to include sales tax collected by the dealer on interstate sales. Upholding the validity of the said statute the Supreme Court held that "the expression 'turnover' means the aggregate amount for which goods are bought or sold, whether for cash or for deferred payment or other valuable consideration, and when a sale attracts purchase tax and the tax is passed on to the consumer, what the buyer has to pay for the goods includes the tax as well and the aggregate amount so paid would fall within the definition of turnover." Since the tax collected by the selling dealer from the purchaser was par....
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....e service tax collected by the Assessee does not have any element of income and therefore cannot form part of the gross receipts for the purposes of computing the 'presumptive income' of the Assessee under Section 44BB of the Act. 16. The Court concurs with the decision of the High Court of Uttarakhand in DIT v. Schlumberger Asia Services Ltd (supra) which held that the reimbursement received by the Assessee of the customs duty paid on equipment imported by it for rendering services would not form part of the gross receipts for the purposes of Section 44BB of the Act. 17. The Court accordingly holds that for the purposes of computing the 'presumptive income' of the assessee for the purposes of Section 44BB of the Act, the service tax collected by the Assessee on the amount paid it for rendering services is 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 is only collecting the service tax for passing it on to the government. 18. The Court furthe....