TaxTMI 
TaxTMI 
2025 (8) TMI 434
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....eas Container Line Limited (hereinafter referred to as the 'Appellant') craves leave to prefer appeal against the order dated 30 January 2025 passed by the Deputy Commissioner of Income tax (International taxation) - Circle 3(2)(2), Mumbai (hereinafter referred to as the 'Ld. AO') under Section 143(3) read with Section 144C(13) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') pursuant to the directions dated 17 December 2024 of the Dispute Resolution Panel ('Ld. DRP') on the following grounds, each of which are independent of, and without prejudice to one another: 1. Ground 1: Assessment proceeding is non-jurisdictional 1.1. On the facts and circumstances of the case and in law, notice issued under section 143(2) of the Act being issued by Assistant Commissioner of Income-tax / Deputy Commissioner of Income-tax (International Taxation), Circle 1(1)(1), Delhi instead of Jurisdictional Assessing Officer [i.e. Deputy Commissioner of Income-tax (International Taxation)-Circle 3(2)(2), Mumbai] is devoid of jurisdiction. 2. Ground 2: Assessment proceeding is time-barred 2.1. On the facts and circumstanc....
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....015-16. 6. Ground 6: Short grant of credit of advance tax of Rs. 3,47,553 6.1. On the facts and circumstances of the case and in law, Ld. AO erred in restricting the credit of advance tax to Rs. 71,01,87,811 as against Rs. 71,05,35,364 claimed by the Appellant in the return of income, thereby short grant of advance tax credit by Rs. 3,47,553. 7. Ground 7: Erroneous levy of interest 7.1. On the facts and circumstances of the case, Ld. AO has erred in levying total interest of Rs. 20,65,056 without providing any basis of such levy. 8. Ground 8: Initiation of penalty proceedings under section 270A 8.1. On the facts and in the circumstances of the case and in law, Ld. AO has erred in initiating penalty proceedings under section 270A of the Act without considering the fact that the Appellant has not underreported its income for the relevant AY. The above grounds of objections are distinct and separate and without prejudice to each other." 3. The relevant facts in brief are that the Assessee, a foreign company tax resident of Hong Kong, was engaged in the business of operation of ships in international traffic and its revenue compr....
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....ng Party from the operation of ships in international traffic may also be taxed in the other Contracting Party, but the tax imposed in that other Contracting Party shall be reduced by an amount equal to 50 per cent thereof. 4. The Assessing Officer was of the view that the Goods & Services Tax (GST) amount formed part of the amount specified in Section 44B(2) of the Act and therefore, 7.5% of the same should have been brought to tax as income of the Assessee in terms of the deeming provisions contained in Section 44B(1) of the Act. However, since the Assessee was entitled to claim benefit of Article 8 of the Tax Treaty, the Assessing Officer proposed addition of 50% of the aforesaid amount. Therefore, the Assessing Officer proposed disallowance of INR.4,49,79,547/- in the Draft Assessment Order, dated 28/03/2024, under Section 143(3) read with Section 144(C)(1) of the Act computed as under: Particulars Amount (INR) GST Amount 1,19,94,54,595/- Deemed Business Income as per Section 44B(1) [@ 7.5%] 8,99,59,095/- Income as per Article 8 of Tax Treaty [@ 50%] 4,49,79,547/- 5. The Assessee filed objections before the DRP and contended that the GST amount was....
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....erusal of the directions issued by the DRP and the Final Assessment Order dated, 30/01/2025, passed by the Assessing Officer, it is clear that the issue under consideration stands decided in the favour of the Assessee and against the Revenue by the decision of the Tribunal in the case of the Assessee. The DRP had while rejecting the objections raised by the Assessee recorded that the Revenue had not accepted the decision of the Tribunal in the case of the Assessee wherein the Tribunal had ruled in the favour of the Assessee holding that the GST collections did not form part of the amounts specified under Section 44B(2) of the Act and therefore, the same could not have been included in receipts for the purpose of computing deemed business income in terms of Section 44B(1) of the Act. We have perused the aforesaid decision of the Co-ordinate Bench of the Tribunal in the Assessee's own case for Assessment Year 2020-2021 [ITA No.3278/Mum/2013, dated 24/01/2024] wherein it has been held as under: "14. In case of presumptive taxation, deduction of expenses is not allowed i.e., purchase and inventory elements are to be ignored for computing deemed income under Section 44B, becaus....
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.... following judgments have been brought to our notice before us wherein the Hon'ble Courts has approved the exclusion of service tax. i. CIT v. Deepwater Pacific I Inc (SLP (Civil) Dairy No(S). 47374 of 2023, dated 13-12-2023) ii. Vantage International Management Co. [2023] 156 taxmann.com 23/296 Taxman 160 (SC) iii. CIT v. Transocean Offshore International Ventures Ltd. [2023] 157 taxmann.com 203/296 Taxman 570/459 ITR 609 (SC) iv. CIT (International Taxation) v. Schlumberger Asia Services Ltd. [2024] 158 taxmann.com 267/297 Taxman 1 (SC) Further, Hon'ble Bombay High Court in the case of Boskalis International Dredging International CV (supra) (followed the decision of Delhi High Court and Mitchell Drilling International Pty Ltd. (supra) and held as under: xx xx 17. Full Bench of Hon'ble High Court of Uttarakhand in case of Schlumberger Asia Services Ltd. (supra) held that service tax paid earlier by the assessee to Government of India is not on account of provision of services in connection with exploration and production of mineral oil, hence would not form part of aggregate taxable amount referred to in c....
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....o a situation where calculation of tax of reimbursement of taxes would tantamount to collection of tax on taxes. Section 44B(2) of the Act provides for deemed taxation on amount paid or payable/received on account of 'carriage' of goods, passengers, etc. Further, the Explanation thereto clarifies that the amounts in connection with the carriage would include 'demurrage charges', 'handling charges" and other amounts of a 'similar nature". Thus, what is sought to be included u/s 44B are the charges' recovered from the consignor of the cargo/customer as a consideration for transportation from a port in India to outside India and vice versa. 23. GST being a mandatory 'statutory levy' cannot be said to be in the nature of 'charges' by the shipping Company towards the carriage. The incidence of GST is on account of taxability of services under the relevant parliamentary statute i.e. GST laws and not on account of the business activities as envisaged in Sections 44B(2)(1) and 44B(2)(ii) of the Act. Otherwise, including GST in gross receipts for purpose of section 44B would be akin to charging income tax on GST i.e., tax on tax, which wo....
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....f Section 44B (1) starts with a non obstante clause "Notwithstanding anything to the contrary contained in sections 28 to 43A....". Since Section 44B overrides the provisions of Section 29 of the Act, therefore in our opinion Section 145A is not applicable for computing deemed income under Section 44B. 27. Thus, the decision of the Hon'ble Bombay High Court will not be applicable in this case same was not rendered in the context of Section 44B and in any case in so far as the observation of the Hon'ble High Court that any tax or levy cannot be part of turnover receipts unless it is not paid, is not applicable in the case of the assessee it has been brought to record that assessee discharged its GST liability of Rs. 96,51,49,085 through payment of tax to the Government Treasury and input tax credit and this has been demonstrated from the copies of form GSTR 9 and annual GST re-conciliation statement. 28. Further, Ld. DRP members also relied on CBDT Circular No. 10/2017 dated March 23, 2017 which discusses on the applicability of ICDS on determination of turnover by non corporate taxpayers covered under presumptive taxation like Sections 44AD, 44AE, 44ADA, 4....
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....Thus, it has been stated that invoking the provisions of Section 43B under Section 44B shall force the assessee to prepare a memorandum account wherein the specified amounts are credited and adjusted by GST due to Section 145A and correspondingly, GST discharged before the due date of filing of tax return specified under Section 139 of the Act is debited to such account However, preparation of such memorandum account is neither required under the Act nor can replace the express provisions of Section 44B of the Act. We therefore, find merits in such contention of the Ld. Counsel that if it is held that Section 145A are applicable for computing deemed income u/s. 44B and GST is added to the specified amounts and provisions of Section 29 are invoked, then deduction of GST paid should be allowed while computing income under the head 'profit and gains' of business or profession as per Section 43B. Even otherwise also Section 44B has to be allowed if it is paid on or before the due date and similarly it can be disallowed once GST has not been paid within the due date. However, this is purely academic, contention which has been raised because we have already held that for the purpose of S....
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....on of 'Book Profits'. 14. In this regard we note that it is admitted position that the Assessee had offered income from operation of ships to tax under the deeming provisions contained in Section 44B of the Act read with Section 90(2) of the Act and Article 8 of the Tax Treaty. The Assessee claimed that in view of Explanation 4A to Section 115JB(1) of the Act the provisions of Section 115JB of the Act were not applicable to the Assessee. However, the Assessing Officer, in the computation sheet annexed to the Final Assessment Order, applied the provisions contained in Section 115JB of the Act and determined 'Book Profits' at INR.1,25,89,94,787/-. The Assessee is now in appeal before the Tribunal on this issue. 15. The provisions contained in Explanation 4A to Section 115JB(1) of the Act read as under: "Explanation 4A: For the removal of doubts, it is hereby clarified that the provisions of this section shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, where its total income comprises solely of profits and gains from business referred to in section 44B or section 44BB or section 44BBA or section 44BBB and....