TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1980
X X X X Extracts X X X X
X X X X Extracts X X X X
....f income for the assessment year under consideration declaring the total income of Rs.76,88,21,960/-. The draft assessment order was passed u/s 143 (3) r.w.s. 144C (13) of the Act. Aggrieved by the draft assessment order, the assessee filed objections before the Ld. Dispute Resolution Panel (DRP)- 2, Mumbai along with Form 35-A in respect of variations made by the Assessing Officer in the draft order. The Ld. DRP after hearing the assessee issued direction u/s 144C(5) of the Act. 3. The assessee has filed the present appeal against the assessment order passed by the DCIT pursuant to the directions issued by the Ld. DRP on the following effective grounds:- 1. "Ground No. 1: Inclusion of service tax for the purpose of computing presumptive income under section 44B of the Income Tax Act, 1961 ('the Act'). 1.1 On the facts and in the circumstances of the case and in law, the learned DCIT has erred in including an amount of Rs. 47,52,66,155/- being the amount of service tax collected and paid to the Government, to the total revenue for the purpose of computing presumptive income under Section 44B of the Act. 1.2 On the facts and in the circumstances of the case and in law, the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....est levied under Section 234C of the Act. 5. Ground 5: initiation of penalty proceeding for the levy of penalty under section 271(1)(c) 5.1 On the facts and circumstances of the case and in law, the learned DCIT erred in initiating penalty proceeding under section 271 (1) (c) of the Act. 5.2 It is prayed that the learned DCIT be directed to drop the penalty proceeding under section 271(1)(c) of the Act. 4. Vide Ground No. 1, the assessee has challenged the addition of Rs. 3,56,44,962/- i.e. 7.5% of the service tax collected by the assessee. During the course of assessment proceedings, it was noticed that the assessee had collected service tax of Rs. 47,52,66,155/-. The assessee claimed that the said service tax is not includible in computing the presumptive income u/s 44B of the Act. However, the AO treated the gross service tax collected by the assessee as the amount specified in section 44BB(2) and further treated 7.5% of the said amount as the assessee's income u/s 44BB(1). The Ld. DRP confirmed the addition rejecting the contention of the assessee that the issue is covered in favour of the assessee by the orders of the Tribunal rendered in the assessee's case for A.Y. 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "3. At the outset, the ld. Counsel for the assessee submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for the Assessment Years 2007-08 and 2008-09 in ITA No. 7809/Mum/2010 and 7365/Mum/2012. On the other hand, Ld. DR submitted that though this issue is covered infavour of the assessee by the Tribunal in assessee's own case, however, there ae various contrary decision, which fact has been noted by the DRP, itself in the impugned order. They have followed Tribunal decision of China Shipping Container Lines (HongKong Co. Ltd.) reported in 145 ITD 230, to decide this issue against the assessee. 4. After considering the rival contentions and on perusal of the impugned orders, we find that the main issue which has been challenged is, whether the service tax is to be treated as part of the total receipts for the purpose of computing the 'Presumptive income' u/s 44B. The assessee's case had been that service tax collected does not form total of the part receipts as it does not involve any element of profit, because it has been collected from the customers on behalf of the Government and cannot be included in the total receipts. W....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontracting B.V. (supra) was relied upon by the Rely in support of its case on the similar issue Case of Islamic Republic of Iran Shipping Lines (supra) before Mumbai Bench of ITAT and relying on the decision of the Hon'ble Bombay High Court in the case Sudarshan Chemical Industries 242 ITR 769 and that of Hon'ble Uttarakhand High Court in the case of DT Vs. Schlumberger ASIA Service Ltd. (supra) it was held by the Mumbai benches that the service tax, which is a statutory liability, would not involve any element of profits and since the service provider has collected the same from its customers on behalf of the Government, it cannot be included in the total receipts for determining the presumptive income of the assessee under section 44B. The decision of Mumbai bench in the case of Islamic Republic of Iran Shipping Lines (supra) has been subsequently followed by the Tribunal at least in three cases cited by the Ld. Counsel for the Assessee including the case of Sidco Forex Intt. Drilling Inc. (supra) wherein Delhi ITA No. 457/Mum/2015 M/s. Orient Overseas Container Line Ltd. 6 bench of the ITAT has decided a similar issue in favour of the assessee holding that reimbursement ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come of the assessee under section 44BB of the Act, the service tax collected by the assessee on the amount paid for rendering services is not to be included in the gross receipts. ITA No. 457/Mum/2015 M/s. Orient Overseas Container Line Ltd. 7 4.4.3 Respectfully following the decision of the Hon'ble Delhi High Court in the case of Mitchell Drilling International Ltd. (supra) and of the Coordinate Bench of this Tribunal in the assessee's own case for assessment years 2007-08, 2008-09 & 2010-11 (supra), we hold that for the purpose of computing the 'presumptive income' of the assessee under section 44BB of the Act, since service tax collected by the assessee does not have any element of income, it therefore cannot form part of the gross receipts and consequently delete the addition made in this regard by the authorities below. Accordingly, ground 1 (1.1 & 1.2) of the assessee's appeal is allowed. 8. The coordinate Bench has decided the identical issue in favour of the assessee in the assessee's own case for the A.Y. 2011-12 by following the decision of the Hon'ble Delhi High Court in the case of DIT-1 Vs. Mitchell Drilling International Pvt. Ltd. (2015) 62 Taxmann.com 24 (Del) ....