TaxTMI 
TaxTMI 
2026 (1) TMI 1121
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....lant) craves leave to prefer appeal against the order dated 12 August 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 02 July 2025 of the Dispute Resolution Panel (Ld. DRP') on the following grounds, each of which are independent of, and without prejudice to one another. On the facts and circumstances of the case and in law: Assessment proceeding is non-jurisdictional 1. The 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. Assessment proceeding is time-barred 2. The impugned assessment order is time barred, being passed after the time limit provided under section 153 of the Act. That it ....
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....ction 244A of the Act 10. On the facts and circumstances of the case and in law, Ld. AO has grossly erred in not granting any interest in accordance with the provisions of Section 244A of the Act 11. On the facts and circumstances of the case, Ld. AO has erred in raising the outstanding demand on the e-filing portal of the Appellant vide Demand Identification Number 2025202337363986854C. Initiation of penalty proceedings under section 270A 12. The 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 first issue that arises for our consideration pertains to the including the Goods and Services Tax ("GST") receipts for computation of deemed income under section 44B of the Act. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a company incorporated under the laws of Hong Kong. The assessee is engaged in the business of operating ships in internatio....
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....en accepted by the Revenue and further appeal has been filed before the Hon'ble Bombay High Court, held that the sum received by the assessee on account of GST, paid by the customer in relation to shipping business, is includable in the aggregate sums as per section 44B(1) of the Act. Accordingly, by holding that the gross GST collected by the assessee is to be treated as an amount specified in section 44B(2) of the Act, the AO proposed an addition of Rs. 8,34,49,094/- to the total income of the assessee and computed the total income of the assessee at Rs. 1,41,14,48,400/- as follows: - Particulars Amount (in Rs. ) Total income as per return 1,32,79,99,310 Add GST of Rs. 2,22,53,09,173 * 7.5% presumptive business income *50% as per Article-8 of India-Hong Kong DTAA 8,34,49,094 Assessed Total Income 1,41,14,48,404 Rounded off to 1,41,14,48,400 6. Being aggrieved, the assessee filed detailed objections before the learned DRP. Vide directions dated 02.07.2025 issued under section 144C of the Act, the learned DRP, following its directions rendered in assessee's own case for the assessment year 2020-21, after no....
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....levant for computing the deemed income u/s. 44B is the amount paid or payable or amount received or deemed to be received on account of carriage of passengers, 15. Section 145A of the Act takes into consideration "valuation of sale of purchase of goods/services and of inventory", whereas Section 44B(2) considers specified amount i.e. "amount paid or payable on account of the carriage of goods shipping at any port in India" and "amount received or deemed to be received on account of the carriage of goods shipped at any port outside India". The terms amount paid or payable and amount received or deemed to be received mentioned under Section 44B cannot be replaced with the term 'valuation' in the absence of any specific enabling provisions under Section 44B or Section 145A Section of the Act or any other provisions of the Act. For instance, is a deeming provision which enables replacement of consideration with 'fair market value' where the amount of consideration is less than the fair market value determined in a prescribed manner. 16. Thus, in our view adding GST component to the deemed income which has to computed directly on specified amounts i.e. ....
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....GST law it can be seen that both are indirect taxes and is recovered by the service provider on behalf of assessee and as an agent of the Government as such rates are specified and thus, the provision under the service tax law are similar to provision of GST law and therefore, in our opinion the judicial precedents delivered in respect of erstwhile tax law would apply mutatis mutandis to the GST laws also. 21. Otherwise also it would be quirk of a fate that tax collected on behalf of the customer is again to be held as part of taxable income of the assessee who is collecting GST. The assessee is taxable person under the GST laws and shows GST separately in the invoice raised on the customers. We have perused the copy of the sample invoice produced before us at our direction wherein, it is seen that service charge is indicated separately and CGST is levied on such service charge is also indicated separately. If the GST services have been indicated in the invoice separately then it cannot be included for purpose of taxation while computing the income. For instance there are various TDS provisions and CBDT has clarified through various circulars that if GST services are indic....
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.... income. 26. The core argument of the department before us and by the id. DRP is that amendment in the provisions of Section 145A of the Act brought by Finance Act 2018, since it includes "services" within its code therefore, income has to be computed in accordance with Section 145A and any taxes levied under services is included and for that heavy reliance has been placed on the judgment of Hon'ble High Court of Bombay in the case of Knight Frank (India) Pvt. Ltd. (supra). However the Hon'ble Court held that Section 145A restricts its ambit only to valuation of purchase and sale of goods in inventory and would not apply to service tax billed on rendering of service as service tax billed has no relation to any goods nor does it have anything to do with bringing goods to a particular location. Section 145A which is for the method of accounting which starts with' for the purpose of determining the income chargeable under the head 'Profits and gains of business or profession, being a general provision, would not apply to the special provisions of Section 44B of the Act. Further, the words "For the purpose of determining the income chargeable under the head "Pr....
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.... shall apply for determining he receipts or turnover, as the case may be. " 29. Thus, reliance placed by the DRP on the aforesaid Circular isnot valid since Delhi High Court in the case of Chamber of Tax Consultants v. Union of India [2017] 87 taxmann.com 92/252 Taxman 77/400 ITR 178 (Delhi) held that the aforesaid Circular was ultra vires the provisions of the Act and liable to be struck down. Also, the amendment was introduced vide Finance Act 2018 to bring certainty on the issue of applicability of ICDS and not to validate the circular. Even otherwise, in the aforesaid Circular, CBDT has also clarified that where there is a conflict between ICDS which is a general provision and specific provisions, specific provision shall prevail. 30. Before us, the plea was taken that if GST is to be added to the amounts paid on account of taxes then deduction of such GST is also required to be given u/s 43B Though the provision of Section 44B overrides Section 28-43A of the Act, but other sections including Section 43B are not specifically over ridden by Section 44B This issue has been decided by the Hon'ble Uttarakhand High Court in the case of Schlumberger Asia Service....
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....rring in nature and has been decided in favour of the assessee by the Coordinate Bench of the Tribunal in preceding years. The learned DR could not show us any reason to deviate from the aforesaid decisions, and no change in facts and law was alleged in the relevant assessment years. Thus, respectfully following the decisions of the Coordinate Bench of the Tribunal rendered in assessee's own case cited supra, we uphold the plea of the assessee and delete the impugned addition by including the GST receipts for computation of deemed income under section 44B of the Act. Accordingly, Grounds No.3-5 raised in assessee's appeal are allowed. 11. The next issue that arises for our consideration pertains to the applicability of the provisions contained in section 115-JB of the Act. 12. Having considered the submissions of both sides and perused the material available on record, we find that in the instant case, it is an admitted position that assessee has offered its income from operation of ships to tax under the deeming provisions contained in section 44B read with section 90(2) of the Act and Article 8 of the India Hong Kong Tax Treaty. It is the plea of the assessee that in view o....
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.... for the year under consideration, directed the AO to allow short grant of TDS and advance tax after verifying the claim of the assessee. From the perusal of the said order of the learned CIT(A), forming part of the paper book from pages 314-333, we find that the learned CIT(A) also directed the AO to compute the aggregate amount of interest under section 244A of the Act after necessary verification. During the hearing, the learned AR submitted that pursuant to the order passed by the learned CIT(A), the assessee filed an application dated 12.02.2025 before the AO requesting to give effect to the order passed by the learned CIT(A) on the aforesaid issues. However, as per the learned AR, the AO did not pass any order giving effect to the directions issued by the learned DRP to date. It was further submitted that in the impugned final assessment order, a similar short grant of credit of TDS and advance tax, and non-grant of interest under section 244A of the Act has been made by the AO. The learned AR submitted that in this regard, on 30.09.2025, the assessee has filed a rectification application under section 154 of the Act before the AO seeking the aforesaid relief. 17. Since th....