Case Law Details
Issue- Addition of Rs.11,34,14,190/- being the amount of Service Tax to the total revenue for the computation of profit under Section 44B of the Income-tax Act, 1961.
The facts in brief are that the assessee company is a foreign company incorporated under the law of Korea. The assessee has opted that its income from operation of shipping be taxed under section 44B of the Income Tax Act on presumptive basis at the rate of 7.5% of the aggregate amount as per the provisions of section 44B of the Act read with Article 9 of the DTAA between India and Korea. The controversy involved in this appeal is as to whether the service tax collected during the year should be a part of the gross receipts for the purpose of the computation of income or the gross receipts are to be taken exclusive of sales tax receipts. The Assessing Officer (hereinafter referred to as the AO) while relying upon the Authority of Advance Ruling (AAR) in the case of “Siem Offshore Inc” reported in (2011) 337 ITR 027 observed that the gross receipts should be taken inclusive of the service tax for the purpose of computation of income of the assessee under section 44B of the Act. While holding so, the AO also relied upon the decision of the Delhi Bench of the Tribunal in the case of “DDIT (International Taxation) vs. Technip Offshore Contracting BE” ITA No.4613/Del/2007 vide order dated 16.01.09 wherein the Delhi Tribunal has held that since the service tax collected by the assessee was directly in connection with the services and facilities as spelt out in section 44BB(2), hence, the amount of service tax collected by the assessee is to be included in the total receipts for determining the presumptive profit under section 44BB.
Being aggrieved by the above action of the AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A), relying upon the decision of the co‑ordinate bench of the Tribunal in the case of “M/s. China Ship Container Lines (Hong Kong) Company Ltd.” in ITA No.8516/M/10 dated 23.08.13, upheld the action of the AO in including the service tax receipt in the gross receipts taken for computing the presumptive profits of the assessee. Being aggrieved, the assessee has come in appeal before us.
At the outset, the Ld. A.R. of the assessee has stated that the very issue has already been dealt with and decided by the Tribunal in the earlier assessment years in the own case of the assessee. He, in this respect, has relied upon the decisions of the Tribunal in the own case of the assessee for A.Y. 2007-08 and 2008-09 and further upon the assessment order for A.Y. 2012-13 wherein the AO, while giving effect to the directions of the DRP, has not included the service tax in the gross income of the assessee for the purpose of calculation of presumptive profits under section 44B of the Act. The copy of the DRP directions dated 24.11.15 for A.Y. 2012-13 have also been placed on The assessee has also relied upon the decision of the Hon’ble Delhi High Court in the case of “DIT vs. Mitchell Drilling International Pvt. Ltd.” (2015) 62 Taxman.com 24 (Delhi).
On the other hand, the Ld. D.R. has relied upon the finding of the lower authorities.
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