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Dit vs sedco forex international drilling inc (uttarakhand high court)

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Dit vs sedco forex international drilling inc (uttarakhand high court). AS PER UTTARAKHAND HIGH COURT DECISION TAX ON EMPLOYEES'. SALARY IS A "NON-MONETARY" PERQUISITE EXEMPT U/S 10(10CC). In a very recent decision of the Uttarakhand High Court (HC) in the case of. DIT v. Sedco Forex International Drilling Inc. & Others (Taxpayer), it was held that the tax on the.

Dit vs sedco forex international drilling inc (uttarakhand high court)


CIT A has erred in not appreciating the fact that the provisions of section 44BB of the Act are a self- contained code providing for computation of profits at a fixed percentage of gross receipts of the assessee and all the deductions and exclusions from income are deemed to have been allowed to the assessee. Owing to the inherent similarity in the nature if the sales tax and service tax, the ratio of the judgment in the said case is directly applicable in the facts of the instant case.

We have heard arguments of both the sides and perused the relevant materials placed before us. Counsel of the assessee submitted that this issue is cover4ed in favour of the assessee by the orders of the tribunal passed in assesses on appeals i.

The Ld Counsel also pointed out that this issue is also covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of Mitchell Drilling International Pty. Limited in ITA No. Replying to the above the Ld. CIT-DR vehemently contended that the issue is not accepted as covered by the said judgments as relied by the appellant because section 44BB is complete court in itself and it 4 provides by a legal fiction to be profits and gains of the non resident assessee engaged in the business of Oil Exploration.

CIT-DR submitted that the matter may kindly be decided in favour of the revenue by holding that the service tax receipts be included in the aggregate amount of being brought to tax. On careful consideration of above submission at the outset we note that the similar issue has been decided in favour of the assesses own appeal by the ITAT for AY Order dated Sudarshan Chemical Industries Ltd. Kaushik also referred to the decisions in DIT v. Section 44BB 1 and 2 of the Act read as under:. 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 A or section A apply for the purposes of computing profits or gains or any other income referred to in those sections.

Section 44BB begins with a non obstante clause that excludes the application of Sections 28 to 41 and Sections 43 and 43A to assessments under Section 44 BB.

The purpose of this provision is to tax what can be legitimately considered as income of the Assessee earned from its business and profession. The expression 'amount paid or payable' in Section 44BB 2. It is in this context that the question arises whether the service tax collected by the Assessee and passed on to the Government from the person to whom it has provided the services can legitimately be considered to form part of the gross receipts for the purposes of computation of the Assessee's 'presumptive income' under Section 44BB of the Act?

In Chowringhee Sales Bureau supra sales tax in the sum of Rs. The question considered by the 10 Supreme Court was: However, there the Assessee 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.

The decision in George Oakes P Ltd. 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.

In the considered view of the Court, both the aforementioned decisions were rendered in the specific contexts in which the questions arose before the Court. In other words the interpretation placed by the Court on the expression "trading receipt' or 'turnover' in the said decisions was determined by the context.

Lakshmi Machine Works supra which sought to interpret the expression 'turnover' was also in another specific context. There the question before the Supreme Court was "whether excise duty and sales tax were includible in the 'total turnover' which was the denominator in the formula contained in Section 80 HHC 3 as it stood in the material time?

The Supreme Court noted that for the purposes of computing the 'total turnover' for the purpose of Section 80 HHC 3 brokerage, commission, interest etc.

Therefore, "turnover" was the requirement. Sudarshan Chemicals Industries Ltd. In the considered view of the Court, the decision of the Supreme Court in Lakshmi Machines Works supra is sufficient to answer the question framed in the present appeal in favour of the Assessee.

The 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 44 BB of the Act.

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 44 BB of the Act. The Court accordingly holds that for the purposes of computing the 'presumptive income' of the assessee for the purposes of Section 44 BB of the Act, the service tax collected by the Assessee on the amount paid t it for rendering services is not to be included in the gross receipts in terms of Section 44 BB 2 read with Section 44 BB 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.

The Court further notes that the position has been made explicit by the CBDT itself in two of its circulars. The landlord only acts as a collecting agency for Government for collection of Service Tax. Vs CIT Supra and finally held that the service tax is not an amount paid or payable or receipt or deemed to be received by the assessee for the services rendered by it.

Rather, the assessee is only collecting the service tax for passing on the Government therefore the service tax collected by the assessee on the amount paid to it for rendering services it not to be included in the gross receipts in the terms of section 44BB 2 Read with section 44BB 1 of the Act. In this situation we decline to accept contention of 14 Ld CIT-DR and hold that the issue is covered on all for corners in favour of the assessee and against the revenue by the decision of the ITAT in assessee's own appeals for AY Supra and Supra hence we are unable to see any valid reason to interfere with the impugned order of the CIT A and thus we uphold the same.

Cites 8 docs - [ View All ]. Commissioner Of Income Tax, Lakshmi Machine Works on 25 April, Ltd vs State Of Madras on 28 April, Try out our Premium Member services: Free for one month and pay only if you like it.


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