IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ब म/

Transcription

1 आयकर अप ल य अध करण H न य यप ठ म बई म IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER आयकर अप ल स./ (न रण वर / Assessment Year : ) Hanjin Shipping Company Ltd. C/o. Hanjin Shipping India P. Ltd., (Agent of Hanjin Shipping Co. Ltd.), 402 Vedanta, 779 Makwana Road, Off Andheri Kurla Road, Marol Village, Andheri(E), Mumbai ब म/ स थ य ल ख स./PAN : AAACH3759G v. DCIT (IT) RG 2(2)(2) Mumbai (अप ल थ /Appellant).. (प रत यथ / Respondent) Assessee by: Revenue by : None Ms. Sunita Billa, DR स नव ई क त र ख /Date of Hearing : घ षण क त र ख /Date of Pronouncement : आद श / O R D E R PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 1538/Mum/2017, is directed against assessment order dated passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3)

2 r.w.s. 144C(13) of the Income-tax Act,1961 (hereinafter called the Act ) in pursuance of directions dated issued by learned Dispute Resolution Panel-1(WZ), Mumbai (hereinafter called the DRP ), for assessment year The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- The Appellant appeals against the impugned order dated 31st January, 2017 passed by the Deputy Commissioner of Income Tax (IT)-2(2)(2) Mumbai (received by the Appellant on 2nd February, 2017) under section 143(3) r.w.s. 144C(13) of the Income tax Act, 1961 (the Act) on the following amongst other grounds each of which is in the alternative and without prejudice to any others: 1) On the facts and in the circumstances of the case and in law, the learned Assessing Officer has erred in proposing and the Hon'ble Dispute Resolution Panel (DRP) has erred in confirming/upholding the additions of Rs.352,540,620/- 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 Act). 2) On the facts and in the circumstances of the case and in law, the learned Assessing Officer and the Hon'ble Dispute Resolution Panel (DRP) have erred in not following the order of Income Tax Appellate Tribunal (ITAT) in assessee's own case for A.Y order dated 31ST Oct, 2012 and A.Y order dated 22nd Oct, 2013 both upheld in favor of assessee relating to the same issue. The Appellant craves leave to alter, amend and / or add any other ground of appeal. 3. The assessee is a company incorporated and registered in Seoul, Korea. The assessee is engaged in the business of global maritime container transportation. The assessee has chosen to be taxed u/s. 44B of the Act with respect to its income from operation of ship on presumptive basis read with Article 9 of the DTAA between India and Korea. The short solitary question which arose in this appeal is whether service tax of Rs. 35,25,40,620/- collected by the assessee and paid to Government during the relevant period is to be included in 2

3 the turnover while computing presumptive income u/s 44B of the 1961 Act from operation of ships. The assessee collected said amount of Rs. 35,25,40,620/- towards service tax which is stated to be deposited with Government Treasury and the assessee excluded said sum from the aggregate amount received from the business of operations of ships while computing presumptive tax u/s 44B of the 1961 Act. The learned DRP was of the view that this service tax component of Rs crore is to be included in the gross receipts for the purpose of presumptive taxation as per the provision of Section 44B of the Act. 4. The learned DRP while issuing directions u/s. 144C(5) of the 1961 Act noted that tribunal in assessee s own case for AY and in ITA no. 8672/Mum/2010 and ITA no. 7010/Mum/2011 respectively has held in favour of the assessee but since Revenue has not accepted aforesaid decision(s) of the tribunal and an appeal has been filed with Hon ble Bombay High Court which is pending for disposal, the additions were confirmed by learned DRP vide directions dated issued u/s 144C(5) of the 1961 Act which later culminated into an assessment order dated passed by the AO under 143(3) r.w.s 144C(13) of the 1961 Act. 5. Aggrieved, the assessee has come in an appeal before the tribunal and none appeared on behalf of the assessee. The Ld. DR brought to our notice directions issued by learned DRP dated u/s 144C(5) of the 1961 Act wherein there is reference to the order of the tribunal in assessee s own case in ITA no. 8672/Mum/2010 and 7010/Mum/2011 for AY and respectively wherein the issue was decided by tribunal in favour of the assessee by holding that service tax shall not form part of the gross receipts which are to be considered for computing presumptive tax u/s 44B of the 1961 Act. 3

4 6. We have heard contention of the Ld. DR and perused the material on record including orders of the tribunal in assessee s own case in ITA no. 8672/Mum/2010 and 7070/Mum/2011 for AY and respectively wherein the tribunal decided the issue in favour of the assessee by holding that service tax component which is collected by the assessee from its client for deposit with Government shall not form part of gross receipt for computing presumptive tax u/s 44B of the 1961 Act. We have also noted that tribunal in assessee s own case for AY in ITA no. 5277/Mum/2014 vide orders dated has again decided the issue in favour of the assessee. Thus, we have observed that tribunal in assessee s own case for preceding years has taken a consistent view that service tax shall be included in the gross turnover while computing presumptive income u/s. 44B of the Act. The order of the tribunal for AY in ITA no. 5277/Mum2014 vide orders dated is reproduced hereunder:- The present appeal has been preferred by the assessee against the order dated of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year The assessee has taken the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) - 10 ('CIT(A)-10') has grossly erred in confirming the actions of the Assessing Officer of making 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 Act'). 2. On the facts and in the circumstances of the case, the learned CIT(A) - 10 has legally erred in not following the order of Income Tax Appellate Tribunal (ITAT) in appellants own case for A.Y and A.Y On the facts and in the circumstances of the case, the learned CIT(A) - 10 has legally erred in not granting reasonable and adequate opportunity to the Appellant to present its case before passing the order and the said order is being passed in violation of principle of natural justice is liable to be quashed. The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of pa herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 4

5 3. 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 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. 4. 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 , 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. 5. 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 and and further upon the assessment order for A.Y 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 for A.Y have also been placed on file. 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. 6. We have heard the rival contentions and have also gone through the records. We find that the co-ordinate bench of the Tribunal in the own case of the assessee in earlier assessment year A.Y vide order dated has observed that the decision of the Delhi Bench of the ITAT in the case of Technip Offshore Contracting BE (supra) has already been considered by the Mumbai Bench of the Tribunal in the case of Islamic Republic of Iran Shipping Lines vs. Dy. Director of Income Tax 11 taxman.com 349 wherein it has been held that the service tax since has been collected by the assessee on behalf of the government which is a statutory liability and does not involve any element of profits and accordingly the same cannot be included in the total receipts for determining the presumptive income. The co- 5

6 ordinate bench of the Tribunal, thus, in the own case of the assessee has decided the issue in favour of the assessee. Following the said decision, the co-ordinate bench of the Tribunal, in the own case of the assessee for A.Y , has again observed that the issue is covered in the assessee s own case for A.Y and thus has upheld the order of the Ld. CIT(A) holding that the service tax since is a statutory liability and does not involve an element of profit and the same being collected by the service provider from his customers on behalf of the government, accordingly cannot be included in the total receipts for determining the presumptive income under section 44B of the Act. Similar view has been taken by the DRP in the own case of the assessee for A.Y The co-ordinate bench of the Tribunal in the case of Islamic Republic of Iran Shipping Lines vs. Dy.DIT ITA No.4877/M/2014 for A.Y vide order dated has observed that though the co-ordinate bench of the Tribunal in the case of M/s. China Ship Container Lines (Hong Kong) Company Ltd. (supra) has decided the issue in favour of the Revenue, however, the Hon ble Delhi High Court, which is a higher authority, in the case of DIT vs. Mitchell Drilling International Pvt. Ltd. (supra) has decide the issue in favour of the assessee. The coordinate bench of the Tribunal has further observed that since the issue under consideration has already been decided in the own case of the assessee and further that the Mumbai Bench of the Tribunal in the case of Marubeni Corporation vs. DCIT (2014) 44 Taxman.com 22 (Mum.) has held that as a matter of precedent the Tribunal is bound to follow the decision rendered by the Tribunal in the own case of the assessee in earlier year, unless, there is a change in law, change in facts and circumstances of the case or the same is contrary to the decision rendered by a jurisdictional high court or apex court. In the absence of any of such circumstances, the earlier decision of the Tribunal in assessee s own case has to be applied. In view of the ratio of law laid down by the co-ordinate bench of the Tribunal in the case of Marubeni Corporation vs. DCIT (supra) which has been further followed by the Tribunal in the case of Islamic Republic of Iran Shipping Lines for A.Y (supra) and in the light of decision of the Hon ble Delhi High Court in the case of DIT vs. Mitchell Drilling International Pvt. Ltd. (supra), we hold that service tax collected by the assessee and paid to the government account having no profit element, cannot be included in the gross receipts for computation of income under section 44B of the Act. This issue is accordingly decided in favour of the assessee. 7. In the result, the appeal of the assessee is hereby allowed. Respectfully following the aforesaid orders of the tribunal in assesses s own case for AY which has elaborately discussed the issue in length, we allow the appeal of the assessee by holding that the service tax collected by the assessee and paid to the government account having no profit element, cannot be included in the gross receipts from operation of ships for computation of income u/s 44B of the 1961 Act. Merely because the Revenue has filed an appeal before the Hon ble Bombay High Court is not sufficient for us to taken a different view as no judgment of the Hon ble High Court/ Hon ble 6

7 Apex Court holding in favour of Revenue has been brought on record by learned DR. This issue is accordingly decided in favour of the assessee. We order accordingly. 8. In the result, the appeal of the assessee is allowed. order pronounced in the open court on आद श क घ षण ख ल न य य लय म ददन क क क गई Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Mumbai, dated: Nishant Verma Sr. Private Secretary copy to 1. The appellant 2. The Respondent 3. The CIT(A) Concerned, Mumbai 4. The CIT- Concerned, Mumbai 5. The DR Bench, 6. Master File // Tue copy// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 7