The Income Tax Appellate Tribunal recently ruled that the service tax collection shall be deducted from gross Receipts while computing the profit for the purpose of Section 44BB of the Income Tax Act, 1961.
The Assessee-company is a tax resident of Singapore and the principal activities are of ship-owners, operators and charters was aggrieved by the order of the AO wherein he observed that the amount of service tax being in the nature of a statutory payment cannot be included in the gross receipts for the purpose of computing the presumptive income of the assessee u/s.44BB of the Act.
Confirming the order of the first appellate authority in the light of judicial pronouncements, the tribunal bench comprising of judicial member Ravish Sood and accountant member S/Sh. Rajendra stated that the same shall be deducted from the gross Receipts for the purpose of computing profit under section 44BB of the Act.
“Service Tax collected by the assessee has to be deposited in the government by all the service-tax-collectors. On behalf of the State they collect the tax and deposit in the treasury.There is element of income in it,” the bench said.
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