Reimbursement of Service Tax not to be included in aggregate of amounts in clauses (a) and (b) of Section 44BB (2) of Income Tax Act: SC dismisses SLP [Read Order]

The Supreme Court dismissed a special leave petition (SLP) in a matter regarding the ruling concerning the reimbursement of service tax not to be included in aggregate of amounts in clauses (a) and (b) of Section 44BB (2) of the Income Tax Act, 1961.

The specific issue, that arose for consideration before the Uttarkhand High Court was, whether the service tax collected by the assessees in the course of provision of services and facilities in connection with, or supply of plant and machinery on hire, in the prospecting for, or extraction or production of, mineral oils in India, was liable to be included in the amount paid or payable for the purpose of computation of the ‘presumptive taxable income’ of the assessee.

The Full Bench of the Uttarakhand High Court observed that “On a plain and literal reading of clauses (a) and (b) of Section 44BB of the Income Tax Act, it is clear that reimbursement of service tax ought not to be included in the aggregate of the amounts specified in clauses (a) and (b) of Section 44BB(2), as it is not an amount received by the assessee on account of services provided by them in the prospecting, extraction or production of mineral oils.”

A Division Bench of the High Court noted that “Following the judgment of the Full Bench of this Court in DIT (International Taxation) & others vs. Schlumberger Asia Services Limited, we are of the view that no fresh question of law arises for consideration in these appeals. Accordingly, the appeals are dismissed.”

The SLP arose out of the impugned final judgment and order dated 02-11-2022 in ITA No. 18/2021 passed by the High Court of Uttarakhand at Nainital.

A Two-Judge Bench comprising Justice BV Nagarathna and Justice Manoj Misra observed that “Following the order of this Court in SLP (C) Dy. No.36391/2023 dated 30.10.2023 [Commissioner of Income Tax vs. M/s Vantage International Management Company], this Special Leave Petition is also dismissed, as we are not inclined to interfere in the matter”.

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