The Delhi bench of the Income Tax Appellate Tribunal ( ITAT )recently held that Service tax collected shall not form part of the ‘gross receipts’ for the purpose of determining income under section 44BB of the Income Tax Act.
The bench including President G.D. Agrawal and Judicial Member Kuldip Singh was considering the case of DCIT, Circle 2 versus M/s. Triton Holdings Limited wherein Revenue challenged the conclusion remitted by DRP that service tax element cannot be included with gross receipts for the purpose of computing taxpayer profit u/s 44BB of the Income-tax Act, 1961.
Eventually, AO ordered to exclude the service tax elements from gross receipt in respect of ONGC, RIL, and Transocean Drilling Services.
Having heard both the parties’ arguments and the contention of assessee that issue in controversy has already been covered in assessee’s own case in favour of the assessee wherein High Court held that 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 u/s 44BB.
By applying the aforesaid decision bench had a considered view that service tax collected shall not form part of the gross receipt for the purpose of determining income for taxable purpose u/s 44BB of the Act.
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