November 2012
DDIT v Mitchell Drilling International Pty Ltd (ITA No 698/Del/2012) Section 44BB of I T Act Asst Year: 2008-09 Decided on: 31 August 2012 Before J.S. Reddy (AM) and U.B.S. Bedi (JM) Counsel for assessee/revenue: Amit Arora/ Vijay Babu Vasanta
By Geeta Jani, Dhishat B. Mehta, Chartered Accountants
Reading Time 2 mins
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Service tax collected from customer does not form part of receipts for computing presumptive income u/s. 44BB of I T Act.
Facts:
The taxpayer was a company incorporated in Australia. It was engaged in the business of providing equipment on hire and manpower for exploration and production of mineral oil and natural gas. It had received income from drilling operations and exploration of mineral oil and had received reimbursement for mobilization expenses. The taxpayer offered its income to tax u/s. 44BB(1) and 10% of the gross receipts was deemed to be income chargeable to tax. The taxpayer did not include service tax collected by it from its customers. It contended that service tax was levied and collected by a service provider as an agent of the Government and it was held in trust as custodian/trustee for the Government and therefore, it cannot be added to its receipts for determination of presumptive profit u/s. 44BB of I T Act.
Held:
Relying on the decision of Delhi Tribunal in Sedco Forex International Drilling Inc [2012] 24 taxman.com 390 (Delhi), the Tribunal held that service tax should not form part of receipts for computing presumptive income u/s. 44BB of I T Act.
