Service Tax is not the part of gross receipt under section 44BB of IT Act.

Last updated: 06 September 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Facts indicate that the assessee is a company incorporated in Australia. It was engaged in the business of providing equipment on hiring and manpower etc. for exploration and production of mineral oil and natural gas. During the year under appeal. the assessee received following amounts from its various customers: S.No.. Particulars Amount (in Rs.) 1. Income from Drilling Operations 13,95,28,845 2. Income from exploration of Mineral Oil 2,40,33,727 3. Reimbursement of mobilization expenses 1,00,86,965 3. The assessee offered its income to tax on gross basis under sub-section (1) of section 44BB and 10% of the gross receipts was deemed to be the income chargeable to tax. It, however, did not include the amount of Rs.2,09,24,553/- in the gross receipts, being service tax received from its customers, while computing its total income. However, the Assessing Officer rejected the contention of the assessee and added the amount of service tax collected by the assessee to its gross receipts to compute its total income.

Citation :
DDIT, Circle 3(2), New Delhi. (Appellant) Vs. M/s Mitchell Drilling International Pty. Ltd., C/o Nangia & Co., Suite-4A, Plaza, M6 Jasola, New Delhi-110025.(PAN/GIR No.AADCM9904H) (Respondent)