GST Not Part of Gross Receipts Under Section 44BB: ITAT Mumbai

The assessee, Oceaneering International GmbH, a non-resident company, filed an appeal before the ITAT against the final assessment order passed under section 143(3) read with section 144C(13) for AY 2023-24, pursuant to DRP directions. The Assessing Officer included Goods and Services Tax (GST) collected by the assessee as part of gross receipts while computing presumptive income under section 44BB of the Income-tax Act.

The assessee contended that GST, being a statutory levy collected separately and deposited with the Government, does not form part of income for presumptive taxation. The issue was stated to be recurring and already decided in favour of the assessee in its own earlier years by coordinate benches of the Tribunal.

Main Issue: Whether GST collected as a separate statutory levy can be included in gross receipts for computing presumptive income under section 44BB of the Income-tax Act.

ITAT’s Decision: The ITAT held that GST does not form part of gross receipts for the purposes of computing income under section 44BB. The Tribunal observed that section 44BB is a special presumptive provision overriding sections 28 to 43A, and the computation mechanism therein is restricted strictly to specified amounts received on account of services rendered. GST, being an indirect tax collected in a fiduciary capacity and shown separately in invoices, has no income element, and its inclusion would amount to taxing a tax. The Tribunal also held that section 145A, dealing with valuation for normal computation, has no application to presumptive taxation under section 44BB.

Thus, the AO was directed to exclude GST of Rs. 22,76,54,279 while computing gross receipts. On the issue of short credit of advance tax, the AO was directed to verify and allow credit of Rs. 38 lakh if found paid. The appeal was partly allowed for statistical purposes.

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