Income Tax Act | GST Would Not Form Part Of Gross Receipts Under Section 44BB: ITAT Mumbai
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that Goods and Services Tax (GST) collected by a non-resident assessee cannot be included in gross receipts for computing presumptive income under Section 44BB of the Income Tax Act, 1961. A Bench comprising Vikram Singh Yadav (Accountant Member) and Sandeep Singh Karhail (Judicial Member) allowed the appeal filed...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that Goods and Services Tax (GST) collected by a non-resident assessee cannot be included in gross receipts for computing presumptive income under Section 44BB of the Income Tax Act, 1961.
A Bench comprising Vikram Singh Yadav (Accountant Member) and Sandeep Singh Karhail (Judicial Member) allowed the appeal filed by the assessee, Oceaneering International GmbH for Assessment Year 2023–24 and directed the Assessing Officer to exclude GST while computing income on a presumptive basis.
The Court stated that we are of the considered view that GST would not form part of gross receipts for the purposes of computing income under Section 44BB of the Act and the AO is hereby directed to exclude the amount of Rs. 22,76,54,279/- towards GST while computing gross receipts in hands of the assessee.
The assessee, a non-resident company engaged in offshore and related activities, was assessed under Section 44BB, which provides for presumptive taxation of certain non-resident businesses.
The Assessing Officer included GST collected by the assessee as part of “gross receipts” and computed income at the prescribed presumptive rate. This approach was upheld by the Dispute Resolution Panel (DRP), leading the assessee to file an appeal before the Tribunal .
The core issue before ITAT was as to whether GST collected by the assessee can be treated as part of gross receipts for the purpose of computing presumptive income under Section 44BB of the Income Tax Act.
The Bench noted that the issue was consistently been decided in favour of assessees in earlier years. Relying on a series of coordinate bench decisions, the ITAT held that GST is a statutory levy, collected by the assessee on behalf of the Government. It does not have the character of income or consideration for services rendered.
The Bench observed that that GST or Service Tax collected by an assessee does not form part of “gross receipts” for the purpose of computing presumptive income under Section 44BB of the Income Tax Act, 1961, as these are statutory levies collected on behalf of the Government and contain no income element.
Further, the Bench observed that Section 44BB is a special provision with a non-obstante clause, and income must be computed strictly on the amounts specified in the section. That Including GST in gross receipts would effectively amount to taxing a tax, which is impermissible in law.
The Bench reaffirmed that indirect taxes like GST cannot be included in taxable income, even under presumptive schemes.
The Bench also observed that GST is shown separately in invoices and is ultimately deposited with the Government, reinforcing that it cannot be treated as part of the assessee's income.
In view of the above, the ITAT directed the Assessing Officer to exclude GST amounts from gross receipts while computing income under Section 44BB and allowed the assessee's appeal on this issue.
Case Title: Oceaneering International GmbH v. DCIT (International Taxation)
Case No.: ITA No. 6705/Mum/2025 | AY 2023–24
Appearance for the Assessee: Shri A.K. Jawadwala
Appaerance for Revenue: Shri Krishna Kumar, Sr. DR