2001 (12) TMI 4 - HC - Income Tax

Computing the deduction under section 80HHC - 1. Whether on the facts and in the circumstances of the case will not the amounts of Rs. 10, 045 and Rs. 1, 17, 483 received by the assessee towards quality claim and raw nut claim form part of the total turnover of the assessee and the Tribunal is right in law in excluding the two amounts from the total turnover for the purpose of computing the deduction under section 80HHC of the Income-tax Act? - 2. Whether in view of Explanation (ba) to section 80HHC and clauses (iiia) (iiib) and (iiic) of section 28 will not turnover take into account all other receipts other than the excluded items of receipts? - The questions are answered against the Revenue and in favour of the assessee and the appeal filed by the Department is dismissed

Summary

Issues:
1. Whether amounts received by the assessee towards quality claim and raw nut claim form part of the total turnover for the purpose of computing deduction under section 80HHC of the Income-tax Act?
2. Whether turnover includes all receipts other than the excluded items for the purpose of section 80HHC?

Analysis:
1. The assessee, engaged in local and export business of cashew kernels, claimed deduction under section 80HHC of the Income-tax Act. The Assessing Officer included amounts received for quality claim and raw nut claim in the total turnover, but the Tribunal ruled these items do not form part of the turnover. The Department contended that all receipts, including income, should be part of the turnover. However, the court held that for section 80HHC, turnover refers to sales and purchases, not all receipts. The purpose is to find profit on export sales, so income not related to sales does not form part of total turnover. The Tribunal's decision was upheld, and the appeal by the Department was dismissed.

2. The court considered whether turnover under section 80HHC includes all receipts other than excluded items. The Department argued that turnover should encompass all receipts, citing a Supreme Court decision. The assessee argued that turnover in this context refers to sales and purchases only. The court agreed with the assessee, stating that for section 80HHC, total turnover is limited to sales turnover and purchase turnover, excluding income not related to sales. The court found no error in the Tribunal's decision and ruled in favor of the assessee, dismissing the Department's appeal.