2009 (3) TMI 988 - SC - Income Tax

Summary

Issues involved:
1. Interpretation of deduction under section 80 HHC of the Income Tax Act, 1961.
2. Inclusion of fabrication charges in the profits of business for deduction under section 80 HHC.
3. Distinction between profits of business for deduction under section 80 HHC and profits of business as computed under the head profit and gains of business or profession.

Interpretation of deduction under section 80 HHC:
The Income Tax Tribunal's decision to exclude excise duty and sales tax from the total turnover for computing deduction under section 80 HHC was upheld. The Tribunal's interpretation was deemed correct in this regard.

Inclusion of fabrication charges in business profits:
The question arose whether fabrication charges should be considered as part of the profits of business for the purpose of deduction under section 80 HHC. The High Court, relying on a previous decision, held that such charges are indeed part of business profits, especially when they have a direct connection to export activities. The Revenue did not challenge this decision, leading to its finality.

Distinction between different types of business profits:
The issue of distinguishing between profits of business for deduction under section 80 HHC and profits of business as computed under the head profit and gains of business or profession was raised. However, as this question did not arise from the Income Tax Appellate Tribunal's order, it was not addressed by the High Court. Consequently, the petition on this question was not entertained.

In conclusion, the Supreme Court dismissed the special leave petition, upholding the decisions regarding the interpretation of deduction under section 80 HHC and the inclusion of fabrication charges in business profits for the purpose of the deduction. The distinction between different types of business profits was not addressed due to its absence in the Tribunal's order.