2009 (1) TMI 859 - HC - Income Tax

Summary

Issues involved: Interpretation of provisions u/s 80HHC for computation of turnover and profits for deduction.

Issue 1: Tribunal's direction on computation of turnover and profits under s. 80HHC

The High Court considered the substantial question of law regarding the Tribunal's decision to uphold the CIT(A)'s order directing the Assessing Officer (AO) to compute the turnover, export turnover, and profits of the business of the granite division only, excluding the total turnover and profits of the other units.

Details: The assessee, a partnership firm engaged in various businesses, filed its return of income for the assessment year 2003-04. The AO calculated the deduction under s. 80HHC by considering the total turnover and profits of the entire business, contrary to the assessee's computation based on the profits and turnover of the standard granites division alone. The CIT(A) allowed the appeal and directed the AO to compute the deduction by focusing on the granite division's turnover, export turnover, and profits. The Tribunal upheld this direction, leading to the current appeal challenging the order.

Issue 2: Precedents and legal arguments

During the hearing, the Revenue's counsel cited previous decisions by the Division Bench of the Court to support their argument. They referred to cases such as CIT vs. M. Gani & Co., CIT vs. Rathore Brothers, and CIT vs. Suresh B. Mehta, where it was established that maintaining separate books of accounts for export and domestic business entitles the assessee to claim the deduction under s. 80HHC solely on export profits.

Details: The Revenue's counsel contended that the issue at hand aligns with the principles set forth in the mentioned cases, emphasizing the entitlement of the assessee to claim the deduction exclusively on export profits when separate accounts are maintained for export and domestic business activities.

Conclusion: Dismissal of the appeal

Based on the precedents cited and the arguments presented, the High Court found no merit in the appeal challenging the Tribunal's decision. Citing the established legal principles, the Court dismissed the appeal, affirming the direction to compute the deduction under s. 80HHC by considering the turnover and profits of the granite division alone.