2002 (10) TMI 790 - HC - Income Tax

Summary

Issues: Interpretation of section 80HHC for deduction computation and treatment of sales tax, excise duty, and octroi in total turnover; Allowance of depreciation on assets at guest house.

Interpretation of Section 80HHC:
The Tribunal refused to refer questions regarding the inclusion of sales tax, octroi, and excise duty in 'total turnover' for deduction under section 80HHC. The Tribunal held that since export turnover excludes these elements, they should not be part of total turnover. The Tribunal emphasized that only the actual sale price should be considered, excluding statutory levies like excise duty and sales tax. The Bombay High Court's analysis of section 80HHC supported this interpretation, stating that only profits derived from exports should be considered, excluding items like excise duty and sales tax.

Sales Tax and Excise Duty Treatment:
The Court clarified that sales tax and excise duty collected by the assessee are not income but collected in a fiduciary capacity, refundable to customers or payable to the State. As per Rule 44 of the Rajasthan Sales-tax Rules, when sales tax is collected separately and shown in the invoice, it does not form part of turnover. Therefore, the Tribunal's decision on this matter was upheld, and no legal question arose from it.

Depreciation on Guest House Assets:
Regarding the allowance of depreciation on assets at the guest house, the Tribunal found that the expenditure was not on the guest house itself but on common facilities for staff and workers. Consequently, the expenditure was rightly disallowed under section 37(4). The Tribunal's factual finding did not give rise to any legal question.

Conclusion:
The Tribunal's decision to not refer the questions to the Court was upheld, as no referable questions of law arose from their orders. Therefore, all three reference applications were dismissed.