2009 (4) TMI 469 - HC - Income Tax

Export special deduction 80HHC Computation of special deduction Conversion charges not includible in turnover

Summary

Issues Involved:
Inclusion of conversion charges in total turnover for computation of deduction under section 80HHC of the Income-tax Act.

Analysis:
The High Court of Madras heard an appeal by the Revenue against the Income-tax Appellate Tribunal's order for the assessment year 1991-92. The Assessing Officer had included conversion charges in the total turnover of the assessee company for the purpose of deduction under section 80HHC of the Act. The Commissioner of Income-tax (Appeals) upheld this decision, but the Tribunal reversed it based on the assessee's own case precedent. The Revenue contended that a similar issue was decided against them in a previous case. However, the High Court examined relevant judgments, including one by the Bombay High Court and another by the same court, and concluded that conversion charges should be excluded from the turnover for calculating the deduction under section 80HHC.

The court referred to the Bombay High Court's ruling that certain receipts, like conversion charges, should not be considered as part of turnover for section 80HHC deduction calculation. Citing a previous case, the court reiterated that miscellaneous income and commission should not be included in turnover for this purpose. Applying this legal principle, the court held that conversion charges must be excluded from the business profit when calculating the deduction under section 80HHC of the Act.

The court, in line with the Division Bench judgment, ruled that conversion charges should be excluded from the turnover for computing the deduction under section 80HHC. Consequently, the court decided in favor of the assessee and dismissed the appeal by the Revenue, without imposing any costs.