9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (4) TMI 678 - HC - Income TaxInterpretation of section 80HHC(3) of the Act - Scope of the Business of assessee - Whether the word business u/s 80HHC(3) of the Act means all businesses of an assessee or only that business, which is partly or fully doing export business Held that - There is no dispute that the formula is, Profit of the business is Export turnover Total turnover of the business - the word business has the same meaning as in the word profits of the business as well as the total turnover of the business provided , Profit of the business means the profits of the business of that unit only, which is fully or partly doing export business namely the SE-Unit , then the total turnover of the business will also mean the total turnover of the SE-Unit only; and Profits of the business means total profits namely profits from the SE-Unit and F-Unit, then the Total turnover of the business will include turnover of both of them. The meaning of the word business used in section 80HHC(3) of the Act is confined only to export oriented unit namely the SE-Unit or to all the businesses carried out by the Assessee namely the SE-Unit as well as the F-Unit is to be determined - use of the word total in section 80HHC(3) of the Act signifies that it is not limited to a particular unit but refers to all the businesses carried on by the Assessee - The decision in GJ. Fernandez Versus ACIT 2010 (10) TMI 843 - Karnataka High Court followed - the word export turnover is also defined in explanation (ba) - It excludes certain amounts mentioned - it does not exclude the turnover of the business other than the one doing export business - the word business means the all businesses carried on by the Assessee and it is not limited to the export oriented unit namely the SE-Unit - decided in favour of Revenue.
Issues:
Interpretation of sub-section (3) of section 80HHC of the Income Tax Act, 1961 - Whether the term 'business' in Section 80HHC(3) refers to all businesses of an assessee or only to the business involved in export activities. Analysis: The case involves M/s Itarsi Oil and Flour Mills, Raipur, for the assessment year 1993-94, focusing on the calculation of deductions under section 80HHC of the Income Tax Act. The Assessee operates two units: a solvent extraction plant (SE-Unit) engaged in both export and domestic business, and a flour mill (F-Unit) exclusively involved in domestic business. The crux of the matter is the interpretation of section 80HHC(3) formula for deduction calculation: Profit of the business * Export turnover / Total turnover of the business. The Assessee calculated the deduction considering only the SE-Unit's figures, excluding the F-Unit, while the Assessing Officer included profits from both units. The dispute led to appeals and ultimately to the High Court. Two key questions were referred: whether the deduction calculation should be based on the profits and turnover of the export-oriented unit alone, or all businesses of the Assessee; and whether the term 'business' in section 80HHC(3) refers only to export activities or encompasses all businesses. The High Court analyzed the legislative intent behind section 80HHC, emphasizing that the term 'business' in this context includes all activities carried out by the Assessee, not limited to export-oriented units. The Court referred to conflicting decisions from various High Courts but aligned with the Karnataka High Court's interpretation, ruling in favor of the Department. The Court highlighted that the use of the term 'total turnover' in section 80HHC(3) indicates a broader scope, encompassing all businesses conducted by the Assessee. It rejected the Assessee's argument for a restricted interpretation based on the relief for export business, emphasizing the legislative language and intent. In conclusion, the High Court answered both questions in the negative, supporting the Department's stance that 'business' in section 80HHC(3) includes all businesses and is not limited to export-oriented activities. The judgment clarifies the calculation methodology for deductions under section 80HHC, emphasizing a comprehensive approach considering all business operations of the Assessee.
|
