2016 (7) TMI 1563 - HC - Income Tax

Deduction u/s 80HHC - Tribunal holding that turnover of all independent businesses are to be clubbed and thereby rejecting the assessee's contention that turnover of only export business is required to be taken into consideration - HELD THAT - In view of the various decisions of the hon'ble Supreme Court and the Explanation to the sections, the interpretation put forward by the Tribunal is required to be accepted. See K. RAVINDRANATHAN NAIR 2007 (11) TMI 10 - SUPREME COURT and JOSE THOMAS. 2001 (11) TMI 73 - KERALA HIGH COURT - Consequently, the issue raised in this appeal is answered in favour of the Department and against the assessee.

Summary

Issues:
Challenge to orders of Income-tax Appellate Tribunal for assessment years 2000-01 and 2001-02. Interpretation of turnover calculation under section 80HHC for deduction.

Analysis:
The appellant challenged the orders of the Income-tax Appellate Tribunal for the assessment years 2000-01 and 2001-02, questioning the calculation of turnover under section 80HHC for deduction. The substantial question of law framed was whether the Tribunal was correct in clubbing turnover of all independent businesses for calculation under section 80HHC, rejecting the appellant's claim for considering only export business turnover. The appellant contended that the Tribunal erred in not appreciating the case facts properly and relied on a Special Bench order instead of a High Court judgment. The Assessing Officer's order emphasized that total turnover should include turnover from all businesses of the assessee, not just the export business.

The appellant cited the case of CIT v. Padmini Technologies Ltd., highlighting the need to consider turnover of specific businesses for deduction calculation. They argued that separate undertakings with distinct books of accounts should be treated independently for turnover assessment. The appellant also referred to the Supreme Court's decision in CIT v. Canara Workshops (P.) Ltd., illustrating the treatment of profits from different industries for deduction purposes.

On the other hand, the respondent emphasized the legislative definitions of terms like export turnover, total turnover, and profit of the business in section 80HHC. They relied on the Supreme Court's decision in CIT v. K. Ravindranathan Nair and the Kerala High Court's ruling in CIT v. Jose Thomas to support their interpretation.

After considering the arguments and relevant legal provisions, the Court concluded that the Tribunal's interpretation, requiring total turnover calculation inclusive of all business turnovers, aligned with the legislative intent and precedents. The Court upheld the Tribunal's decision in favor of the Department, disposing of the tax appeals accordingly.