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2018 (9) TMI 1472 - HC - Income TaxDeduction under Section 80HHC - amount of profits from sale of office waste and scrap to be treated as part of the business profits for the purpose - Held that - As in the case of Commissioner of Income Tax-VII vs. Punjab Stainless Industries 2014 (5) TMI 238 - SUPREME COURT for the purpose of calculating the deduction, according to the provisions of Section 80HHC of the Act, one has to take into account, the profits of the business of assessee, export turnover and total turnover and the deduction, subject to several other conditions, incorporated in the section, is determined as profits of the business X export turnover/total turnover. - Decided in favour of the assessee
Issues:
1. Interpretation of Section 80HHC of the Income Tax Act 1961 regarding profits from sale of office waste and scrap. Analysis: The High Court of Madras heard an appeal by the Revenue against the Income Tax Appellate Tribunal's order for the Assessment Year 1992-93. The Tribunal had disposed of four appeals, two by the Revenue and two by the assessee, with this appeal focusing on one order, I.T.A. No. 869/Mds/2000. The substantial question of law admitted for consideration was whether profits from the sale of office waste and scrap should be considered part of business profits for deduction under Section 80HHC of the Income Tax Act 1961. The Tribunal and the Commissioner of Income Tax (Appeal) had held that the sale of office waste and scrap generated during normal business activities should be treated as business income, making it eligible for deduction under Section 80HHC. The High Court noted that the Supreme Court, in a previous case, had discussed how sale proceeds from scrap should be dealt with, emphasizing that such proceeds could be shown separately in the Profit and Loss Account or deducted from the amount spent on raw materials. Based on the Supreme Court's guidance, the High Court concluded that the profits from the sale of office waste and scraps should indeed be considered part of business profits for calculating the deduction under Section 80HHC. Therefore, the substantial question of law was answered in favor of the assessee, resulting in the dismissal of the appeal by the Revenue. The judgment highlighted the importance of correctly interpreting and applying the provisions of the Income Tax Act to determine taxable profits and deductions accurately.
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