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Issues Involved:
1. Whether the import duty benefit forms part of "turnover" for the purposes of relief u/s 80HHC. 2. Whether certain receipts should be excluded from profits of the industrial undertaking while computing deductions u/s 80HH and 80-I. 3. Whether the revised claim for deduction u/s 80HHC(1A) as a supporting manufacturer is sustainable. 4. Whether the assessee is entitled to section 80HHC deduction on its direct export sales. Summary: Issue 1: Import Duty Benefit as Part of Turnover - The assessee argued that the import duty benefit of Rs. 3,67,25,867 should not form part of "turnover" for the purposes of relief u/s 80HHC. Alternatively, if considered, only the net amount after deducting debits should be included. - The Tribunal held that only the net amount of Rs. 31,99,431 should be considered as part of "turnover" for the purposes of section 80HHC, rejecting the inclusion of the entire Rs. 3,67,25,867. - The Tribunal relied on the principle that the "total turnover" should not artificially inflate the denominator in the formula for computing export profits. Issue 2: Exclusion of Certain Receipts from Profits - The Tribunal addressed the exclusion of various receipts such as import entitlement benefit, interest on deposits, discount received, foreign exchange fluctuation, and sales tax refund from the profits of the industrial undertaking. - The Tribunal upheld the exclusion of the import entitlement benefit following the Supreme Court judgment in CIT v. Sterling Foods. - Interest on deposits and loans was decided in favor of the assessee, following the Tribunal's earlier judgments. - Discount received, foreign exchange fluctuation, and sales tax refund were also decided in favor of the assessee, following the Tribunal's and Supreme Court's judgments. Issue 3: Revised Claim for Deduction u/s 80HHC(1A) - The Tribunal agreed with the assessee that the figures in the audit certificate are not binding and the deduction should be granted as per the provisions of the Act. - The matter was set aside to the Assessing Officer to grant the deduction allowable under the Act. Issue 4: Entitlement to Section 80HHC Deduction on Direct Export Sales - The Tribunal found that the issue is covered in favor of the assessee by the judgments of the Ahmedabad Bench of the Tribunal. - The issue was decided in favor of the assessee, allowing the deduction on direct export sales. Conclusion: - The appeals of the assessee were partly allowed, with specific directions on each issue as detailed above.
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