9911796707
TMI Blog1995 (1) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------ Adj. Export Turnover 90% of Export Incentive X ------------------------------------ Adj. Total Turnover 20,14,47,244.75 = Rs. 1,54,79,750.91 X -------------------------- = 1,39,65,300.90 22,32,92,945.19 ------------------------ Total deduction under section 80HHC(3) = 2,46,41,400.69 ------------------------- The total turnover was computed as follows : I. SEA FOOD DIVISION : Rs. Rs. Direct Export Sales (F.O.B.) 20,14,47,244.75 Local Sales 11,05,146.03 D/C Scrap Sales 3,20,053.08 Quality Bonus on Export 6,62,291.00 Freezing charges 177.50 20,35,34,912.36 II. SHIPPING DIVISION : As per Schedule I to the accounts 1,25,45,839.00 III. INCOME FROM SOFTWARE DIVISION : As per Schedule J to the accounts 79,500.00 IV. INCOME FROM CONSTRUCTION DIVISION : As per Schedule K to the accounts 71,32,693.83 Total turnover 22,32,92,945.19 The assessee also claimed deduction under section 80-I of the Act in respect of its sea food division as follows : Sea food Division : Profit of the business before charging depreciation : Rs. Chargeable profit as per statement attached after chargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 80HH he included the gross construction receipts as turnover apart from the profit on such construction and thus arrived at a total turnover of Rs. 25,24,99,693 as against Rs. 22,32,92,945 reported by the assessee. This computation is as follows :--- Assessee's figures Adjusted figures 22,32,92,945 Add : Gross construction receipts 3,60,80,430 ----------------------- 25,93,73,375 Deduction to be included 68,73,682 ----------------------- 22,32,92,945 25,24,99,693 --------------------- ----------------------- He denied benefit to the assessee in respect of the deduction under section 80-I as there was no balance of export income after allowing deduction under section 80HHC. However, he computed the turnover for the purpose of section 80-I as follows : Assessee's figures Adjusted figures (admitted by the assessee) 24,38,06,692 Add: 3,60,80,430 ----------------------- 27,98,87,122 Less : 68,73,682 ------------------------ 24,38,06,692 27,30,13,440 --------------------- ------------------------ as against Rs. 24,38,06,692 reported by the assessee. These adjustments were made as prima facie adjustments in the intimation sent u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income determined was not based on prima facie adjustments but are adjustments of debatable nature. The denial of section 80-I deduction was against the ratio laid down by the various Benches of the Income-tax Appellate Tribunal rendered in the following cases : 1. Walaiti Ram Gupta Co.v. ITO[1990]33 ITD 544(Delhi) ; 2. Shapoorji Pallanji Co. (P.) Ltd. v. ITO [1986] 18 ITD 1 (Bom.) ; 3. Elemech Industrial Construction v. ITO [1988] 26 ITD 148 (Hyd.). It was also vehemently contended that at the time when the return of income was filed in December 1992, the interpretation of the appellate authority was that the assessee was entitled to claim deduction under section 80-I in respect of the construction activities engaged by it and the decision of the Supreme Court in CIT v. N.C. Budhiraja and relied on by the revenue was rendered as late as 7-9-1993 and, therefore, no additional tax can be levied on that basis. Further, the inclusion of Rs. 2,92,06,748 in the total turnover cannot be viewed as a prima facie adjustment. On the above basis, rectification of the intimation under section 154 was prayed for by the assessee. The Assessing Officer passed a detailed order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of granting relief in respect of the donations made by the assessee under section 80G of the Act. The assessee is in second appeal. 3. Sri R. Vijayaraghavan, the learned counsel for the assessee submitted that only prima facie adjustments can be made in an intimation under section 143(1)(a). He relied on the Circular No. 688 dated 24-8-1994 (209 ITR St. 75) to buttress the point that adjustments which are very apparent above can be made in an intimation under section 143(1)(a) and not the kind of adjustments that have been made by the Assessing Officer. What constitutes 'turnover' and what constitutes 'total turnover' are not simple propositions. There could be, any amount of debate or discussion on the same. The assessee's version of the turnover and the qualifying amount of deduction under section 80HHC has been certified by the Chartered Accountant in the form prescribed in accordance with sub-section (4A) of section 80HHC. Thus, the claim made by the assessee on the basis of the accounts and the certificate issued by the Chartered Accountant accompanying the return is not a fanciful claim. If the Assessing Officer had different perceptions or views on the same, he sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so no need to exclude any sum received by way of cash assistance or other export incentives. At any rate, these are debatable issues, which cannot be thrashed out as prima facie adjustments in an intimation under section 143(1)(a) of the IT Act. 4. Sri C. Abraham, the learned senior departmental representative submitted that the assessee was building flats for others. The expression " total turnover " has not been positively defined as it excludes only certain items of expenses or receipts. Therefore, it should be construed as an inclusive definition which will take in its sweep the contract receipts received from the flat owners. There is no warrant to read the ingredient of sale into the expression 'turnover' or 'total turnover' because if the profit is confined only to the profits of exports of goods or merchandise then perhaps the argument of the learned counsel for the assessee might be credible. By a fiction the entire business profit is taken into account for purpose of arriving at the profits derived from the export of goods and in the case of the assessee it having both exports and inland trading or business, a proportion of the total profit is to be taken as profit der ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference is made to freight and insurance attributable to the transport of goods or merchandise beyond the customs station as defined in the Customs Act, 1962 and as reference is made to profits on sale of licence, cash assistance received against export and customs duty or excise repaid or repayable as drawbacks against exports. These items are either for inclusion or for exclusion from the total turnover. As reference to these items are normally associated with sale of goods, it is possible that a view can be taken that the " totalturnover " as defined in clause (ba) under the Explanation to sub-section (4A) of section 80HHC must necessarily refer to the sale of goods or merchandise. Thus, two views are possible. Once this position is admitted, it can be reasonably concluded that it cannot fall under the prima facie adjustments of the nature envisaged in the proviso to section 143(1)(a) of the IT Act. 6. Whether the deduction admissible under section 80HHC should be restricted only to the export income reported by the assessee or whether it should be from out of the profits derived from the export business as defined in section 80HHC is another moot point which cannot admit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be filed along with the return of income is not so filed, the deduction claimed under that section can be disallowed as a prima facie adjustment. Some more examples in this regard are the non-filing of audit reports or other evidence along with the return of income as required under sections 12A(b), 33AB(2), 35E(6), 43B (first proviso), 54(2), 54B(2), 54D(2), 54F(4), 54G(2), 80HH(5), 80HHA(4), 80HHB(3), 80HHD(6), 80HHE(4), 80-I(7), 80-IA(8) and the like. But if evidence is subsequently furnished, rectification under section 154 should be carried out to the extent permitted by the Board's Circular No. 669, dated 25-10-1993. No prima facie disallowance shall, however, be made if any evidence, required to be filed along with the return of income only in pursuance of the non-statutory guidance notes for filing in the return of income, is not so filed. (c) A claim for deduction or rebate of any amount which exceeds statutory limit imposed, if such limit is expressed either as a specific mandatory amount or as a percentage, ratio or a fraction, and if the information relevant to application of the statutory limits appear in the return or the accompanying accounts for docum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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