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TMI Blog2011 (4) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... s well founded. - answered in favour of the Revenue - 183 and 184 of 2008 - - - Dated:- 29-4-2011 - MR. JUSTICE ELIPE DHARMA RAO, MR. JUSTICE M. VENUGOPAL, JJ. For Appellant : Mr. J. Nareshkumar For Respondent : Mr. P. Senthilkumar COMMON JUDGMENT ELIPE DHARMA RAO, J. Since the issue involved in both these Tax Appeals are one and the same and they are inter-connected, they were heard together and disposed of by this common judgment. 2. At the time of admission, though four substantial questions of law were framed, the Bench had admitted these appeals on the second question of law alone, which is as follows:- "whether on the facts and in the circumstances of the case, the Income Tax Tribunal is right in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee. Aggrieved by the order of the Tribunal, the Revenue has come forward with the present appeal. 4. In these appeals, though four substantial questions of law had been raised by the Revenue, this Court, at the time of admission, following the earlier decisions of the Supreme Court answered Question Nos. 1, 3 and 4 against the Revenue and formulated the aforesaid Substantial Question No.2, which relates to claiming of technical service charges, for consideration. 5. With respect to this issue, the Assessing Officer in paragraph 3.2 of the order dated 19.11.2004, under the heading in respect of deduction under Section 80HHC, has held that the explanation offered by the assessee is not convincing as this is a company do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beginning after the 31st day of March, 2004 and ending before the 1st day of April, 2005; (b) who owns any undertaking which manufactures or produces goods or merchandise anywhere in India (outside any special economic zone) and sells the same to any undertaking situated in a special economic zone which is eligible for deduction under section 10A and such sale shall be deemed to be export out of India for the purposes of this section. Explanation.- For the purposes of this section, -- ............ ........... ............. ............ ........... ............. (ba) total turnover shall not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission, interest, rent, charges or any other receipt of a similar nature included in such profits. In the present case, we are concerned with the question whether the technical service charges and tyre retreading receipts would form part of the export business and are eligible for deduction under Section 80HHC. The Section makes it clear that any other receipt of a similar nature should be included in such profits. The assessee deals with the business of manufactur of Air compressors Service Station Equipments and part of the manufactured products was also exported. The assessee has stated that income from lease operations is also one of the business activities and it should be considered as income derived out of the business and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... baa) it is clear that what was includible in the business profits in the above formula had to be included also in the total turnover. Therefore, according to learned counsel, the Tribunal as well as the High Court had erred in holding that the processing charges were not includible in the total turnover. He also relied on the judgment of the Rajasthan High Court in CIT vs. Sharda Gum and Chemicals [(2007) 288 ITR 116]. 11. The Hon'ble Supreme Court, on consideration of the submissions and the provisions of law laid that, held that the processing charges, which was part of gross total income, was an independent income like rent, commission, brokerage, etc. and, therefore, 90 per cent of the said sum had to be reduced from the gross total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80HHC was recomputed excluding the business and other income, is well founded. 14. With regard to the judgment relied on by the learned counsel for the assessee in Southern Sea Foods Ltd. vs. Joint Commissioner of Income Tax [288 ITR 151], the Supreme Court without answering the issue on merits, had dismissed the SLP on the ground that the High Court has followed its previous judgment, which has become final and no appeal has been filed. Therefore, in view of the judgment in 295 ITR 228 (cited supra), with respect, we are unable to follow the judgment of the Supreme Court. In view of the above, the substantial question of law is answered in favour of the Revenue and the Appeals are allowed. No costs. - - TaxTMI - TMITax - Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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