9911796707
TMI Blog2011 (4) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... alone, which is as follows:- "whether on the facts and in the circumstances of the case, the Income Tax Tribunal is right in holding that technical service charges and tyre retreading receipts do form part of the export business and are eligible for deduction under Section 80HHC?" 3. The facts culled out from the pleadings are as follows :- The assessee filed return under Section 139(1) of the Income Tax Act, 1961 (in short "the Act") and the same was processed under Section 143(1) of the Act. Thereafter, under Section 154 of the Act, an order was passed after finding that while computing deduction under Section 80 HHC of the Act, the assessee had included contract / rent income, lease operations, which were not related to the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of deduction under Section 80HHC, has held that the explanation offered by the assessee is not convincing as this is a company doing mainly the business of manufacturing of compressors and garage machineries, a part of which was exported; that income from lease operation is treated as not falling in the main business activities of the assessee and hence, the deduction under Section 80HHC was recomputed by excluding this and other income and arrived at the taxable amount of Rs.4,26,16,843/-. The appellate authority as well as the Tribunal, following the decision of the Commissioner of Income-Tax vs. Bangalore Clothing Co. [260 ITR 371], allowed the claim of the assessee and held that service charges and receipts should not have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962): Provided that in relation to any assessment year commencing on or after the 1st day of April, 1991, the expression total turnover shall have effect as if it also excluded any sum referred to in clauses (iii-a), (iii-b) and (iii-c) of Section 28; (baa) profits of the business means the profits of the business as computed under the head Profits and gains of business or profession as reduced by (1) ninety per cent of any sum referred to in clauses (iii-a), (iii-b) and (iii-c) of Section 28 or of any receipts by way of brokerage, commission, interest, rent, charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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, therefore, eligible for deduction under Section 80HHC. The Assessing Officer, who was not convinced with the aforesaid statement made by the assessee, proceeded to treat the technical service charges and tyre retreading receipts as part of the export business on the footing that the assessee has been mainly doing the business of manufacturing of compressors and garage machineries and a part of which was exported. This finding of the Assessing Officer gets ample support from the decision of the Supreme Court in Ravindranathan Nair case. 10. In the said case, the learned Addl. Solicitor General a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 income to arrive at the business profits and since the said processing charge was an important component of business profits, it also had to be included in the total turnover in the said formula to arrive at the business profits in terms of clause (baa) to the said Explanation. In the case before the Supreme Court, it was held that the processing charges were included in the gross total income from cashew business and that even according to the assessee the said charges constituted an important component of gross total income from cashew business. 12. Ultimately, the Supreme Court has obs ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
