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TMI Blog2010 (1) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel Sri Joseph Markose appearing for the respondent-assessee. 2. The assessee was engaged in manufacture and sale of automotive parts both within India and out of India. Admittedly the assessee is entitled to deduction of export profit under section 80HHC of the Act. However, since the assessee has local sales as well as export sales, eligible deduction of export profit has to be determined with reference to section 80HHC(3) of the Act. While applying the formula provided therein, the assessee deter-mined the proportionate export profit eligible for deduction and claimed deduction thereof. However, among other things, the Assessing Officer noticed that business profit arrived at by the assessee includes income from sale of scrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80HHC of the Act. Counsel for the assessee also relied on the Division Bench decision of this court in William Goodacre and Sons India Ltd. v. CIT [2008] 305 ITR 365. 4. The Supreme Court has explained in detail the procedure and formula for computation of eligible deduction of export profit in the above referred case. Of course, the question considered in that decision was whether the processing charges form part of turnover which is the denominator in the formula for computation of deduction of eligible export profit. However, in this case, the issue is not on the denominator but as to whether the two items referred to above, namely, income from scrap sales and insurance claim received are in the nature of income referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such item of profit is included in business profit. Section 28 of the Act provides for inclusion of certain items as business income because such items would not have fallen under "business profits" but for such specific inclusion. In the first place, the first three items covered by Explanation clause are items which got included in the business profit by virtue of operation of three clauses of section 28 referred to therein. The three items of income are not referable to any turnover of the assessee and so much so if the said items of income are included in the business profit by virtue of operation of section 28, then unless it is excluded, computation of export profit based on turnover formula will not be correct or realistic. The posit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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