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TMI Blog2013 (1) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... is not called for by operation of Explanation (baa)(i) to Section 80HHC, but at the same time, scrap sales turnover, if not included in the total turnover, should be added to the total turnover as denominator in the computation of eligible relief under Section 80HHC (3). - Income Tax Appeal No. 823 of 2008 - - - Dated:- 8-4-2011 - MR. ADARSH KUMAR GOEL AND MR. AJAY KUMAR MITTAL JJ. Present: Mr. Radhika Suri, Advocate for the appellant. Mr. Rajesh Katoch, Standing counsel for the respondents-Revenue. AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for Short "the Act") has been filed by the assesse6 against the order dated 29.9.2008, passe9 by the Income Tax Appellate Tribunal Chandiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had made sale of scrap amounting to Rs. 79,25,489/-. According to the viewpoint of the Revenue, the sale proceeds of the scrap was a part of the total turnover though the assessee had ignored to include the amount of sale of scrap, while computing deduction under Section 80HHC of the Act. At the same time, the assessing' officer excluded the profit on sale of scrap from the profit of the business on proportionate basis for the purposes of calculation of deduction under Section 80HHC. The assessing officer, thus, vide order dated 10.7.2006 modified the deduction admissible under Section 80HHC. 4. The assessee filed appeal before the Commissioner of Income Tax (Appeals) [for short "the CIT(A)"]. The CIT(A) held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business for the purpose of computation of deduction under Section 80HHC. The assessee further took the matter in appeal before the Tribunal, impugning the orders passed by the CIT(A) dated 28.12.2007 and 25.9.2006. The main submission that was raised on behalf of the assessee was that the CIT(A)had erred in holding that the entire turnover of sale of scrap was to be excluded from profits of business while computing the deduction under Section 80HHC. 6. The Tribunal, vide order dated 29.9.2008, under appeal before us, held that the deduction under Section 80HHC of the Act should be computed after excluding the profit on sale of scrap from the profit of business and the sale of scrap also would not form part of the total turnover, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India)'s case (supra). 12. The question regarding inclusion of profit on sale of scrap in calculating business profit under Section 80HHC came up for consideration before the Kerala High Court in the Kar Mobile Limited's case (supra) where after examining the provisions of Section 80'HHC and the Explanation (baa) (1) attached thereto, it was held that the profits arising from the sale of scrap shall form part of business profits referred to in the formula for determining admissible deduction under Section 80HHC of the Act. It was also recorded that the sale of scrap and shall also form part of the total turnover of the assessee. The relevant observations read thus: "The whole exercise of sub-section (3) of Section 80HHC is to determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 position is similar so far as brokerage, commission', interest and rent are concerned because these items of income are income derived from separate operations other than sale of goods, which constitute total turnover. Keeping this in mind, we are of the view that the income from sale of scrap is not income of the nature similar to brokerage, commission, rent, interest, etc., specifically covered by clauses (iiia), (iiib) and (iiic) of Section 28. On the other hand, the finding of the Tribunal and the lower a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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