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TMI Blog2014 (5) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... as to encourage export so as to earn more foreign exchange - If the purpose is to bring more foreign exchange and to encourage export, the legislature would surely like to give more benefit to persons who are making an effort to help our nation in the process of bringing more foreign exchange - once the Government decides to give some benefit to someone who is helping the nation in bringing foreign exchange, the Revenue should also make all possible efforts to encourage such traders or manufacturers by giving such business units more benefits as contemplated under the provisions of law – HC was correct coming to the conclusion that the proceeds generated from the sale of scrap would not be included in the ‘total turnover’ – Decided against Revenue. - Civil Appeal No. 5592 of 2008, Civil Appeal Nos. 3283 and 4491 of 2009 and 4898 of 2010 - - - Dated:- 5-5-2014 - Anil R. Dave And Dipak Misra,JJ. JUDGMENT Anil R. Dave, J. 1. Being aggrieved by the judgment delivered in ITA No. 520 of 2006 dated 19th January, 2007, by the High Court of Delhi, this Appeal has been filed by the Commissioner of Income Tax. 2. The facts giving rise to the present appeal, in a nutshell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age which the assessee would get under Section 80HHC would decrease because the amount deductible substantially depends upon the ratio between the export turnover and total turnover. If the export turnover is higher, comparatively the amount deductible under Section 80HHC would be more; or in other words, if compared to total turnover, export turnover is less, the amount deductible from the income under Section 80HHC would be reduced. By virtue of the impugned judgment delivered by the High Court, the accounting method followed by the respondentassessee has been approved and therefore, this appeal is filed by the Revenue. 11. The learned counsel appearing for the appellant-Revenue, had vehemently submitted that even the sale of scrap is sale and the proceeds which the respondent-assessee received from such sale should be included in the total turnover . In the circumstances, the total turnover must include the amount received by the respondent-assessee from the sale of scrap. 12. It had been submitted by him that the respondent-assessee was getting substantial amount from sale of scrap and the receipt from the sale of scrap was a regular feature of its business. In the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one has to know the meaning of the term turnover . The term turnover has neither been defined in the Act nor has been explained by any of the CBDT circulars. 18. In the aforestated circumstances, one has to look at the meaning of the term turnover in ordinary accounting or commercial parlance. 19. Normally, the term turnover would show the sale effected by a business unit. It may happen that in the course of the business, in addition to the normal sales, the business unit may also sell some other things. For example, an assessee who is manufacturing and selling stainless steel utensils, in addition to steel utensils, the assessee might also sell some other things like an old air conditioner or old furniture or something which has outlived its utility. When such things are disposed of, the question would be whether the sale proceeds of such things would be included in the turnover . Similarly in the process of manufacturing utensils, there would be some scrap of stainless steel material, which cannot be used for manufacturing utensils. Such small pieces of stainless steel would be sold as scrap. Here also, the question is whether sale proceeds of such scrap can be incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Loss Account of the respondent-assessee.. 24. The situation would be different in the case of the buyer, who purchases scrap from the respondent-assessee and sells it to someone else. The sale proceeds for such a buyer would be treated as turnover for a simple reason that the buyer of the scrap is a person who is primarily dealing in scrap. In the case on hand, as the respondent-assessee is not primarily dealing in scrap but is a manufacturer of stainless steel utensils, only sale proceeds from sale of utensils would be treated as his turnover . 25. So as to be more accurate about the word turnover , one can either refer to dictionaries or to materials which are published by bodies of Accountants. The Institute of Chartered Accountants of India ( hereinafter referred to as the ICAI ) has published some material under the head Guidance Note on Tax Audit Under Section 44AB of the Income Tax Act . The said material has been published so as to guide the members of the ICAI. In our opinion, when a recognized body of Accountants, after due deliberation and consideration publishes certain material for its members, one can rely upon the same. Para 5 of the said Note deals wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said term has been incorporated in Section 80 HHC of the Act. 28. The intention behind enactment of Section 80HHC of the Act was to encourage export so as to earn more foreign exchange. For the said purpose the Government wanted to encourage businessmen, traders and manufacturers to increase the export so as to bring more foreign exchange in our country. If the purpose is to bring more foreign exchange and to encourage export, we are of the view that the legislature would surely like to give more benefit to persons who are making an effort to help our nation in the process of bringing more foreign exchange. If a trader or a manufacturer is trying his best to increase his exports, even at the cost of his business in a local market, we are sure that the Government would like to encourage such a person. In our opinion, once the Government decides to give some benefit to someone who is helping the nation in bringing foreign exchange, the Revenue should also make all possible efforts to encourage such traders or manufacturers by giving such business units more benefits as contemplated under the provisions of law. 29. For the aforesaid reasons, we are of the view that the view ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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