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TMI Blog2014 (10) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80HHC(3)" Decided against revenue. Receipts from sale of scrap Held that:- Following the decision in Commissioner of Income-Tax vs- Punjab Stainless Steel Industries & Others [2014 (5) TMI 238 - SUPREME COURT] it has been held that the raw material, which is not capable of being used for manufacturing the goods will have to be either sold as scrap or might have to be re-cycled of disposed of to someone who would re-cycle the scrap - when such scrap is sold, the sale proceeds of the scrap cannot be included in the term "turnover" - the proceeds of sale of such scrap would not be included in "sales" in the profit and loss account of the assessee. 90% of the fees received from Robert Bosch Held that:- Following the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consideration the amended Section 145A of the Act introduced w.e.f. 1.4.1999 and applicable to the current assessment year? 2) Whether the Appellate Authorities were correct in holding that receipts of ₹ 5,24,63,704/- from sale of scrap cannot be included in the total turnover for the purpose of computation of deduction u/s.80HHC of the Act? 3) Whether the Appellate Authorities were correct in holding that 90% of the fees received from Robert Bosch of ₹ 4,32,08,798/- cannot be excluded in accordance with Explanation to Section 80HHC of the Act? 3. The first substantial question of law arose for consideration before the Apex Court in the case of Commissioner of Income-Tax vs Lakshmi Machine Works reported in ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso sell some other things. In ordinary accounting parlance, as approved by all accountants and auditors, the term sales , when reflected in the profit and loss account, would indicate sale proceeds from sale of the articles or things in which the business unit is dealing. When other things like old furniture or a capital asset, in which the business unit is not dealing are sold, the sale proceeds therefrom would not be included in sales but would be shown separately. Sale proceeds from scrap may either be shown separately in the profit and loss account or may be deducted from the amount spent by the manufacturing unit on the raw material from which goods are manufactured. The raw material, which is not capable of being used for manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... percent of the amount applying the provisions of Explanation (baa) to section 80HHC of the Act. The assessee objected to the deduction. The assessee contended that the proviso to Explanation (baa) could be applied only to those items which are specifically mentioned therein. The Tribunal accepted the assessee s contention. On appeal to the High Court: Held, dismissing the appeal, that admittedly that the assessee was in the business of export of goods and merchandise. The assessee was earning foreign exchange out of that export business. The disputed income was earned by the assessee for its fees towards developmental work from the foreign enterprise. The developmental work was intimately connected with the business of manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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