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TMI Blog2012 (7) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax collected by the assessee and paid to the Government should form part of the total turnover. The second question is whether the turnover discount offered by the assessee to its dealers should form part of the total turnover for the purpose of computing deduction under Section 80HHC of the Act. 3. We may notice facts in brief: 3.1 The appellant-assessee is a company engaged in the business of production and sale of Plastic Hose Pipes used in agriculture operations. During the year relevant to assessment year 1992-93, the assessee made net sales of ₹ 11,62,61,934/-. The assessee also had made certain exports during the said period. In terms of the provisions contained in Section 80HHC as it stood at the relevant time, the assessee was entitled to deduction on such exports sales in terms of the formula provided in said section. It is well known that Section 80HHC of the Act provided for deduction in respect of profits retained for export business. Under sub-section (1) of Section 80HHC of the Act, as it stood at the relevant time an assessee who was engaged in the business of export of goods or merchandise to which a section applied was entitled to deduction in computi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 49,47,812/-. This is the amount of discount allowed to the declare on their turnover which they have done with the assessee during the year. Hence, it is termed as "turnover discount". According to the assessee, it is not discount from the assessee's turnover. We are unable to agree with this submission given by the assessee. As rightly observed by the learned CIT(A), sales takes place at the first instance and discount is given at the later stage. Therefore, the terms "total turnover" has to be understood with respect to the amount shown on the sale bills and the subsequent discount allowed to the declare can only be treated as an item to be debited to the P & L A/c. In this context we have to point out with respect that the case law relied on by the learned counsel in the case of Madras Rubber Industries (P) Ltd. supra is not persons to the issue before us at that was a case decided by the Hon'ble Supreme Court with reference to valuation under the Central Excise and Salt Act, 1944. In the context of I.T. Act, that case law is distinguishable with respect to the term "total turnover" as appearing in Sec. 80HHC." 7. Learned counsel Mr. Karia for the appellant submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertains to the profit and loss account provide that shall set out the various items relating to the income and expenditure of the company arranged under the most convenient heads; and in particular, shall disclose the information specified therein including the turnover, that is, aggregate amount for which sales are effected by the company. 11. Having heard the learned counsel for the parties and having perused the material on record, we may first notice the discount scheme framed by the assessee. By Circular dated 01.04.1991, the assessee addressed the tender letter to all its dealers and conveyed that there will be modification of the previous turnover discount (TOD for short). Henceforth, the discount would be allowed in following manner: Net value Excluding Taxes TOD% Dutron Kanafles Suction & Delivery House: Size 50 mm to 200 mm (Excluding Duct Hose) : Below ₹ 2.0 lacs Nil : ₹ 2.0 lacs & above 2% : ₹ 3.0 lacs & above 3% Rs. 4.0 lacs & above 4% Rs. 5.0 lacs & above 5% As regards DUCT Hoses TOD will be allowed as below for the current year. DUCT HOSE : Below ₹ 2.0 lacs NIL size 20 MM to 200MM : ₹ 2.0 lacs & above 3% : ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration for the works contract as may be prescribed and such price shall be deemed to be the sale price for the purpose of this clause;] 15. From above definitions it can be seen that turnover for the purpose of the said Act is an aggregate of the sale prices received and receivable by dealer in respect of sales of goods in course of inter-State trade or commerce made during the prescribed period. In turn, the term "sale price" in Section 2(h) of the said Act means the amount payable to a dealer as consideration for sale of any goods as reduced by any sum allowed as cash discount according to the prevailing practice in the trade, but inclusive of certain specified items. 16. Before the Apex Court in case of The Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) Vs. M/s. Advani Coorlikon (P.) Ltd. reported in AIR 1980 SC 609 these definitions came up for interpretation. The question was whether a trade discount as opposed to a cash discount could form part of the turnover. The Apex Court noted that under clause 2(h) it was only the cash discount which would be excluded from the sale price. The Apex Court also noted that there was clear distinction between the trade di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the assessee offered to its dealer was in cash but proportionate to the total sales effected by an individual dealer. The amount of discount depended on such total sales. In view of the decision of the Apex Court in case of M/s. Advani Coorlikon (P.) Ltd. (supra), such discount would not form part of the sale price that the assessee would receive. It is not in dispute that in the books of accounts also the assessee had shown the reduced amount as total sale price. 19. The Rajsthan High Court also in case of Commissioner of Income Tax Cs. Pesticides India Ltd. (supra) taken a similar view. In the said decision, while examining a very similar issue, the Division Bench observed as under: "36. The expression "turnover" has reference to sale proceeds of sale of goods/services traded by the assessee. The expression "turnover" in relation to business conveys multiple meanings. In one sense, it is considered to be a volume of business, which in the case of a manufacturer may include total goods produced and disposed of in a given time or in another case may indicate turning over of capital involved in business or in yet another sense it may mean profits derived from a business in a gi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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