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TMI Blog2004 (3) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... ions to Section 80HHC. While logic need not always be the basis for a taxing provision, it does not follow that a taxing provision logically made, should be interpreted illogically or asymmetrically, merely because it is a taxing statute. We therefore respectfully agree with the consistent and logical interpretation adopted by the Bombay and Calcutta High Courts and reject the interpretation put forth by the Revenue. As a consequence, we find that the order of the Tribunal is in order and does not call for interference. The appeal is, therefore, rejected. - R. Raveendran And H. Billappa, JJ. JUDGMENT R. V. Raveendran, J. 1. This appeal by the Revenue under Section 260-A of the Income-tax Act, 1961 ( Act for short) is filed against the order dt. 28th. June, 2002, passed by the Tribunal, Bangalore Bench, in ITA No. 550/Bang/1999 relating to the asst. yr. 1996-97. The respondent assessee is a Government Company. 2. The question of law involved in this appeal is whether sales-tax collected by the assessee on its sales, should be treated as part of total turnover for the purpose of computing the profits derived from export, for claiming deduction under Section 80HHC of the Act. 3. Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term total turnover includes sales-tax and excise duty. The effect of the respective contentions can be easily understood from the following illustration : Rs. Profits of Business = 50,000 Export Turnover = 2,00,000 Total Sales Turnover (without Sales-tax Ex. Duty) = 4,00,000 Total Sales Turnover (with Sales-tax Ex. Duty) = 5,00,000 Profits of Export (according to assessee) 50.000 x 2,00,000 4,00,000 = 25,000 Profits of Export (according to Revenue) 50.000 x 2,00,000 5,00,000 = 20,000 5. In this case, the assessee while computed the profit of exports in terms of Sub-section (3) in the return submitted, had excluded the sales-tax from the total turnover. The AO passed an order of assessment dt. 25th Feb., 1999, wherein he added the sales-tax collected by the assessee to the trading receipts to arrive at the total turnover. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who by an order dt. 25th June, 1999, upheld the order of the AO. The further appeal filed by the assessee was allowed by the Tribunal holding that total turnover shall not include the sales-tax collected by the assessee for the purpose of calculating eligible amount of deduction under Section 80HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net turnover, (inserted w.e.f. 1st April, 1951) was inapplicable for computing the taxable turnover for assessment years prior to that date. It was further held that in the absence of an express provision in the ST Act at the material time, which obliged the taxing authority to exclude the amount of sales-tax collected by the dealer, from the taxable turnover, turnover included the sales-tax received by the dealer as part of the price. Here again, the decision was rendered with reference to the provisions of local sales-tax law and is of no assistance to interpret the term occurring in Section 80HHC. 7. In S. Mohan Lal v. R. Kondiah AIR 1979 SC 1132, the Supreme Court stated the principle relating to interpretation of words used in a statute, with reference to their definitions in other enactments, thus : It is not a sound principle of construction to interpret expressions used in one Act with reference to their use in another Act; more so if the two Acts in which the same word is used are not cognate Acts. Neither the meaning, nor the definition of the term in one statute affords a guide to the construction of the same term in another statute and the sense in which the term has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator; and that sales-tax and excise duty which do not form part of the export turnover cannot also form part of total turnover as both the numerator and denominator should contain the same components. The Court further observed: In the circumstances, we are of the view that in order to ascertain the export profits, the above two items (sales-tax and excise duty) cannot be introduced to inflate the total turnover artificially in order to reduce the benefit which an assessee is entitled to ... Even according to the accounting principles, such levies do not form part of the profit and loss account. In fact, they are shown as liability in the balance sheet. In the circumstances, the above two items cannot be included in the total turnover. We prefer this interpretation as it advances the object sought to be achieved by the legislature. Lastly we are of the view that sales-tax and excise duties are levied under separate enactments which have different objects. We are concerned with Section 80HHC which is a separate code by itself. Hence, the general definition of the word turnover or the case law dealing with the said definition under the Sales-tax Act which is a state levy, cannot be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profits of export' should be taken as 30 per cent of total profits of business. The said method of calculation of profit of export is given in view of the obvious difficulties in calculating the actual profit with reference to the exports alone. Further, the normal human tendency is to inflate the expenditure and reduce the profit so as to reduce the tax burden. But, where a particular profit (like export profit) is excluded from the total income to be taxed, the tendency would be to increase the quantum of such export profits. In other words, where an assessee has profits from internal sales and from export, the legislature expected an attempt to increase the profit from export transactions and decrease the profit from non-export transactions. To avoid such evasions and at the same time ensure the grant of incentive for exports, the legislature made a provision for determining the profits from exports, in proportion to the ratio which the turnover of exports bears to the total turnover. Consequently, it follows that if the export turnover does not have the elements of sales-tax or excise duty, the total turnover should also not have the said inputs. In the circumstances, to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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