2005 (10) TMI 43

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..... ion of deduction under section 80HHC of the Act. Accordingly, the question of law referred to above is answered in the affirmative, against the Revenue and in favour of the assessee
Judge(s) : P. D. DINAKARAN., N. KANNADASAN. JUDGMENT The judgment of the court was delivered by P.D. Dinakaran J.-Against the order of the Appellate Tribunal in I.T.A. Nos. 696/Mds/1996 and 2326/Mds/97, dated November 8, 2004, the Revenue has preferred the appeals and raised the following common substantial question of law: "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that sales tax, excise duty, sales of raw materials, charges of miscellaneous income and commission does not form part of the turnover for the .....

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..... n that the turnover from the business of sale of motorcycles, motorcycle spare parts, television sets cannot be introduced to inflate the total turnover artificially in order to reduce the benefit which the assessee is entitled to. That would be clearly going against the object of section 80HHC, which is solely to encourage the exports. The Bombay High Court in a somewhat similar situation in the decision reported in CIT v. Sudarshan Chemicals Industries Ltd. [2000] 245 ITR 769, while interpreting the words 'total turnover' has observed as follows: 'That the total turnover cannot include the sales tax and the excise duty and total turnover should be restricted only to such receipts which have an element of profit in it and it .....

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..... ve any element of profit of business ... The object of section 80HHC is required to be kept in mind while considering that section. The general definition of the word 'turnover' or the definition under the sales tax laws or the case law dealing with the definition of turnover under the State levy cannot be imported into section 80HHC of the Act, particularly, when such expressions are incorporated and explained in the provision itself. Sales tax and excise duty are not to be included in the total turnover while computing the deduction under section 80HHC." In view of the above settled law, we are of the considered view that the Appellate Tribunal was right in holding that the sales tax, excise duty, sales of raw materials, cha .....

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