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TMI Blog2017 (8) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80HHC of the Act was to encourage export so as to earn more foreign exchange. It was concluded that 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. Thus the question regarding inclusion of sale of scrap in the total turnover is required to be examined afresh by the Assessing Officer in the factual matrix of the case. We set aside and the matter be remanded to the Assessing Officer for deciding the issue regarding penalty afresh after the decision in quantum proceedings in accordance with l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating deduction under Section 80HHC? (ii) Whether on the facts and in law, the Hon ble Income Tax Appellate Tribunal was justified in directing the Assessing Officer to exclude from the profits of the business only the proportionate profit earned on amount of sale of scrap excluded from the total turnover whereas the whole of the amount of sale of scrap is the total profit on sale of scrap? (iii) Whether on the facts and in law, the Hon ble Income Tax Appellate Tribunal was justified in deciding the issue in the present case in contradiction to its earlier decision delivered in the case of ACIT Vs. M/s Nahar Spinning Mills Limited in ITA No.750/Chandi/2002, ITA No. 523 394/Chandi/2003 and also in the case of M/s Highway Cycles in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was finalized by the Assessing Officer under Section 143(3) of the Act at total income of ₹ 16,92,482/-. The deduction under Section 80HHC of the Act was restricted to ₹ 1,56,61,475/- as against the claim of the assessee at ₹ 1,73,53,957/-. While computing deduction under Section 80HHC of the Act, the Assessing Officer excluded the amount of sale of scrap from the total turnover and the proportionate profit on sale of scrap from the profits of the business . The assessee filed an appeal before the Commissioner of Income Tax (Appeals), [CIT(A)] against the order dated 10.07.2006. Vide order dated 25.09.2006, Annexure A.II, the issue was decided in favour of the assessee. However, it was clarified that the sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application under Section 254(2) of the Act. Vide order dated 12.06.2009, the Tribunal upheld the orders passed by the Assessing Officer. Hence the instant appeals by the appellant-revenue. 4. We have heard learned counsel for the parties. 5. Admittedly, the assessee had claimed deduction under Section 80HHC of the Act amounting to ₹ 1,73,53,957/- in its return of income. The Assessing Officer did not include the sale of scrap in the total turnover for the purpose of deduction under Section 80HHC of the Act. Further, the Assessing Officer excluded the proportionate profit on the sale of scrap from the profits of the business to compute deduction under Section 80HHC of the Act. In appeal the CIT(A) decided the issue in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale of scrap from the total turnover and the proportionate profit from the profits of the business. Thus, the Tribunal did not interfere with the order passed by the Assessing Officer under Section 154 of the Act. 6. The issue has now been finally decided by the Hon ble Supreme Court in Commissioner of Income Tax-VII, New Delhi Vs. Punjab Stainless Steel Industries , Civil Appeal No. 5592 of 2008 decided on May 05, 2014 wherein after considering the relevant statutory provisions and the case law on the point, it was held by the Apex Court that the proceeds generated from the sale of scrap would not be included in the total turnover. It was observed that the intention behind the enactment of Section 80HHC of the Act was to encourage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the aforesaid reasons, we are of the view that the view expressed by the High Court is in conformity with the normal accounting practice followed by the traders, including the respondent-assessee and it was justified in coming to a conclusion that the proceeds generated from the sale of scrap would not be included in the total turnover . 7. In view of the law laid down by the Apex Court in Punjab Stainless Steel Industries s case (supra), learned counsel for the parties submitted that the question regarding inclusion of sale of scrap in the total turnover is required to be examined afresh by the Assessing Officer in the factual matrix of the case. It was urged that in such circumstances, the orders passed by the CIT(A) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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