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TMI Blog2004 (9) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, the Tribunal was right in holding that sales tax and excise duty (Appeal No. 726/2004) and excise duty (Appeal No. 181/2004) not to be included in the total turnover while computing the deduction under section 80HHC of the Income-tax Act, 1961?" The assessment years involved are 1990-91 and 1992-93. In these appeals, the Assessing Officer included the excise duty and sales tax collection in the total turnover of the assessee for computing the deduction under section 80HHC. On appeal by the assessee, the Commissioner of Income-tax (Appeals) upheld the action of the Assessing Officer. On further appeal to the Tribunal, the Tribunal following the decision of the Bombay High Court in the case of CIT v. Sudarshan Chemicals Industries Limited [2000] 245 ITR 769 accepted the contention of the assessee and allowed the appeals. The said order of the Tribunal is put in issue in the present appeals. Mrs. Pushya Sitharaman, learned standing counsel for the Department placed before us the working sheet and contended that the removal of the excise duty and sales tax element from the total turnover would increase the percentage of the export profit which would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from the export of such goods or merchandise... (3) For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured or processed by the assessee, the profits derived from such export shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee;... (c) where the export out of India is of goods or merchandise manufactured or processed by the assessee and of trading goods, the profits derived from such export shall,- (i) in respect of the goods or merchandise manufactured or processed by the assessee, be the amount which bears to the adjusted profits of the business, the same proportion as the adjusted export turnover in respect of such goods bears to the adjusted total turnover of the business carried on by the assessee; and (ii) in respect of trading goods, be the export turnover in respect of such trading goods as reduced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (iiic) of section 28. The word "turnover", when it is not specifically defined in the Act, would actually assume the meaning that the consideration received must be for the sale of goods and it must be available with the assessee for being turned over or in other words it must come to the assessee's till as the money belonging to him. In order that an amount can be included in the total turnover it must either be the purchase or the sale price or something incidental to the transfer of the goods dealt with by the assessee. In other words the turnover must relate to the purchase or the sale of the goods made by the assessee. The incidental expenses such as freight and insurance have been specifically excluded. When the definition of total turnover excludes incidental expenses such as freight and insurance, which amount has to be borne by the assessee for safe transportation of his goods from and out of his pocket, it is highly impossible to accept the contention that the term "turnover" would include itself the excise duty and sales tax components which are all indirect taxes and the assessee has to collect and pay it over to the Government and such statutory dues will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e export turnover bears to the total turnover. The emphasis is on the words 'profits derived from the exports'. Therefore, weightage must be given to such profits. Such profits cannot be reduced artificially by including statutory levies in the denominator, namely, total turnover. Therefore, the turnover should be restricted to such receipts which have an element of profit in it. It is only the actual sale price which is relevant. Anything charged by the assessee by way of excise duty and sales tax cannot be taken into account as they do not have any element of profit. Even, according to 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." The Division Bench of this court in which one of us is a party (K. Raviraja Pandian J.) in the case of CIT v. Madras Motors Ltd./M.M. Forgings Ltd. [2002] 257 ITR 60, while answering the question in that case, whether the Tribunal was right in its conclusion that the total turnover in section 80HHC of the Act is only the turnover relating to the export business of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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