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TMI Blog2001 (12) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... port turnover and the exports are not liable to such levies. The deduction under section 80HHC of the Act is granted on the proportion which the export turnover bears to the total turnover. The contention of the Revenue, on the other hand, is that the said three items have to be included in the total turnover. If the contention of the Revenue is accepted, the assessee would get a smaller proportion of the total profit as export profit and consequently there would be a smaller deduction under section 80HHC of the Act. If the assessees' contention is accepted the total turnover would be reduced by the octroi, sales tax and excise duties which would increase the proportion of the export profits and consequently the deduction under section 80HHC of the Act would be increased. Applying the principles of interpretation of the statutory provision granting a deduction, the Tribunal was of the view that while working out the ratio or proportion both the export turnover and the total turnover should consist of the same components or ingredients. According to the Tribunal uniformity or harmony between the export turnover and the total turnover must be sought to be achieved and in doing so t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms duty were and are includible in the concept of the "total turnover" as the Legislature had not considered it expedient to remove an anomaly imagined by the assessee. Thus Mr. Mallick had advanced his argument in support of the contention of the Revenue that octroi, sales tax and excise duties cannot be excluded from the total turnover under section 80HHC of the Act. Mr. Agarwal, appearing for the Revenue, in I.T.R. No. 136 of 1995 supported the above noted contentions raised by Mr. Mallick on this score. Furthermore it had been contended both by Mr. Mallick and Mr. Agarwal in the course of their argument that there was no express provision in the relevant section of the Act excluding sales tax, octroi and excise duty from the purview of the total turnover. It had further been pointed out by them that the expression "total turnover" as understood in the commercial world and as defined in the Bengal Finance (Sales Tax) Act included those three items, namely, sales tax, octroi and excise duty, and there cannot be any reason to hold that the same interpretation cannot be given effect to the expression "total turnover" under the Income-tax Act. Our attention had been drawn by them to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the export turnover was the numerator in the above formula whereas the total turnover was the denominator and the said formula was prescribed to arrive at the profits from exports. It is further the contention of Dr. Pal that if the denominator was to include the items like sales tax, excise duty and octroi duty and if the numerator would exclude the above items, the formula would become, unworkable and the proportion would be disturbed and unbalanced. Dr. Pal emphasised the point that the profits derived from exports would be the amount which bears to the profits of the business as computed under the head "Profits and gains of business" the same proportion as the export turnover bears to the total turnover and therefore weightage must be given to such profits. He further contended that the turnover should be restricted to such receipts which would have an element of profit in it and it is only the actual sale price which would be relevant and anything charged by way of octroi, excise duty and sales tax must not be taken into account as they do not have any element of profit. The case of CIT v. Sudarshan Chemicals Industries Ltd. [2000] 245 ITR 769 (Bom) was cited by Dr. Pal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys down that where the export is of goods, 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. So the emphasis should be laid on the words "profits derived from the exports" and as such weightage must be given to such profits which cannot be reduced artificially by including statutory levies in the total turnover. In the case of CIT v. Sudarshan Chemicals Industries Ltd. [2000] 245 ITR 769, the Division Bench of the Bombay High Court clearly held that the turnover should be restricted to such receipts which have an element of profit in it and it is only the actual sale price which is relevant. We find no reason to differ from the view of the Division Bench of the Bombay High Court expressed in the above noted case. In our view octroi, excise duty and sales tax cannot have any element of profit and as such those items cannot be included in the total turnover. If contrary view is taken that will make the object sought to be achieved by the Legislature nugatory. The case of McDowell and Co. Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive it can well be held that the case of McDowell and Co. Ltd. [1985] 154 ITR 148 (SC) which deals with separate enactments has got no manner of application to interpretation of the words "total turnover" which find place in the relevant provision of the Income-tax Act. It is to be borne in mind in this context that the sales-tax, octroi and excise duties are levied under the separate enactments which have different objects and as such the general definition of the word "turnover" or the case law dealing with the said definition under the Sales Tax Act can in no way be imported into section 80HHC of the Income-tax Act with which we are presently concerned. For the foregoing reasons, we hold that on the facts and in the circumstances of the case, the Tribunal was right in law in holding that octroi, sales tax and excise duty should be excluded from the figure of "total turnover" while computing the deduction under section 80HHC of the Act. The question of law referred to us by the Tribunal is answered in the affirmative, in favour of the assessee and against the Revenue. Both the reference cases being I.T.R. Nos. 131 of 1995 and 136 of 1995 are disposed of accordingly. The partie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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