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TMI Blog2006 (5) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... a statute having application throughout the country, we do not find any good reason to differ from the views taken by six different High Courts on the issue. Accordingly, the substantial question of law raised in the appeal is answered against the Revenue and in favour of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... reunder, it has to be given a restrictive meaning while computing the 'export profit' for the purpose of section 80HHC, namely, only that part of the receipt for sale consideration is to be taken as part of the total turnover which has an element of profit therein and, accordingly the receipt of excise duty and sales tax which do not include an element of profit should be excluded from "total turnover". In the result, the Assessing Officer was directed to compute the deduction under section 80HHC on export profits and arrived at on the basis of the export turnover and total turnover exclusive of the receipts of excise duty and sales tax'. So by respectfully following the order of the Tribunal (Special Bench) in the aforesaid referred to case, we are of the opinion that learned Commissioner of Income-tax (Appeals) was fully justified in holding that sales tax and excise duty should not be included in the 'total turn over' for calculating deduction under section 80HHC. We, therefore, do not see any merit in this ground of the Departmental appeal." 3. We have heard Dr. N. L. Sharda, advocate, counsel for the Revenue and Shri Akshay Bhan, advocate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany) resident in India is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance 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 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 tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India ;" 7. From the above extract, it is clear that subject to and in accordance with the provisions of the section, an assessee engaged in the business of export is entitled to claim deduction of the profits derived by it from export, while computing its total income under sub-section (1) of section 80HHC of the Act. Sub-section (3)(a) of section 80HHC of the Act provides how "profits derived from export" should be arrived at. It provides that profits derived from 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. 8. "Export turnover", "total turnover" and "profits of business" have been defined in Explanations (b), (ba) and (baa) to section 80HHC of the Act. "Total turnover" is not to include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined under the Customs Act, 1962. The proviso theret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 been understood in the several statutes does not necessarily throw any light on the manner in which the term should be understood generally. On the other hand it is a sound, and, indeed, a well-known principle of construction that meaning of words and expressions used in an Act must take their colour from the context in which they appear. . ." 12. Keeping in view the above principles for interpretation of statutes the term "total turnover" used in section 80HHC of the Act needs to be interpreted vis-a-vis the definition of "export turnover" with reference to other definitions as given in various clauses of section 80HHC of the Act. The interpretation under the Income-tax law needs to be contextual and should not be with reference to the interpretation given to it under the sales tax law. 13. It is submitted by counsel for the assessee that the profits derived from such exports should be the amount, which has profit element in it. As already stated, while interpreting the word "total turnover", under section 80HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such receipts which have an element of profit in them. It is only the actual sale price, which is relevant. The element of sales tax and excise duty cannot be included to inflate the total turnover artificially in order to reduce the benefit which an assessee is otherwise entitled to." 15. In CIT v. Sudarshan Chemicals Industries Ltd. [2000] 245 ITR 769 (Bom), it is held as under (page 773) : ". . . Under clause (b) of the Explanation to section 80HHC, export turnover is defined to mean sale proceeds received in India by the assessee in foreign exchange. Under the said definition, export turn over is defined to mean the sale proceeds of any goods which are exported out of India but which will not include freight or insurance. Clause (ba) defines total turnover to exclude freight or insurance. This clause (ba) explains the turnover in a negative manner so as to exclude freight or insurance. Therefore, a combined reading of the above two clauses shows that they include anything which has nexus with the sale proceeds. Correspondingly, they show that they exclude everything which has no nexus with the sale proceeds. Further, the meaning of export turnover in clause (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ports'. 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 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." 16. The other High Courts have also taken a similar view. 17. Counsel for the Revenue could not cite any judgment taking a view contrary to what has been taken in the judgments referred to above. 18. What should be the approach of the different courts dealing with an all India statute is well-settled by the various judgments. The latest being CIT v. SAE Head Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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