9911796707
TMI Blog1999 (12) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 80HHC as claimed. The assessing officer, vide notice dated 17-8-1994 sought to rectify the assessment in so far as it related to deduction under section 80HHC, as while claiming the deduction, the assessee had not included receipts of ₹ 52,17,920 by way of labour charges in the total turnover of the business. Though the notice under section 154 was served on 15-8-1994, no compliance was made. The assessing officer, therefore, proceeded to compute the deduction under section 80HHC as follows: Dedn under section 80HHC = Export turnover X Profit of the business + 90% of export licence premium X ITO Total turnover = 35,77,292 X 6,64,291 + 2,08,498 X 35,77,292 87,95,212 87,95,212 = 2,70,188 + 84,802 = 3,54,996 He revised the total income accordingly. The assessee appealed but without success. This has brought the assessee before us. The assessee has challenged the confirmation of order under section 154 by the Commissioner (Appeals). In the grounds of appeal it is submitted that in his rectificatory order, the assessing officer has added gross labour charges of ₹ 52,17,920 (reimbursement by Principals of actual l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is vehemently argued that reimbursement of labour charges amounting to ₹ 50,27,181 cannot form part of total turnover for the purpose of computing deduction under section 80HHC. In support of his arguments, reliance was placed on the following decisions:- 1. Salgaocar Mining Industries Ltd. v. Deputy CIT (1997) 61 ITD 105 (Pune-Trib) 2. Income Tax Officer v. Smt. Suman Goyal (1998) 99 Taxman 147 (Del-Trib.) 3. International Research Park Laboratories Ltd. v. Assistant CIT (1994) 50 ITD 37 (Del-Trib) (SB) 4. Pinkstar Mumbai v. Deputy CIT (IT Appeal No. 6031 (Mum) of 1997 dated 23-2-1999.) 4. The learned Departmental Representative on the other hand, supported the orders of the revenue authorities. He invited out attention to the findings of the Commissioner (Appeals) that job receipts from the Principals were the amount of total work done. This is supported by the bills raised by the assessee on the Principals. The learned Departmental Representative also pointed out that the assessee is not a commission agent who is engaged in doing labour job work and, therefore, the entire gross receipts on account of labour charges form part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the term total has been defined as the whole; entire; constituting or comprising a whole; complete in nature; invoking all resources or aspects; manifesting every characteristic or the whole nature of all activity person, etc. The term turn over has been defined to mean to do business to the amount of . From the above dictionary meaning, it is obvious that the total amount of money taken in a business will constitute the total turnover of the assessee. It is an admitted position that besides the business of imports and exports of diamonds, the assessee undertakes job work for cutting and polishing of diamonds, In the year of account, the assessee received total job work charge of ₹ 52,17,920. In the year of account, the assessee raised 11 bills on its principals for an aggregate amount of' ₹ 52,17,920. According to the assessee, the said aggregate amount of bill of ₹ 52,17,920 comprises of ₹ 50,27,181 by way of reimbursement of labour charges and ₹ 1,90,739, being commission charged by the assessee @) ₹ 6 per ct. While claiming the deduction under section 80HHC, the assessee excluded the amount of labour charges of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein. From the language of the expression total turnover as extracted above, it is obvious that it merely states that freight or insurance attributable to the transport of goods or merchandise beyond the customs station shall not form part of the 'total turnover'. Export incentives have also been excluded from the definition the term total turnover for and from the assessment year 1991-92 onwards. Having regard to the explanation in respect of the expression total turnover , we are of the view that the entire amount of the bills raised, inclusive of commission shall form part of total turnover of the assessee's business. The assessing officer had commuted an apparent error in his order dated 8-2-1993 in not considering the aggregate amount of bill as part of total turnover raised by the assessee on principals in respect of job work done in allowing deduction under section 80HHC. On the face of the explanation of the term total turnover in section 80HHC, the question of any debate as to the includibility or otherwise of the aggregate amount of job work receipts in total turnover did not arise at all. We are, therefore, of the view that the assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case (supra). In that case the assessee was a Public Limited Co. engaged, inter alia, in the business of export of cosmetic goods and other products. In the year of account the assessee had received export fees of ₹ 2.04 crores on assignment of certain export orders to another exporter H.L.L. The assessee had claimed deduction under section 80HHC treating the commission received from HLL as profits derived from export business, eligible for apportionment on the basis of the export turnover to the total turnover. This was not acceptable to the assessing officer who declined to accept that the commission received from the other exporter was also the profit derived from exports. When the matter was taken up to the Tribunal by the assessee, the Tribunal held that the commission received on assignment of export orders is eligible for deduction under section 80HHC. Perusal of the decision (supra) will go to reveal that it was nobody's case that commission forms part of turnover. It was in that context that an observation was made by the Tribunal (page 44 of the report) that it was no doubt that the commission was not turnover but it was a profit relatable to export. In the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose job work was undertaken by the assessee, has been brought on record. There is no evidence to show that the principals had agreed to reimburse the expenses as well in getting the job work done besides giving commission to the assessee which was the position in Smt Suman Goyal's case (supra). Moreover, Smt. Suman Goyal was admittedly a commission agent, which is not the case with the assessee on hand. The assessee besides, being an exporter of polished diamonds, undertakes job work of cutting and polishing of diamonds and the commission earned by the assessee is incidental to the carrying on of the said job work. The fact that the assessee has raised bills on the principals for aggregate amount of job work done inclusive of commission cannot be ignored. 9. The decision in Pink Star's case (supra) relied upon by the assessee is admittedly not directly on the issue involved in the case of the assessee before us. In that case, the issue was whether the profits of the business have to be reduced by 90 per cent of gross labour charges or by 90 per cent of net labour charges received by the assessee. On the basis of facts in that case, it was held by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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