9911796707
TMI Blog2008 (3) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961. Besidesmanufacturing and exporting of products, the assessee was engaged indoing job works for others, particularly exporters, the income wherefromwas also included as business profit in the computation of proportionateexport profit for deduction under Section 80HHC of the Act. The receiptsinvolved are : 1. Income received for job works. 2. Latex backing charges received and 3. Rubber edging charges received. 2. Senior counsel appearing for the assessee clarified and the orders describe the nature of activities done by the assessee as the processing of items supplied by the awarders into final product in their factory by giving rubber latex backing to door mats and other coir products and giving rubber edging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by- (1) ninety percent of any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits ; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India" ; ….. 3. Counsel for the assessee relied on several decisions of High Courts, particularly of the Karnataka High Court in Commissioner of Income Tax v. Bangalore Clothing Company [2003] 260 ITR 371, that of the Madras High Court in Commissioner of Income Tax v. Kiran Processors [2007] 288 ITR 165 and that of Kerala High Court in Commissioner of Income Tax v. United Marine Expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om business turnover. Brokerage, commission, interest and rent etc. are obviously items which are essentially in the nature of net receipts and are not derived out of the total turnover of the assessee. In fact besides these four items enumerated in clause (baa)(1), charges or any other receipt of a similar nature should also be excluded. Even though Senior Counsel appearing for the Revenue submitted that charges referred to under the sub-section are independent of other items referred therein, we are unable to accept this proposition because "charges" along with any other receipt referred to in the above clause are the residuary items of income which qualify for inclusion under (baa) only if such receipt is in the nature of brokerage, comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as if the assessee has purchased rubber latex in their own account and used it in the embellishment work on the product of the awarder, then assessee would have incurred sales tax leading to liability for sales tax on purchase of raw material namely, rubber and sales tax on works contract. However, the assessee's contention based on the decisions above referred that even if raw material is supplied by the awarder or purchased by the assessee on reimbursement basis, without it's value forming part of total turnover, the assessee is still entitled to inclusion of the above items in the total profit is unacceptable because the activity referred to in the decisions are not one comparable to what is carried on by the assessee which is just job ..... X X X X Extracts X X X X X X X X Extracts X X X X
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