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TMI Blog2023 (1) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... Debts Write Back cannot be included in total turnover for the previous year 2016-17. On exclusion of the Provisions for Doubtful Debts Write Back the total turnover of the Appellant for the previous year 2016-17 falls below of INR 250 Crores. In view of the aforesaid, we hold that the Appellant was correct in offering its income to tax at the rate of 25% in the return of income. Additional tax demand raised on the Appellant on account of computing income tax liability by adopting rate of 30% (instead of income tax rate of 25%) is deleted. Present appeal is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year 2016-17 exceeding INR 250 Crores. 4. Being aggrieved, the Appellant carried the issue in appeal before CIT(A). However, the CIT(A) decline to grant relief. Therefore, the Appellant is before us in appeal on this issue. 5. The Ld. Authorised Representative for the Appellant appearing before us submitted that the income tax rate of 25% is applicable in the case of the Appellant since in the previous year 2016-17 the total turnover of the Appellant did not exceed the threshold limit of INR 250 Crores specified in Finance Act, 2018. Elaborating on this, he submitted that while computing the total turnover for the previous year 2016-17 Other Income of INR 8.53 Crores has been added to revenue from operations amounting to INR 243.33 Crores to arrive at total turnover of INR 251.86 Crores. The Other Income of INR 8.53 Crores included Provision for Doubtful Debts Write Back amounting to INR 4.09 Crores which cannot formed part of total turnover in view of the judgment of Hon'ble Supreme Court in the case of CIT-VII, New Delhi vs. Punjab Stainless Steel Industries : 364 ITR 144 (SC). Further, the information relating to turnover for the previous year 2016-17 was not available o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion would be whether the sale proceeds of such things would be included in the 'turnover'. Similarly in the process of manufacturing utensils, there would be some scrap of stainless steel material, which cannot be used for manufacturing utensils. Such small pieces of stainless steel would be sold as scrap. Here also, the question is whether sale proceeds of such scrap can be included in the term 'sales' when it is to be reflected in the Profit and Loss Account. 20. In ordinary accounting parlance, as approved by all accountants and auditors, the term 'sales', when reflected in the Profit and Loss Account, would indicate sale proceeds from sale of the articles or things in which the business unit is dealing. When some other things like old furniture or a capital asset, in which the business unit is not dealing are sold, the sale proceeds therefrom would not be included in 'sales' but it would be shown separately. 21. In simple words, the word "turnover" would mean only the amount of sale proceeds received in respect of the goods in which an assessee is dealing in. For example- If a manufacturer and seller of air-conditioners is asked t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tants. The Institute of Chartered Accountants of India ( hereinafter referred to as the 'ICAI') has published some material under the head "Guidance Note on Tax Audit Under Section 44AB of the Income Tax Act". The said material has been published so as to guide the members of the ICAI. In our opinion, when a recognized body of Accountants, after due deliberation and consideration publishes certain material for its members, one can rely upon the same. Para 5 of the said Note deals with "Sales", "turnover" and "gross receipts". Paras 5.2 and 5.3 of the said Note are reproduced hereinbelow, which pertain to the term "turnover". '5.2 In the "Guidance Note on Terms Used in Financial Statements" published by the ICAI, the expression "Sales Turnover" (Item 15.01) has been defined as under:- "The aggregate amount for which sales are effected or services rendered by an enterprise. The term 'gross turnover' and 'net turnover' (or 'gross sales' and 'net sales') are sometimes used to distinguish the sales aggregate before and after deduction of returns and trade discount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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