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TMI Blog2023 (6) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... d in computing PB as they were independent incomes , which had no element of export turnover. Board Circular 621, dated 19.12.1991 ( explaining the amendments to the Act by Finance (No.2) Act, 1991, does so qua sec. 80HHC. Same sets out the rationale for deduction of independent incomes in computing profits of the business , on the basis of which, applying further filters, the export profit is determined. That is, incomes, which though stand credited to the Profit Loss Account, have no element of turnover. As some expenditure might be incurred in earning these incomes, which is generally by way of common expenses, an ad hoc deduction from such incomes is provided to account for the same, explaining thus the basis for deduction of such incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een shown as so. The AO, if he considered the same as warranted, ought to have invoked section 154 of the Act. Even assessee has credited, and only rightly so, the entire amount of REP premium to the Profit Loss Account, it is only the profit component therein that would stand to be excluded on the transfer of the REP, as the assessee claims with reference to the decision in Topman Exports [ 2012 (2) TMI 100 - SUPREME COURT] Further still, as it appears, the same falls u/s. 28(iiie) of the Act, adjustment in respect of which stands co-opted in Explanation (baa) by Taxation Laws (Amendment) Act, 2005 w.r.e.f. 01.04.1998,i.e., AY 1998-99 onwards. As such, considered whichever way, there is no basis for the said adjustment in the instant proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r travelled to the Hon'ble High Court at the instance of the Revenue, raising the following three questions for it's adjudication:- 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and in fact in holding that processing charges and lease rent received are not to be included in the total turnover for computation of deduction under section 80HHC? 2. Whether, on the facts and in the circumstances of the case and in view of the Explanation (ba) to Section 80HHC and clauses (iiia), (iiib) and (iiic) of Section 28, will not turnover take into account all other receipts other than the excluded items of receipts? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 80HHC with direction to the Assessing Officer to recompute eligible relief under section 80HHC by following judgement of the Supreme Court above-referred and after giving opportunity to the assessee. The Tribunal's order pertaining to the last question will stand confirmed." The appeal effect thereof was accordingly given by the Assessing Officer (AO), retaining the 'total turnover'(TT) at Rs. 1272.70 lakhs, i.e., as computed earlier (even as we observe minor differences in the figures of 'processing charges' and 'processing rent', i.e., with reference to that adopted earlier, included therein, and which differences thus neutralise each other). Further, 90% of the profit on processing charges (i.e., Rs. 4,80,255/-) and processin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (TT) and "profit of the business" (PB) in computing the latter u/s. 80HHC(3); and (b) other items which would stand to be included in calculating TT. 3.2 The Hon'ble Apex Court in K. Ravindranathan Nair (supra) explained that the processing charges constitute an important part of the cashew business and, therefore, were to be included in the TT thereof u/s. 80HHC(3) (para 23). Also, profit incentives and items like rent, commission, brokerage, etc., though form part of gross total income, had to be excluded in computing PB as they were "independent incomes", which had no element of export turnover (para 19). Board Circular 621, dated 19.12.1991 (reported at [1992] 195 ITR (St.) 154 (at para 32/pgs. 176-179) explaining the amendments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween the amendments as explained by the Board and as later elucidated by the Hon'ble Apex Court. 4. In view of the above, we direct as under: - (a)processing charges (rs.72,73,110/-) shall form part of the total turnover; (b) profit on processing charges (rs. 4,80,255) shall not be excluded in computing PB; (c)processing rent (at Rs. 2,14,720), an independent income, shall not form part of TT, but shall stand reduced in computing PB, at 90% thereof, i.e., Rs. 1,93,248; (d) discount received on purchase of tin plates (Rs.1,54,443), reduced in computing PB vide assessment order dated 16.02.2099, has not been similarly reduced while giving effect vide order dated 09.04.2012, so that it obtains no longer. Being an integral part o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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