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TMI Blog2001 (5) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... guest house. 4. We are, however, not in agreement with the contention on behalf of the assessee. The learned counsel for the assessee had admitted before us that the local conveyance expenses under consideration related to the staff located at the guest house and hence the expense should be considered to be closely connected with the maintenance of the guest house inasmuch as the local conveyance should be treated as having been incurred for the purpose of fetching things and articles required for maintenance of the guest house. The assessee itself seems to have included the local conveyance expenses within the guest house expense and also came up with the break-up of the guest house expenses in that manner (by including the local conveyance expenses) before the AO. Otherwise, the AO would not have got any separate idea about the local conveyance expenses incurred by the staff of the guest house. In essence, therefore, the assessee admits that the local conveyance expenses were a part and parcel of the expenses incurred by it for maintenance of the guest house. As such, we agree with the Departmental contention that the local conveyance expenses are intimately connected with the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) 287 : (1997) 223 ITR 271 (SC) at 281. The circular of the CBDT No. 731, dt. 20th Dec, 1995 with regard to the issue of allowance of deduction under s. 80-O has also been referred to in this connection. Further reliance has also been placed on the judgment of the Tribunal, Delhi Bench in the case of Capt. K.C. Saighal vs. ITO (1995) 54 ITD 488 (Del). 7. On the other hand, the learned Departmental Representative relies on another judgment of the Supreme Court in the case of Sea Pearl Industries & Ors. vs. CIT (2001) 165 CTR (SC) 395 : (2001) 247 ITR 578 (SC) at p. 583 to argue that the object of allowing deduction under s. 80HHC is to encourage the earnings of foreign exchange. The learned Departmental Representative argues in this connection that inasmuch as the brokerage and commission had to be paid out of the gross sale proceeds, the net amount actually earned by the assessee by way of foreign exchange is required to be taken into consideration. 8. We are of the opinion that the expression "export turnover" denotes gross sale proceeds. The relevant definition w.e.f. 1st April, 1991, simply speaks of exclusion of freight or insurance attributable to the transport of goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lower authorities are, therefore, being reversed and the AO is directed to recompute the deduction accordingly. 9. Grounds numbered 4 and 5 relate to the question of wealth deduction under s. 80HHC will have to be allowed at the stage of computation of composite income to the assessee from agricultural as well as non-agricultural operations or from the non-agricultural component as such, after applying the ratio of 40 : 60 to the composite income. Both the AO as well as CIT(A) have held that deduction under s. 80HHC is required to be allowed from the non-agricultural component of the income of the assessee alone and not from the composite income. In this connection, the learned Departmental Representative refers to the insertion of sub-s. (4B) to s. 80HHC by the Finance Act, 1999, w.e.f. 1st April, 1992. In this connection, the learned counsel for the assessee draws our attention to the order of the Tribunal, E-Bench, Calcutta, dt. 22nd Dec, 1999 (ITA No. 1975/Cal/97, etc.) in the case of Warren Tea Ltd. wherein even after taking into consideration the amendment, as referred to above, the Tribunal has held the issue in favour of the assessee by holding that in the case of tea b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utation of business income. Only after arriving at the composite income in that manner, the said income should be allocated into agricultural and non-agricultural components by using the ratio of 60 is to 40. The principle has been enunciated in detail even by the Calcutta High Court in the assessee's own case as referred to above by taking clue from the judgment of the Supreme Court in the-case of Tata Tea Ltd. vs. State of West Bengal (1988) 70 CTR (SC) 99 : (1988) 173 ITR 18 (SC). Thus, for the purpose of applicability of the new sub-s. 4(b), only such income which is not charged to tax at that stage shall be excluded. In other words, if the assessee's business income includes any agricultural operation also, the income from which can be arrived at directly or some other income which is exempt under the other provisions of the Act, then such income should be excluded from the total income of the assessee as referred to in sub-ss. (1) and (1A) of s. 80HHC. So far as the agricultural component of the income from tea business is, however, concerned, the said agricultural income, although included in a latent manner, cannot be touched in views of non-determinability of the agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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