2012 (7) TMI 1131 - HC - Income Tax

Supreme Court distinguishes gross vs. net receipts under section 80HHC, overturns High Court decision.

The Supreme Court held that only the net amount of receipts from job works should be excluded under section 80HHC, not the gross amount. The High Court's ... - Issues involved: Assessment years 2002-03 and 2003-04 - Exclusion of job works receipts u/s 80HHC - Interpretation of gross or net value for exclusion.Summary:In the present case, the appellant, an exporter of fabrics with job works, excluded gross receipts from job works u/s 80HHC. The Commissioner of Income Tax held the exclusion as bad in law, which was upheld by the Appellate Tribunal. The main issue was whether the exclusion should be based on gross or net value. The Appellate Tribunal found the exclusion of receipts as bad in law, not meeting the parameters of the formula. The appeals raised the question of law regarding the correctness of the orders passed by the authorities.The High Court referred to a previous decision and held that the entire amount of receipts from job work should be excluded from the numerator as per the formula. The Supreme Court's interpretation in another case clarified that only the net amount should be excluded, not the gross amount. The court emphasized the distinction between gross and net receipts in various scenarios. Relying on these decisions, the question of law was answered in favor of the revenue, and the matter was remanded back to the Assessing Authority for reassessment in accordance with the Supreme Court's ruling. Consequently, the appeals were disposed of.