2015 (3) TMI 541

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ssed by the Income Tax Appellate Tribunal, Lucknow in I.T.A. Nos.169, 170, 171, 264 and 172/Alld/2000 for the Assessment Years 1989-90, 1990-91, 1991-92, 1992-93 & 1993-94. 2. On 15.11.2011, a coordinate Bench has admitted the Appeals on the following substantial questions of law:- "Whether on the facts and circumstances of the case, particularly that the assessee's unit was a 100% Export Oriented Unit (EOU), recovery of cost of material by way of sale of scrap generated in its manufacturing process, could be treated as local sale on which relief under Section 80 HHC was not admissible." 3. In respect of Income Tax Appeal No.88 of 2002, one more question of law was admitted, which is as under:- "Whether on the facts and circ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ill not being satisfied, the assessee has filed the present appeal. 6. Sri Ashish Bansal, learned counsel for the assessee submits that the scrap is an essential part of the fresh goods and the same will have to be thrown or sold in the local market as scrap. The sale proceeds derived by disposing of the scrap was duly accounted in the book of accounts and the same was reduced from the cost of raw material. He also submits that universally accepted "accounting standards" in the matter of accounting of 'recovery' of cost through sale of self-generated scrap, had duly been followed by the assessee year after year and the Department had accepted the same. The entire proceeds on account of sale of scrap, stood duly reflected in the r....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o be thrown or sold in the local market. When such scrap is sold, the sale proceeds of the scrap cannot be included in the term of "turnover", therefore, the proceeds of sale of such scrap would not be included in "sales" in the profit and loss account of the assessee. It may be mentioned that the Hon'ble Apex Court in the case of Commissioner of Income Tax Vs. Punjab Stainless Steel industries (2014) 364 ITR 144 SC has observed that:- "28. The intention behind the enactment of section 80HHC of the Act was to encourage export so as to earn more foreign exchange. For the said purpose, the Government wanted to encourage businessmen, traders and manufacturers to increase the export so as to bring more foreign exchange in our country. If....