TaxTMI 
TaxTMI 
2007 (1) TMI 85
X X X X Extracts X X X X
X X X X Extracts X X X X
....3334/Del/2001 relevant for the assessment year 1998-99. 2. The controversy in this case is whether freight charges said to have been incurred by the Assessee and recovered by it from its foreign buyer are liable to be included in the expression 'Indirect Cost' for the purposes of calculation of the export turnover in terms of Section 80HHC (3)(b) of the Income Tax Act, 1961. 3. According to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment freight was recovered from the foreign buyer and the amount so recovered was deducted by the Assessee from its total turnover for the purposes of determining the FOB value of the goods exported. 6. Section 80HHC (3)(b) of the Act is important and it reads as follows : "80HHC Deduction in respect of profits retained for export business.- (1) . . . . (3) For the purposes of sub-section (1) -....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962)." 9. It is quite clear from the above that freight or insurance attributable to the transport of goods or merchandise beyond the customs station is not a part of the export turnover of the goods and, therefore, c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eing direct costs, allocated in the ratio of the export turnover in respect of trading goods to the total turnover. . . . ." 13. We are of the view that the shipment freight cannot be included as a part of the indirect cost incurred by the Assessee since it is not a part of the export turnover as defined in clause (b) of the Explanation to Section 80 HHC (4C) of the Act. Moreover, it is not a "co....