TaxTMI 
TaxTMI 
2017 (1) TMI 883
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.... the circumstances of the case and in law, the Ld. CIT(A) has erred in treating sales tax refund as eligible component for deduction under section 80HHC without appreciating that sales tax refund cannot be considered to be derived out of export activity as there is no direct nexus between such receipts and export business." (2) "On the facts and in the circumstances of the case and in low, the Ld CIT(A) erred in treating sales tax refund as profit from business, as against income from other sources, without taking into cognizance that receipts does not assume the character of export related activity." (3) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in placing reliance on the decision of Hon&....
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....as misunderstood the facts of the case and provisions of law in this regard. The refund of sales-tax was nothing but reduction of cost, therefore it was not akin to any other income received by the assessee. Further, provisions of Explanation (baa) to section 80HHC were not applicable upon the assessee since assessee was a trader and not a manufacturer. Ld. CIT(A) considered the entire submissions and judgments placed before him and agreed with the submissions of the assessee and held that assessee was eligible to get the benefit of deduction u/s 80HHC as no other income was received as the amount of sales-tax refund received by the assessee went into reducing the cost of purchases of the assessee. Relevant part of the findings of Ld. CIT(A....
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....ther establishment of the assessee situate outside India; A reading of language of Section 80HHC of the Act would indicate that for manufacturers, the deduction has to be computed based on ratio of profits of business in ratio of export turnover to total turnover. However, in the present case, the appellant is not a manufacturer but a trader. For traders, the profit has to be computed based on export turnover as reduced by direct and indirect costs. Hence, the definition of profits of business as per Explanation (baa) to Section 80HHC is not relevant to the appellant's case. In the case of a trader, export turnover is to be reduced by direct and indirect costs. In the case of Dresser Rand (supra), the Bombay High Court considered ....
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....ng a deduction under section 80HHC. The Bombay High Court held that in the instant case, it can hardly be argued that the deemed credit under the CENVAT Incentive Scheme would not reduce the material/manufacturing cost of the goods exported by the assessee. No other provision vas brought to our notice that would justify the disallowance of CENVAT incentive whilst computing the admissible deduction under section 80HIHC. In this view of the matter, in the peculiar facts and circumstances of the instant case, the Tribunal has not misdirected itself in coming to the conclusion that the amount of deemed credit under the CENVAT Incentive Scheme was a part of the business profits of the assessee eligible for a deduction under section 80HHC despite....