TaxTMI 
TaxTMI 
2007 (7) TMI 203
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....sessing Officer included excise duty and sales tax on the total turnover for computing the deduction under section 80HHC(3)(b) of the Act. The Commissioner of Income-tax (Appeals), Special Range-I, Nasik (in short the "CIT (A)"), held that while calculating the deduction under section 80HHC amounts of excise duty and sales tax collected by the assessee, are not to be included in the total turnover for the purpose of computing deductions under section 80HHC. The Revenue preferred an appeal before the Income-tax Appellate Tribunal, Pune Bench, Pune, (in short the "Tribunal"). The appeal was dismissed following a decision of the Bombay High Court in CIT v. Sudarshan Chemicals Industries Ltd. [2000] 245 ITR 769. Appeal was preferred by the Reve....
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....its have got to be ascertained on ordinary principles of commercial trading and accounting. However, the income-tax has laid down certain rules to be applied in deciding how the tax should be assessed and even if the result is to tax as profits what cannot be construed as profits, still the requirements of the Income-tax Act must be complied with. Where a deduction is necessary in order to ascertain the profits and gains, such deductions should be allowed. Profits should be computed after deducting the expenses incurred for business though such expenses may not be admissible expressly under the Act, unless such expenses are expressly disallowed by the Act. Therefore, schematic interpretation for making the formula in section 80HHC workable ....
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....nover' in other laws like Central Sales Tax or as defined in accounting principles. Goods for export do not incur excise duty liability. As stated above, even commission and interest formed a part of the profit and loss account, however, they were not eligible for deduction under section 80HHC. They were not eligible even without the clarification introduced by the Legislature by various amendments because they did not involve any element of turnover. Further, in all other provisions of the Income-tax Act, profits and gains were required to be computed with reference to the books of accounts of the assessee. However, as can be seen from the Income-tax Rules and from the above Form No. 10CCAC in the case of deduction under section 80HHC a re....
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....ion, interest etc. was excluded from the profits derived from the export. Therefore, even without the clarification such items did not form part of the formula in section 80HHC(3) for the simple reason. that they did not emanate from the 'export turnover', much less any turnover. Even if the assessee was an exclusive dealer in exports, the said commission was not includible as it did not spring from the 'turnover'. Just as interest, commission etc. did not emanate from the 'turnover', so also excise duty and sales tax did not emanate from such turnover. Since excise duty and sales tax did not involve any such turnover, such taxes had to be excluded. Commission, interest, rent etc. do yield profits, but they do not partake of the character o....