TaxTMI 
TaxTMI 
2006 (2) TMI 85
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....inter alia, deduction under section 80HHC of the Income-tax Act (hereinafter referred to as "the Act") in respect of its income from exports, deduction in respect of interest on foreign bills (for 1995-96 only), and deduction of customs duty from closing stock. The Assessing Officer found that the assessee had excluded the sales tax and excise duty from the total turnover for the purpose of computation of deduction under section 80HHC of the Act and accordingly he recomputed the total turnover including these elements. The Assessing Officer also disallowed the interest on foreign bills under section 40(a)(i) as no tax was deducted at source, and included the value of customs duty into the valuation of closing stock. Hence, the assessee file....
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....er made disallowance by following the earlier assessment orders. The Commissioner of Income-tax (Appeals) deleted the disallowance made by the Assessing Officer. On appeal by the Revenue, the Appellate Tribunal allowed the issue in favour of the assessee. It could be found that the conditions for supply of goods by the nonresident to the assessee were that the payment of purchase price in instalments was to be made with the condition that the assessee will compensate the supplier by means of interest on the unpaid instalments. The unpaid instalment was not the same as loan and therefore, interest paid could not be treated as paid on the loan and hence, deduction of tax at source was not attracted. Since it is not the case of the Revenue th....
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....tances of the case, the Tribunal was right in holding that the excise duty and sales tax should be excluded from the total turnover to arrive at the deduction under section 80HHC, this court in CIT v. Wheels India Ltd. [2005] 275 ITR 319 and CIT v. Sundaram Fasteners Ltd. [2005] 272 ITR 652 (Mad) held that it is highly impossible to accept the contention that the term "turnover" would include the excise duty and sales tax components which are all indirect taxes and which the assessee has to collect and pay over to the Government and such statutory dues will not have any element of profit of business and therefore, the sales tax and excise duty are not to be included in the total turnover while computing the deduction under section 80HHC. I....