2018 (4) TMI 715

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....r passed by the Income Tax Appellate Tribunal, 'A' Bench Chennai in ITA No.1476/Mds/2006, dated 18.10.2007. 3. This Tax Case Appeal has been admitted on the following substantial questions of law:- "1.Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the appellant is not entitled to deduction under section 80HHC of the Income Tax Act, in respect of the interest, rent and miscellaneous income earned out of business operations? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that 90% of the gross receipts should be excluded from the profits of the business under clause (baa) of Explanation to section 80HHC....

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....charges or any other receipt of like nature included in business profits, had to be deducted from business profits computed in terms of sections 28 to 44D of the IT Act. In other words, receipts constituting independent income having no nexus with exports were required to be reduced from business profits under cl. (baa). A bare reading of cl. (baa) (1) indicates that receipts by way of brokerage, commission, interest, rent, charges etc., formed part of gross total income being business profits. But, for the purposes of working out the formula and in order to avoid distortion of arriving export profits cl. (baa) stood inserted to say that although incentive profits and 'independent incomes' constituted part of gross total income, the....

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.... 23. Before concluding we state that the nature of every receipt needs to be ascertained in order to find out whether the said receipt forms part of/or that it has an attribute of an export turnover. When an indirect tax is collected by the taxpayer on behalf of the Government the tax recovered is for the Government. It may be an income in the conceptual sense or even under the IT Act but while working out the formula under section 80HHC(3) of the IT Act and while applying the four variables one has to ascertain whether the receipt has an attribute of export turnover. An indirect tax like excise duty does not have that element of export turnover as understood in the above formula. As stated above, it is recovered by the taxpayer on beh....