TaxTMI 
TaxTMI 
2006 (5) TMI 82
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....essee filed its return of income for the assessment year in question on November 28, 1995, declaring total income of Rs. 3,81,53,620, which was processed under section 143(1)(a) of the Income-tax Act, 1961 (for short "the Act"), on February 8, 1996. Regular assessment under section 143(3) of the Act was completed vide order dated March 16, 1998, and the income of the assessee was determined at Rs. 3,95,42,740. At the time of passing of order under section 143(3) of the Act, the deduction claimed by the assessee under section 80HHC of the Act was recomputed by including sales tax and excise duty in the total turnover. Aggrieved against this action of the Assessing Officer, the assessee went in appeal before the Commissioner of Income-tax (Appeals), who relying upon the order passed in appeal filed by the assessee for the assessment year 1994-95 decided the issue in favour of the assessee. The Revenue, not accepting the order of the Commissioner of Income-tax (Appeals), further challenged the same before the Tribunal. The Tribunal relying upon a Special Bench decision of the Tribunal, Calcutta, in the case of IFB Agro Industries Ltd. v. Deputy CIT [2002] 83 ITD 96 rejected the appeal....
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.... advocate, counsel for the respondent and perused the record carefully. 4. Dr. N. L. Sharda, learned counsel appearing for the Revenue contended that the removal of the excise duty and sales tax element from the total turnover would increase the percentage of the export profit vis-a-vis total profits. He further contended that for the purpose of calculation of the deduction under section 80HHC of the Act, total turnover is to be taken into account and even from the point of view of sales tax laws, total turnover would include excise duty and sales tax paid on the goods. He further contended that the excise duty and sales tax are certainly a trading receipt being part of the sale proceeds of the goods and merely because it is not levied on the goods, which are exported, does not mean that it should not be taken into account for the purpose of calculating total turnover of the assessee. 5. Mr. Akshay Bhan, learned counsel appearing for the assessee contended that the language employed in the very provision explicitly makes it clear that the statutory outgoings cannot be included in the total turnover so as to inflate the same. While the intention of the Legislature in giving be....
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....ct of such goods bears to the adjusted total turnover of the business carried on by the assessee ; and (ii) in respect of trading goods, be the export turnover in respect of such trading goods as reduced by the direct and indirect costs attributable to export of such trading goods : Provided that the profits computed under clause (a) or clause (b) or clause (c) of this sub-section shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiia) (not being profits on sale of a licence acquired from any other per son), and clauses (iiib) and (iiic) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. Explanation.- . . . (4) The deduction under sub-section (1) shall not be admissible unless the assessee furnishes in the prescribed form along with the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section. (b) 'export turnover' means the sale proce....
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....n as defined under the Customs Act, 1962. The proviso thereto provides in relation to any assessment year commencing on or after the 1st day of April, 1991, that the expression "total turnover" shall have effect as if it also excluded any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28. While "total turnover" is defined by an "excluding" definition, the term "export turnover" is defined in clause (b) of Explanation by an extensive definition as meaning the sales proceeds received in, or brought into, India by the assessee in convertible foreign exchange, of any goods or merchandise to which section 80HHC of the Act applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station. There is no dispute as to how the "profits of business" or the "export turnover" is to be arrived at. But the dispute falls in a very narrow compass, i.e., as to how the "total turnover" of the business of the assessee should be arrived at, for calculating the profit of export. 9. The said provision is given effect by adopting the following formula : Profit of Export Profit....
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....Act, different High Courts have taken a view in favour of the assessee. 14. While dealing with the issue in CIT v. Wheels India Ltd. [2005] 275 ITR 319, the Madras High Court held as under (page 324) : "11. The word 'turnover', when it is not specifically defined in the Act, would actually assume the meaning that the consideration received must be for the sale of goods and it must be available with the assessee for being turned over or in other words it must come to the assessee\qs till as the money belonging to him. In order that an amount can be included in the total turnover it must either be the purchase or the sale price or something incidental to the transfer of the goods dealt with by the assessee. In other words the turnover must relate to the purchase or the sale of the goods made by the assessee. The incidental expenses such as freight and insurance have been specifically excluded. 12. When the definition of total turnover excludes incidental expenses such as freight and insurance, which amount has to be borne by the assessee for safe transportation of his goods from and out of his pocket, it is highly impossible to accept the contention that ....
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....ause (b) of the Explanation to section 80HHC, therefore, clearly shows that export turnover did not include excise duty and sales tax. The export turnover is the numerator in the above formula whereas the total turnover is the denominator. The above formula has been prescribed to arrive at the profits from exports. In the circumstances, the above two items, namely, sales tax and excise duty, cannot form part of the total turnover. In fact, if the denominator was to include the above two items and if the numera tor excluded the above two items then the formula would become unworkable. In the circumstances, we are of the view that in order to ascertain the export profits, the above two items cannot be introduced to inflate the total turnover artificially in order to reduce the benefit which an assessee is entitled to. Ultimately, the object of section 80HHC is required to be kept in mind in order to encourage export. The legislature has applied the above formula in order to find out the profits derived from the exports. In this connection, section 80HHC(1) may also be noticed. Under section 80HHC(1), it is, inter alia, provided that where an assessee is engaged in the business of exp....
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....ad Office Monthly Paid Employees Welfare Trust [2004] 271 ITR 159, wherein the Delhi High Court dealing with the issue held as under (page 169) : "When in the tax matters which are governed by all India statute, there is a decision of another High Court on the interpretation of a statutory provision, it would be a wise judicial policy and practice not to take a different view barring, of course, certain exceptions, like where the decision is sub silentio, per incuriam, obiter dicta or based on a concession or takes a view which it is impossible to arrive at or there is another view in the field or there is a subsequent amendment of the statute or reversal or implied overruling of the decision by a higher court or some such or similar infirmity is manifestly perceiv able in the decision. It must be remembered that it is a general policy in Income-tax matters that whatever the view of the Bench at the time of hearing may be the Bench should follow the view taken by another High Court on the interpretation of the section. In the case of CIT v. Sara bhai Sons Ltd. [1983] 143 ITR 473, 486, the Gujarat High Court observed that 'Even though we may be persuaded to tak....