TaxTMI 
TaxTMI 
2023 (6) TMI 608
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....r (AY) 1996-97. 2. We may briefly state the relevant facts of the case. The assessee, an individual in the business of processing of raw cashew nuts and export of cashew kernels, filed her return of income on 26.02.1997 declaring total income at Rs. 8,82,500. The processing of cashew nuts was, apart from for self, undertaken for other firms, including sister concerns, earning processing income at Rs. 73,98,210. Rent at Rs. 89,620 was received in respect of factory at Sreeramapuram, which was used by the assessee's sister concerns. Both the processing charges and lease (processing) rent were included in the 'total turnover', while the same were excluded in computing the 'profits of the business' under Explanation (baa) below section 80HHC....
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....e Hon'ble Apex Court on 13/2/2007 (reported as CIT v. K. Ravindranathan Nair, at [2007] 295 ITR 228 (SC)). The Hon'ble High Court, accordingly, allowed the appeal of the Revenue in view of the decision of the Hon'ble Apex Court in K. Ravindranathan Nair (supra), holding as under (in ITA 114/2008, dated 19/2/2009): - "Out of the three questions raised in the department's appeal, questions 1 and 2 pertain to computation of eligible profit for deduction under section 80HHC of the Income Tax Act. Both these questions are covered by decision of the Supreme Court in COMMISSIONER OF INCOME-TAX V. K. RAVINDRANATHAN NAIR (2007) 295 ITR 228. So far as third question is concerned, we find the Tribunal has only followed the decision of....
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....fit element already excluded from the profits in the return of income. Both the inclusion in turnover and exclusion from profits at 90% cannot be done simultaneously, which will only whittle down the true benefit eligible to the assesse, which was never the intention of the Parliament." The same did not find acceptance by both the assessing and the first appellate authority inasmuch as the scope of the instant proceedings was only to give appealeffect to the directions of the Hon'ble High Court. No ground or issue not arising therefrom could form part of the said proceedings. Aggrieved, assessee is in second appeal. 3. We have heard the parties, and perused the record. 3.1 We may, at the outset, clarify the scope of instant proceed....
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.... that "profits of the business" for the purpose of section 80HHC will not include receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature. As some expenditure might be included in earning these incomes, which in the generality of case is part of common expenses, ad hoc 10per cent deduction from such income is provided to account for these expenses. As would be evident, the same sets out the rationale for deduction of independent incomes in computing 'profits of the business', on the basis of which, applying further filters, the export profit is determined. That is, incomes, which though stand credited to the Profit & Loss Account, have no element of turnover. Further, as some expenditure....