2006 (8) TMI 228

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....are that the assessee is a manufacturer and exporter of carpets. The Assessing Officer noticed that manufacturing process involved weavers the payment to whom is not verifiable. He rejected the books of account and-applied gross profit rate of 18.5 per cent as against 18.1 per cent declared by the assessee. Ld. CIT(A) found that the assessee has maintained proper details and, therefore, there was no justification in making addition. 3. We have heard ld. A.R. and ld. D.R. So far as applicability of provisions of section 145 was concerned, we are of the view that it is applicable on the facts of the case as payments made to weavers/Karigars are not verifiable and there is no stock register as such of raw material and its correlation with t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....port sale proceeds not realised could not be excluded from the definition of total turnover because of Explanation (ba) in section 80HHC. Ld. CIT(A), however, was of the view that after the decision of Hon'ble Kerala High Court in CIT v. Abad Fisheries [2002] 258 ITR 641, sale proceeds not realised could not be included in the total turnover as they do not form part of actual profit. 5. Before us, ld. D.R. relied on the definition of total turnover in Explanation (ba) in section 80HHC whereas ld. A.R. for the assessee submitted that only export turnover has been defined and not the total turnover. He relied on the decision of Kerala High Court as referred by ld. CIT(A) in her order. 6. We have considered the rival submissions and peru....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... of the assessee and what will not be included if clearly specified in Explanation (ba). They are only freight, insurance, attributable to the transport of the goods or merchandise beyond the custom station as defined in the Customs Act. As per proviso, after 1st April, 1991, items covered in section 28 as mentioned in the proviso, will also be excluded. Thus, there are specific exclusion provided in Explanation (ba). Therefore, other items could not be excluded like sale proceeds not realised. Since sale proceeds not realised will not form part of export, then proportionate profit worked out as per formula will not include profit on such unrealised export. It may be mentioned here that total profit i.e., computed business profit will inclu....