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2014 (7) TMI 1125 - ANDHRA PRADESH HIGH COURTInterpretation on the computation of relief u/s 80HHC - 90 per cent. of the receipts on the sale of scrap and conversion charges were to be excluded as per ITAT - whether the "conversion charges" earned by the applicant can be deducted from the "profits and gains of the business" to arrive at the "profits of the business" - Held that:- The view expressed by the Bombay High Court in Bangalore Clothing Co.'s case (2003 (1) TMI 89 - BOMBAY High Court) holds the field in which the assessee not only carried out the activity of manufacture and export of its own but also took up the job work of other manufactures. The question arose as to whether the charges levied for job work can be treated on par with the items mentioned in the clause. The answer was in the negative. If the amount has anything to do with the activity of manufacturing though not of export goods, deduction thereof cannot be made. Otherwise, the proportion of the profit earned through export to the total profit gets disturbed. Amounts that can be treated as falling in the category of brokerage, commission, interest, rent, charges occurring in the clause are only those items, which are unrelated to, and other than the amounts forming part of the total turnover of the business carried on by the assessee occurring in sub-section (3) of section 80HHC of the Act. Since the "conversion charges" are earned through the activity of manufacturing though for the benefit of other customers, the question of deducting the same from the general profits, in the context of arriving at profits from business under the clause does not arise. - Decided in favour of assessee.
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