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2015 (3) TMI 541 - HC - Income TaxAdmissibility of relief under Section 80 HHC - whether recovery of cost of material by way of sale of scrap generated in its manufacturing process, could be treated as local sale - assessee's unit was a 100% Export Oriented Unit (EOU) - Held that:- From the record, it appears that the assessee's firm was 100% export unit, it had maintained the books of account subject to Audit under Section 44(A)(B) of the Income Tax Act. The cutting of the leather resulting into scrap which either will have to be thrown or sold in the local market. When such scrap is sold, the sale proceeds of the scrap cannot be included in the term of "turnover", therefore, the proceeds of sale of such scrap would not be included in "sales" in the profit and loss account of the assessee.The assessee was not primarily dealing in scrap but was a manufacturer of 'shoe uppers'. So, only the sale proceeds from sale of 'shoe uppers' would be treated as its turnover, as per the normal accounting practice profits. The income derived from the sale of scrap would not be included in the total turnover and the same will have to be reduced from the cost of the raw material.See Commissioner of Income Tax Vs. Punjab Stainless Steel industries (2014 (5) TMI 238 - SUPREME COURT) Reopening of assessment - Held that:- The proceedings under section 148/147 of the Act were not required as no fresh material was brought on record. This is a case of merely accounting principle. Therefore, we set aside the proceedings under Section 148/147 of the Act initiated by the A.O. for all the assessment years under consideration. All the impugned orders are hereby set aside. - Decided in favour of the assessee
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