TMI Blog2007 (4) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit over and above the benefits u/s 10B in respect of same industrial undertaking, the said provision has indicated separately and exclusively to clear that double deduction should not be claimed for the same income. Moreover for claiming the deduction under the said sections condition to make the export is not mandatory while claiming the deduction u/s 10B and 80HHC of the Income-tax Act. It is mandatory that the income to be derived from export. In our opinion, non-mentioning section 80HHC in the aforesaid clause (iii) of sub-section (6) of section 10B will not entitle the assessee to claim deduction u/s 80HHC for the reason that the deduction u/s 80HHC is otherwise also not available to the units claiming exemption u/s 10B, because the profits of the unit claiming deduction u/s 10B is not to be included with the profits eligible for deduction u/s 80HHC and since in such type of industrial undertaking no eligible profit can be derived without having export turnover, therefore, export turnover which earned profit eligible for deduction u/s 10B should also not be included in the turnover to claim deduction u/s 80HHC of the Income-tax Act. Thus, we set aside the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... talks of procedures, as to how profits of business are to be computed It provides that in case, : incomes of kind including interest are included in the profits of business 90% thereof shall be reduced therefrom It does not make any distinction between the interest earned from Source 'A or source ''B . Interest from wherever it is earned retains the character of interest Be it an interest from the customer on delayed payment of dues. it is not in dispute in the present case that interest income from the customer on delayed payment of dues is included in the business income and assessed as such. What has been held in Guvinder Choudhary's case (supra) is that in the case of a contractor, interest received on delayed payment is a business in come and not income from other sources. Same view was taken by the Hon'ble Supreme Court in CIT v. B.N. Agarwala Co. MANU/SC/2188/1996. In the present case also, interest received by the assessee on delayed payment by the customer has been assessed as business income. It is at the time of determination of profits of business for the purpose of Clause (baa) as referred above, that the interest component added therein is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples for interpretation of statutes the term 'total turnover' used. Section 80HHC needs to be interpreted vis a vis the definition of 'export turnover' with reference to other definitions as given in various clauses of section 80HHC. The interpretation under the IT law need to be contextual and should not be with reference to the interpretation given to it under the sales tax law while interpreting the words 'total turnover' under section 80HHC. Different High Courts interpretation involved in the present case is of a statute, having application throughout the country, there is no good reason to differ from the views taken by excluding the amount of sales tax and excise duty from the total turnover of the purposes of computation of deduction under section 80HHC. 5. The next issue vide ground No. 3 agitated by the department is whether the turnover of the unit whose income is exempt under section 10B of the Income-tax Act is to be included in the total turnover for the purposes of calculating the deduction under section 80HHC of the Income-tax Act. 5.1 Brief facts relating to this issue are that the assessee claimed deduction under section 80HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of export turnover of 100 per cent EOU and that could never be the intention of the Legislature as it was not allowing additional benefit to the assessee but it was depriving him of the existing benefits available in form of deduction under section 80HHC. It was also stated that export turnover means the sales proceeds (received in or brought into India) by the assessee in convertible foreign exchange of any goods or merchandise to which this section apply and which were exported out of India but did not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in Customs Act, 1962. The reliance was placed on the decision of the ITAT, Delhi Bench in the case of Jindal Exports (P.) Ltd v. Asstt. CIT [1989] 31 ITD 217 wherein issue was decided by placing reliance on the judgment of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd [1973] 88 ITR 192 and it was held that even if two reasonable construction of the relevant provisions were possible, that construction which favours the assessee must be adopted. It was also held that deduction under section 80HHC could not be denied to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. 5.3 The assessee carried the matter to the ld. CIT(A) and submitted that section 10B and section 80HHC are two different sections intended to give different benefit to the eligible assessees on fulfilling the conditions prescribed under those sections. It was further stated that both those sections could not be considered as substitute of each other as section 10B was introduced to give further incentive to the assessee as had been explained in the memorandum explaining provisions of Finance Bill, 1998 and also in Circular No. 528, dated 16-12-1988 issued by CBDT. It was stated that there was no restriction anywhere in the Act that the assessee cannot avail benefit under section 10B and under section 80HHC simultaneously. It was further stated that wherever the intention of the Legislature was to restrict the benefit in any manner the same was being specifically provided in the Act. It was contended that the deduction under section 80HHC was available to the assessee as a whole and not to its industrial undertaking(s) in respect of its export turnover, the term which had been defined in Explanation to section 80HHC. It was pointed out that in the said definition no exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-1994 on which reliance was placed by the Assessing Officer, it was submitted that the said circular simply provided that the industrial undertakings which were not achieving export turnover at least 75 per cent of their total turnover would not be allowed exemption under section 10B but they could avail of the normal 100 per cent deduction under section 80HHC. The industrial undertakings become eligible to claim exemption under section 10B on fulfilment of various conditions inter alia including a condition to achieve at least an export turnover of 75 per cent of their total turnover, in case the unit was not in a position to fulfil any of the conditions making it eligible for exemption under section 10B, then the assessee could not claim the additional incentive available under section 10B but it could always claim the deduction available under section 80HHC. It was stated that the golden rule is that word(s) of a statute must prima facie be given their ordinary meaning and when the words of a statute are clear, plain and unambiguous then effect should be given to that meaning irrespective of the sections as it is said that the words themselves best declare the intention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggested that exemption under section 10B and deduction under section 80HHC were to be allowed alternatively and mutually exclusive. According to him, the circular as well as section 10B and section 80HHC gave a conclusion that exemption under section 10B was a separate and distinct incentive given to the assessee over and above the deduction under section 80HHC and that both the sections could not be treated as alternate to each other as both the sections intended to give different benefits to the assessee on fulfilling the conditions of both the sections separately. He observed that the language of section 10B and section 80HHC also did not provide for any kind of restriction, so as not to consider the export turnover of 100 per cent EOU for computation of deduction under section 80HHC. According to the ld. CIT(A), the definition of 'Export Turnover' to be considered for section 80HHC was the sale proceeds received in or brought into India by assessee and it could not be presumed that the export turnover of an EOU owned by an assessee was to be excluded for the purposes of computation of deduction under section 80HHC. The ld. CIT(A) observed that the assessee had rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim any other deduction or allowance under any other provision of Income-tax Act specially under Chapter VI-A of Income-tax Act. He referred to the provisions of section 80AB of Income-tax Act and stated that the said provisions clearly states that the deduction under Chapter VI-A are to be made with reference to income included in the gross total income and if the income of any unit was not included in gross total income then no deduction under this Chapter under the head 'C- Deduction' in respect of certain incomes would be allowed. He relied on the judgment of Hon'ble Supreme Court in the case of IPCA Laboratory Ltd v. Dy. CIT [2004] 266 ITR 521. He further submitted that the ld. CIT(A) has passed a non-speaking order since he has not discussed how the various case laws relied on by the assessee were applicable to the facts of the instant case particularly the facts of the cases of Shrike Construction Equipment Ltd. and Jindal Export (P.) Ltd. 6.1 Ld. Sr. DR for the revenue submitted that CBDT issued Circular No. 684, dated 10-6-1994 and directed by keeping in view and to ensure that only those 100 per cent EOUs should avail the tax exemption where the expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B' in the case of Samtex Fashions Ltd. v. Asstt. CIT [2005] 92 ITD 535. It was stated that a strict interpretation was required in cases of exemption. Reliance was also placed on the following case laws: Lahaul Potato Growers Co-op. Marketing Processing Society Ltd. v. CIT [1998] 232 ITR 718 (MP); Novopan India Ltd. v. Collector of Central Excise 1994 (73) ELT 769 (SC); Dr. Renuka Delta v. CIT [1999] 240 ITR 463 (AP); CIT v. N.C. Budharaja Co. [1993] 204 ITR 412 (SC); South Arcot District Co-op. Supply Marketing Society Ltd. v. CIT [1974] 97 ITR 500 (Mad.); CIT v. Kisan Co-op. Rice Mills Ltd. [1976] 103 ITR 264 (MP); CIT v. Mattasamund Kissan Co-op. Rice Mill Marketing Society Ltd. [1976] 103 ITR 499 (MP); Keshkal Co-op. Marketing Society Ltd. v. CIT [1987] 165 ITR 437 (MP); CIT v. Kerala State Co-op. Marketing Federation Ltd. [1994] 207 ITR 319 (Ker.); Dudhganga Vedganga S.S.K. Ltd. v. Dy. CIT [1995] 54 ITD 97 (Pune). 6.2 It was further submitted that the Assessing Officer rightly took the view that the turnover relating to the profit for which deduction was claimed under section 10B was not to be considered in the tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of exemption under section 10B. It was submitted that turnover was to be taken into consideration for the purposes of deduction under section 80HHC was the turnover of the business of whole of the units of the assessee and since the Assessing Officer has taken the aggregate of business income then the turnover should also have been taken in respect of all the units of the business. He referred to section 80HHE(5) of the Income-tax Act and submitted that what had not been covered in section 10B had been covered by section 80HHE(5) but there was no converse in section 80HHC of the Income-tax Act. He submitted that deduction under section 80HHC was to be worked out on the basis of total turnover of the assessee and not considering the turnover which excluded export turnover for which deduction under section 10B was claimed. He pointed out that as per section 80HHE(5) of the Income-tax Act, the deduction which has been claimed under section 80HHE(1) that was not to be considered under any other provisions of the Income-tax Act for the same or any other assessment year but it was not the condition under section 80HHC. He vehemently argued that there was no bar that the turnover of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of section 80HHC. Therefore, deduction under sections 80HHC and 10B can be claimed separately in respect of same unit. Reliance was placed on the following case laws: Shirek Construction Equipments Ltd.'s case; Arvind Mills Ltd.'s case; Jindal Export (P.) Ltd.'s case; Modi Sugar Mills Ltd.'s case; Baidyanath Ayurved Bhawan (P.) Ltd.'s case; Mangalore Chemicals Fertilizers Ltd.'s case; Hansraj Gordhandas's case; Gujarat State Fertilizers Co.'s case; Kaumudini Narayan Dalal's case; Satish Panalal Shah's case; International Research Park Laboratories Ltd. v. Asstt. CIT [1994] 50 ITD 37 (Delhi)(SB); P.R. Parbhakar v. CIT [2006] 284 ITR 548 (SC); Pearl Polymers Ltd. v. Dy. CIT [2002] 80 ITD 1 (Delhi) (SB); CIT v. Vadilal Lallubhai [1972] 86 ITR 2 (SC); Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821. 8. We have considered the rival contentions and carefully gone through the material available on record. In the present case the only controversy relates to deduction under section 80HHC and the relevant question to be adjudicated is whether - turnover of an EOD f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the export of such goods or merchandise. Therefore, the export turnover which is to be considered while working out deduction under section 80HHC is that turnover which is only and only relevant for earning the profit/income from export. It has been admitted by the assessee that the profit for which deduction under section 10B has been claimed was not included in the profit to claim deduction under section 80HHC. Therefore, the turnover which was related to the profit eligible for deduction under section 10B can also not be included in the turnover considered for the purpose of deduction under section 80HHC. 8.1 Hon'ble Kerala High Court in the case of Janatha Cashew Exporting Co. has held that- Since the sales turnover of sales made by the assessee to the export house did not answer the description of export turnover, the Assessing Officer rightly excluded such turnover from export turnover while computing relief available to the assessee under the proviso to section 80HHC(3). In the instant case also the turnover of sales made by the assessee for which deduction under section 10B has been claimed did not answer the description of turnover eligible for deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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