TMI Blog2009 (12) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected as closing stock during the year was liable to be allowed as an expenditure during the current year itself. Whether the Tribunal was correct in holding that excise duty, sales tax and scrap sales are not includible in the total turnover for the purpose of deduction under sections 80HHC and 80HHE of the Act ? Held that- while computing the total turnover for the purpose of section 80HHC, the Assessing Officer is required to consider the value received by the sale of scrap also, as it cannot be excluded as the sale of scrap amount to a turnover in the domestic market. The excise duty paid by assessee for selling scrap has to be excluded. - 27 of 2005 - - - Dated:- 10-12-2009 - MANJUNATH K. L., ARAVIND KUMAR JJ. M.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, questions Nos. 1 and 2 are answered against the Revenue. 3. In the light of the submissions of the learned counsel for the parties, we have to consider only question No. 3 in this appeal. 4. In order to appreciate the case of the parties, it is useful to refer to the facts of this case. The assessee-company filed the return of income for the assessment year 1993-94. It is engaged in the manufacture of goods. The goods are exported and are also sold in the domestic market. The assessee claimed deduction under sections 80HHC and 80HHE of the Act. Based on the total turnover, while computing the total turnover, the assessee had not included the amount realized by it by selling the scrap material produced during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Revenue relying upon section 80HHC, sub-section (3)(1)(a) contends that the value received by the assessee from sale of scrap shall also be included while computing the total turnover. According to him, the definition of the words, "export turn-over" is altogether different from the definition of "total turnover" for the purpose of computing the deduction under sections 80HHC and 80HHE. Relying upon the definition clause of total turnover and export turnover, he contends that the Tribunal has committed a serious error in giving relief to the assessee. According to him, "export turnover" means, "the sale proceeds (received in or brought into India) by the assessee in a convertible foreign exchange (in accordance with clause (a) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y sum referred to in clauses (iiia), (iiib), (iiic), (iiid) and (iiie) of section 28." 6. He contends that export turnover is different from total turnover. Therefore, while computing the deduction under section 80HHC for the purpose of computing total turnover, the Assessing Officer was required to consider the value received by the assessee from the sale of scrap which is generated while manufacturing the end products of the assessee. 7. The learned senior counsel appearing for the assessee relying upon the judgment of the Madras High Court reported in the case of CIT v. Ashok Leyland Ltd. [2008] 297 ITR 107, contends that income from scrap sale can-not be treated as part of turnover for the purpose computing the deduction under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m out of country. But total turnover includes the turnover of the asses-see which is inclusive of export turnover and also the domestic turnover. Therefore, we are of the view that in view of the distinct definition clause of export turnover and total turnover, while computing the total turnover for the purpose of 80HHC, the Assessing Officer is required to consider the value received by sale of the scrap also, as the same cannot be excluded as the sale of scrap amounts to a turnover in a domestic market. 9. We have carefully considered the judgments relied upon by the learned senior counsel appearing for the assessee. In the two judgments relied upon by him, the Madras High Court did not actually consider the definition of export turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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