9911796707
TMI Blog2012 (4) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act, 1961 (the 'Act' hereinafter) dated 25/2/2001. 2. The assessee, an individual, is in the business of cashew exports as well as running a hotel. This is the second round before the Tribunal; it adjudicating the same on an earlier occasion per its order dated 26-04-2005. The Department carried the matter in appeal, i.e., in respect of its appeal (in I.T.A. No. 114/Coch/2002) before the Hon'ble jurisdictional High Court, which, vide its order dated 19-08-2008 (in I.T.A. No. 64 of 2008/copy on record), while denying admission, granted liberty thereto to move the tribunal in case it was of the view that its order is inconsistent with a subsequent judgment by the apex court. The tribunal, vide its order in M.P. No. 85/Coch/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m has not been defined in the Act, except in terms of the items that do not form part thereof (refer Explanation (baa) to s. 80HHC); (b) excluding 90% of the processing charges received/accrued, from the 'profits of the business' under Explanation (baa) to s. 80HHC. The ld. CIT(A) following the decision by the tribunal (in I.T.A. No. 763/Coch/1995) directed exclusion of the processing charges in the computation of 'total turnover', and also the profit element in the processing charges in the computation of the 'profits of the business' under Explanation (baa). The assessee is to provide the necessary particulars for arriving at the figure for profit and, in absence thereof, the AO would adopt a percentage at 10% of the gross charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges' is an 'independent income' like brokerage, commission, rent, charges, etc. forming part of the gross total income (GTI), being business profit, though having no nexus with the export and, accordingly, is to be deducted at 90% thereof (pg. 240). Further, the said processing charges would also stand to be included in the 'total turnover' for computing the deduction for export profits u/s. 80HHC(3) (pg. 242). No other and subsequent decision by the apex court, taking a contrary or different view, has been brought to our notice. We, accordingly, have no hesitation in directing for the same in the instant case as well. 5.2 The assessee has, however, raised an alternative plea, claiming that even if so, it is only the income from the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is to be avoided. So, however, we may hasten to add that no presumptive rate as suggested by the ld. CIT(A) at 10%, as also by the assessee, would hold. If the assessee is not inclined or otherwise unable to exhibit with reasonable accuracy the extent of income included in the gross processing charges, which only we may reiterate stands included in the business income computed u/s. 28 and, thus, in the GTI, the statutory presumption of the same being at 90% thereof would apply. In other words, the statutory presumption of excluding 90% (of the receipt) is only toward adjusting the business profits from the impact of the independent incomes, even as explained by the apex court in K. Ravindranathan Nair (supra). As such, once 'processing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est', etc., it may be appreciated, have generally no identifiable costs relatable thereto (debited to the P&L account/operating statement), so that the law provides a presumptive rate of expenditure there-against at 10%, effectively determining the profit (income) embedded therein at 90%. It is the well accepted by now that the restriction or the exclusion of the specified receipts under Explanation (baa) at 90% is only toward adjusting the estimated expenditure there-against, ascertaining the profit/income component therein. 'Processing charges', however, stand on a different footing, and may well constitute a major source of revenue for the assessee. The apex court has in fact time and again, exhorted the courts and tribunals to accord an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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