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M/s. Lucas TVS Ltd. Versus The Asst. Commmissioner of Income Tax

2015 (3) TMI 405 - MADRAS HIGH COURT

Computation of relief u/s 80HHC - Interpretation of term “Total turnover” - whether Scrap sales should be included in the Total Turnover while computing deduction under 80HHC? - Held that:- As relying on Commissioner of Income Tax-VII Vs Punjab Stainless Industries [2014 (5) TMI 238 - SUPREME COURT] wherein held that the proceeds generated from the sale of scrap would not be included in the "total turnover" - If all accountants, auditors, businessmen, manufacturers, etc., are normally interpreti .....

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ieved by the order of the Tribunal in allowing the appeal filed by the Revenue, the assessee is before this Court by filing the present appeal. 2. This Court, vide common order dated 3.7.08, the following substantial question of law has been framed in both the appeals, viz., TCA Nos.541 and 542/08 :- Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the relief under Section 80IA should be deducted from profits and gains of business before co .....

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case, the Tribunal was right in law in holding that scrap sales should be included in the Total Turnover while computing deduction under 80HHC 4. The short facts, in a nutshell, are as hereunder :- The appellant is engaged in the business of manufacture of Auto Electrical Components. For the assessment year 2002-2003, the appellant filed its return of income on 25.10.02 admitting an income of ₹ 26,65,95,389/-. The return was processed u/s 143 (1) of the Income Tax Act on 8.3.03 raising a .....

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ollowing the Tribunal's order for the earlier years, the CIT (Appeals) held that scrap should not be excluded from the profits of the business and also scrap sales should not be included in the total turnover for the purpose of computing deduction u/s 80HHC and, thereby, allowed in part the appeal filed by the appellant/assessee. 6. The Revenue, aggrieved by the said order, preferred appeal to the Tribunal, while the assessee did not choose to prefer any appeal. The Tribunal, on the second g .....

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rect the Assessing Officer to include the scrap sales in the total turnover for the purpose of determining deduction under Sec. 80HHC of the Act. Aggrieved by the said order of the Tribunal in allowing the appeal filed by the Revenue, the appellant/assessee is before this Court by filing the present appeal raising the above question of law. 7. The learned counsel for the parties were put on notice and were heard on the above substantial question of law. Heard Mr.Venkatnarayanan, learned counsel .....

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clarity :- 7. For the purpose of availing of deduction under section 80HHC of the Act for the relevant assessment year, the assessee was not including the sale proceeds of scrap in the total turnover but was showing the same separately in the profit and loss account. 8. According to the Revenue, the sale proceeds from the scrap should have been included in the "total turnover" as the respondent-assessee was also selling scrap and that was also part of the sale proceeds. 9. Insofar as .....

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ction 80HHC would be more ; or, in other words, if compared to the total turnover, export turnover is less, the amount deductible from the income under section 80HHC would be reduced. By virtue of the impugned judgment delivered by the High Court, the accounting method followed by the respondent-assessee has been approved and, therefore, this appeal is filed by the Revenue. 10. Accordingly, the Supreme Court, while interpreting the abovesaid provision, held as hereinbelow :- 26. If all accountan .....

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