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2018 (4) TMI 715

and against the assessee in the light of the decision, in the case of Commissioner of Income Tax Vs. K.Ravindranathan Nair reported in (2007 (11) TMI 10 - Supreme Court of India) - Whether Tribunal was right in law in holding that 90% of the gross receipts should be excluded from the profits of the business under clause (baa) of Explanation to section 80HHC of the Act? - Held that:- This issue has been decided by the Hon'ble Supreme Court in the case of ACG Associated Capsules (P) Ltd. Vs. Commissioner of Income Tax [2012 (2) TMI 101 - SUPREME COURT OF INDIA]asheld Ninety per cent of the net interest or net rent which has been included in the profits of the assessee as computed under the head profits and gains of business or profession .....

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se (baa) of Explanation to section 80HHC of the Act?" 4. So far as question No.1 is concerned, the same has to be answered in favour of the Revenue and against the assessee in the light of the decision, in the case of Commissioner of Income Tax Vs. K.Ravindranathan Nair reported in (2007) 295 ITR 0228. The operative portion of the judgement reads as follows:- "21. At the outset, we may state that, in the present case, we are dealing with the law as it stood during assessment year 1993-1994. At that time Section 80HHC(3) of the IT Act constitute a code by itself. Subsequent amendments have imposed restrictions/qualifications by which the said provision has ceased to be a code by itself. In the above formula three existed four varia .....

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ituted part of gross total income, they had to be excluded from gross total income because such receipts had no nexus with the export turnover. Therefore, in the above formula, we have to read all the four variables. On reading all the variables it becomes clear that every receipt may not constitute sale proceeds from exports. That, every receipt is not income under the IT Act and every income may not be attributable to exports. This was the reason for this Court to hold that indirect taxes like excise duty which are recovered by the taxpayers for an on behalf of the Government, shall not be included in the total turnover in the above formula (see: CIT Vs. Lakshmi Machine Works (supra). 22. In the present case, the processing charges were i .....

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the taxpayer on behalf of the Government. Therefore, in the present cases, our judgement in CIT Vs. Lakshmi Machine Works (supra), has no application." 5. Following the above decision, question No.1 is decided against the assessee and in favour of the Revenue. 6. So far as the second question of law is concerned, the issue has been decided by the Hon'ble Supreme Court in the case of ACG Associated Capsules (P) Ltd. Vs. Commissioner of Income Tax reported in (2012) 247 CTR 0372. In the said case the Hon'ble Supreme Court rendered the following conclusion:- "Ninety per cent of the net interest or net rent which has been included in the profits of the assessee as computed under the head profits and gains of business or profe .....

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