TMI Blog2021 (8) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent assessee is using stainless steel as raw material, from which utensils are manufactured. The raw material, which is not capable of being used for manufacturing utensils will have to be either sold as scrap or might have to be re-cycled in the form of sheets of stainless steel, if the manufacturing unit is also having its re-rolling plant. If it is not having such a plant, the manufacturer would dispose of the scrap of steel to someone who would re-cycle the said scrap into steel so that the said steel can be re-used. When such scrap is sold, in our opinion, the sale proceeds of the scrap cannot be included in the term turnover for the reason that the respondent-unit is engaged primarily in the manufacturing and selling of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inath Sridevan Assisted by M/s.Jyotsna Sivakumar JUDGMENT T. S. SIVAGNANAM, J. This appeal by the revenue under Section 260A of the Income Tax Act, 1961 ['the Act' for brevity] is directed against the order dated 24.04.2015 passed by the Income Tax Appellate Tribunal [hereinafter referred to as the Tribunal ], 'B' Bench in I.T.A.No.2400/Mds/2014 for the assessment year 2007-2008. 2.The appeal was admitted on 04.01.2016 on the following substantial question of law: Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the scrap sales had to be excluded from the total turnover as well as the export turnover while computing the exemption under Section 10B? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment order. 6.The learned senior standing counsel for the revenue seeks to draw a distinction with regard to the deduction claim under Section 80HHC and would point out that the case on hand is a claim made under Section 10B of the Act. However, the legal principle which is required to be considered is as to what is the meaning of the word 'turnover'. The Hon'ble Supreme Court in the case of Commissioner of Income Tax-VII, New Delhi vs. Punjab Stainless Steel Industries [(2014) 46 Taxman 68 (SC)] considered this issue and held as follows: 17.To ascertain whether the turnover would also include sale proceeds from scrap, one has to know the meaning of the term turnover . The term turnover has neither be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... niture or a capital asset, in which the business unit is not dealing are sold, the sale proceeds therefrom would not be included in sales but it would be shown separately. 21.In simple words, the word turnover would mean only the amount of sale proceeds received in respect of the goods in which an assessee is dealing in. For example- If a manufacturer and seller of air-conditioners is asked to declare his turnover , the answer given by him would show the sale proceeds of air-conditioners during a particular accounting year. He would not include the amount received, if any, from the sale of scrap of metal pieces or sale proceeds of old or useless things sold during that accounting year. This clearly denotes that ordinarily a busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer would be treated as turnover for a simple reason that the buyer of the scrap is a person who is primarily dealing in scrap. In the case on hand, as the respondent-assessee is not primarily dealing in scrap but is a manufacturer of stainless steel utensils, only sale proceeds from sale of utensils would be treated as his turnover . 25.So as to be more accurate about the word turnover , one can either refer to dictionaries or to materials which are published by bodies of Accountants. The Institute of Chartered Accountants of India ( hereinafter referred to as the ICAI ) has published some material under the head Guidance Note on Tax Audit Under Section 44AB of the Income Tax Act . The said material has been published so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyalty etc. Where excise duty is included in turnover, the corresponding amount should be distinctly shown as a debit item in the profit and loss account. (emphasis supplied) The aforestated meaning given by the ICAI clearly denotes that in normal accounting parlance the word turnover would mean total sales as explained hereinabove. The said sales would definitely not include the scrap material which is either to be deducted from the cost of raw material or is to be shown separately under a different head. We do not see any reason for not accepting the meaning of the term turnover given by a body of Accountants, which is having a statutory recognition. 26.If all accountants, auditors, businessmen, manufacturers etc. are nor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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