TMI Blog2000 (8) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... er appeal, the assessee claimed deduction under s. 80HHC of the IT Act amounting to Rs. 14,11,75,230. For the purpose of computation of deduction, the figure of total turnover adopted at Rs. 75,31,22,778 does not include the amount of excise duty and sales-tax collected from the customers as under: Rs. Excise duty 6,28,85,426 Sales-tax 51,04,269 The assessee claimed that total turnover does not include sales-tax and excise duty in view of the decision of Calcutta Bench of the Tribunal in the case of Chloride India vs. Dy. CIT (1995) 53 ITD 180 (Cal). The Assessing Officer (AO), however, proceeded to compute the deduction under s. 80HHC by including the sales tax and excise duty receipts as part of the total turnover. The learned CIT(A) upheld the action of the AO on the issue. 4. Assailing the conclusion of the learned CIT(A), Shri J.P. Shah, the learned counsel for the assessee, argued that sales-tax and excise duty received by the assessee from the customers do not contain an element of profit and since such receipts have been credited separately and do not form part of P L a/c of the assessee, such receipts cannot be incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss income under the IT Act. Relying on this ground, the learned Departmental Representative argued that there is absolutely no justification for excluding such receipts from the figure of total turnover while computing deduction under s. 80HHC of the IT Act. 6. We have carefully considered the rival submissions and perused the various decisions cited by the learned representatives on both sides. In our opinion, the position is now well settled by a string of judgments of Hon'ble Supreme Court that excise duty and sales-tax recovered by the assessee from the customers essentially constitute trading receipts of the assessee. The decisions of the Hon'ble Supreme Court in Chowringhee Sales Bureau and Sinclair Murray Co. (P) Ltd. vs. CIT 1974 CTR (SC) 283 : (1974) 97 ITR 615 (SC) though rendered in the context of sales-tax rules, govern the facts of the instant case in the matter of sales-tax and excise duty realisation by the assessee. Further reliance is placed on the decision of Hon'ble Gujarat High Court, in the case of Navjivan Udyog Mandir (P) Ltd. vs. CIT (1994) 117 CTR (Guj) 360 : (1994) 207 ITR 40 (Guj) wherein the Hon'ble High Court has categorically held that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld indicate that there is no legislative intention, express or implied, to exclude realisation on account of sales-tax or excise duty from the scope and ambit of "total turnover." What is sought to be excluded expressly by the legislature is freight and insurance attributable to the transport of goods beyond the customs station. Therefore, any attempt to restrict the scope of the expression "total turnover" by excluding sales-tax and excise duty realisation would be contrary to the express legislative intention as well as the unambiguous statutory language used for defining the expression "total turnover". 8. The expression "total turnover of the business" would thus necessarily include the sale realisation of the assessee on the sale of goods. Such realisations would obviously include various components like cost of raw material, overhead expenses of the assessee, other miscellaneous expenses like sales-tax, excise duty, etc. and element of profit included by the assessee. These components are integral parts of the sale proceeds and there is no justification whatsoever for excluding any cost component for the purpose of adopting the figure of "total turnover" while computing de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de for any such exclusion any portion of the realisation on the so-called ground that it does not contain a profit element. Sales realisation, as we have already pointed out, is an integral part of the price realised by the assessee on the sale of its goods and no portion of such realisation can be excluded on the ground that it has no element of profit. 11. The learned counsel for the assessee has heavily relied upon the decision of Ahmedabad Bench of the Tribunal in Shree Dinesh Mills Ltd.'s case. The learned counsel argued that the decision referred by Ahmedabad Bench is binding on us. There can be no dispute about the proposition that in income-tax matters which are governed by the Indian statute, when there is decision of one Bench of the Tribunal interpreting the statutory provisions, it would be wise judicial policy and practice not to take a different view. However, this is not an absolute proposition and there are certain well-known exceptions to it. In cases where a decision is sub silentio, per incuriam, obiter dicta or takes a view which it is impossible to arrive at or there is another view in the field or some such or similar infirmity is manifestly perceivable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such loss, is loss on revenue account and is deductible in computing business income under s. 28, although not allowable under s. 36. Your appellant prays that the disallowance be deleted". The learned CIT(A) has dealt with the issue vide paras 14, 15 and 16 of the order and remitted the issue of disallowance of Rs. 2,67,123 to the file of the AO with the direction that deduction would be allowed in respect of those amounts which were written off in the books of accounts and which related to sales effected in the past. The learned counsel argued that even if advances for purchases written off in the books do not fall for deduction under s. 36(2), the deductibility of such amounts should be considered as admissible business expenditure for the purposes of s. 28. We are inclined to accept the contention of the learned counsel. We would, accordingly, direct that if the advances for purchases have been written off in the books on grounds of non-recovery, the AO would consider the issue of deduction of such amounts of business loss under s. 28. This ground is, therefore, partly allowed as above." 14. Ground No. 5 reads as under: "The learned CIT(A) erred in holding that inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er each of the six heads as contemplated under s. 14 of the IT Act will have to be made independently and separately and interest receipts by an assessee from deposits could only be taxed under the head "income from other sources" under s. 56 of the IT Act. The income received by an assessee had to be treated under one or other head having regard to the source from which that income is derived. A mere fact that a person carried on business does not lead to the inference that all income received by such a person is business income. The decision of Madras High Court in South India Shipping Corporation Ltd. relied upon by the learned CIT(A) fully supports the view taken by us here. The interest income thus clearly has no nexus, direct or indirect with the industrial undertaking and, therefore, ss. 80HH and 80-I would not be applicable in respect of interest income. With regard to the limited scope and ambit of the expression "derived from" used in ss. 80HH and 80-I, reference may be made to the recent decision of Hon'ble Supreme Court in CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (1999) 237 ITR 579 (SC) and Hindustan Liver Ltd. vs. CIT (1999) 157 CTR (SC) 506 : (1999) 239 ITR 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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