Gujarat High Court
C.I.T.-I vs Raymon on 1 July, 2011
Author: Harsha Devani
Bench: Harsha Devani
Gujarat High Court Case Information System
Print
TAXAP/213/2004 5/ 5 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 213 of 2004
For
Approval and Signature:
HONOURABLE
MS.JUSTICE HARSHA DEVANI Sd/-
HONOURABLE
MR.JUSTICE R.M.CHHAYA Sd/-
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
NO
2
To be
referred to the Reporter or not ? NO
3
Whether
their Lordships wish to see the fair copy of the judgment ?
NO
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ? NO
5
Whether
it is to be circulated to the civil judge ?
NO
=========================================================
C.I.T.-I
- Appellant(s)
Versus
RAYMON
GELATINE - Opponent(s)
=========================================================
Appearance :
MR
KM PARIKH for
Appellant(s) : 1,
MR RK PATEL for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MR.JUSTICE R.M.CHHAYA
Date
: 21/04/2011
ORAL
JUDGMENT
(Per : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. In this appeal under section 260A of the Income Tax Act, 1961, (the Act), the appellant-revenue has challenged the order dated 18.9.2003 made by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' in ITA No. 3913/Ahd/2002 for assessment year 1998-99.
2. While admitting the appeal, this Court vide order dated 24.1.2005 had formulated the following substantial question of law:
"Whether the Income Tax Appellate Tribunal is right in law on facts and circumstances of the case in holding that Excise Duty and Sales Tax are to be excluded from the total turnover as defined under Section 80HHC Explanation (ba) of the Income Tax Act, 1961?"
3. The assessment year is 1998-99 and the relevant accounting period is the year ended on 31.3.1996.
4. At the outset Mr. R.K. Patel, learned Advocate appearing on behalf of the respondent-assessee has drawn the attention of the Court to a decision of the Supreme Court in the case of CIT Vs. Lakshmi Machine Works, (2007) 290 ITR 667 (SC), to submit that the controversy involved in the present case stands concluded by the Supreme Court in favour of the assessee.
5. Mr. K.M. Parikh, appearing on behalf of the appellant is not able to dispute the aforesaid position of law. In the circumstances, it is not necessary to set out the facts and contentions in detail.
6. The Supreme Court in case of Lakshmi Machine Works (supra) has held thus:
"24.
Section 80-HHC(3) was a beneficial section. It was intended to provide incentives to promote exports. The incentive was to exempt profits relatable to exports. In the case of combined business of an assessee having export business and domestic business the legislature intended to have a formula to ascertain export profits by apportioning the total business profits on the basis of turnovers. Apportionment of profits on the basis of turnover was accepted as a method of arriving at export profits. This method earlier existed under the Excess Profits Tax Act, it existed in the Business Profits Tax Act. Therefore, just as commission received by an assessee is relatable to exports and yet it cannot form part of "turnover", excise duty and sales tax also cannot form part of the "turnover". Similarly, "interest" emanates from exports and yet "interest"
does not involve an element of turnover.
25. The object of the legislature in enacting Section 80-HHC of the Act was to confer a benefit on profits accruing with reference to export turnover. Therefore, "turnover" was the requirement. Commission, rent, interest, etc. did not involve any turnover. Therefore, 90% of such commission, interest, etc. was excluded from the profits derived from the export. Therefore, even without the clarification such items did not form part of the formula in Section 80-HHC(3) for the simple reason that it did not emanate from the "export turnover", much less any turnover. Even if the assessee was an exclusive dealer in exports, the said commission was not includible as it did not spring from the "turnover". J ust as interest, commission, etc. did not emanate from the "turnover", so also excise duty and sales tax did not emanate from such turnover. Since excise duty and sales tax did not involve any such turnover, such taxes had to be excluded.
Commission, interest, rent, etc. do yield profits, but they do not partake of the character of turnover and, therefore, they were not includible in the "total turnover"." (Emphasis supplied) In the light of the above cited decision of the Supreme Court it is apparent that the controversy involved in the present case stands concluded in favour of the assessee. In the circumstances, the question is answered in the affirmative, that is, the Tribunal was right in law and on facts in holding that excise duty and sales tax are to be excluded from the total turnover as defined in section 80HHC Explanation (ba) of the Income Tax Act, 1961.
8. The appeal is accordingly dismissed with no order as to costs.
Sd/-
(H.N. Devani, J.) Sd/-
(R.M. Chhaya, J.) M.M.BHATT Top