Kerala High Court
The Commissioner Of Income Tax vs Shri.R. Ganapathy on 28 February, 2008
Author: C.N.Ramachandran Nair
Bench: C.N.Ramachandran Nair, T.R.Ramachandran Nair
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ITA.No. 170 of 2002()
1. THE COMMISSIONER OF INCOME TAX,
... Petitioner
Vs
1. SHRI.R. GANAPATHY, GANESH EDIBLE
... Respondent
For Petitioner :SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT
For Respondent :SRI.JOSEPH MARKOSE
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR
Dated :28/02/2008
O R D E R
C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR JJ.
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I.T.A No.170 of 2002
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Dated this the 28th day of February, 2008
J U D G M E N T
C.N.RAMACHANDRAN NAIR, J.
Question raised is whether the processing charge received by the assessee from M/s.I.T.C Ltd. for processing and supply of cashew nut is to be treated as turnover for the purpose of computation of deduction in respect of eligible export profit under Section 80 HHC.
2. On going through the order of the Tribunal and after hearing the parties, we find that the tribunal has given a clear finding that the assessee has entered into contract with M/s.I.T.C Ltd. for the processing of cashew nuts and the execution of the contract was, in turn, given on sub contract by the assessee to another party. In fact, the amount received is credited by the assessee and the amounts simultaneously given to the sub- contractors towards processing charges is debited in the accounts. Since the tribunal found that it is an independent transaction and that the assessee has not processed any cashew nuts but had directly purchased cashew kernels and exported the same, assessee was rightly treated as merchant-exporter. We find from I.T.A No.170 of 2002 -: 2 :- the order of the Tribunal that the entire transaction is not related to the export business but to be excluded from the computation of deduction in respect of eligible export profit under Section 80 HHC of the IT Act.
3. However, the learned Standing Counsel pointed out that it is clear from the assessment order that the assessee has taken the contract amount towards business income of assessee in the computation of eligible export profit. If the contract receipt does not constitute turnover as claimed by the assessee in the computation of eligible deduction under Section 80HHC, then the profit from that contract also cannot be reckoned at all. We do not think that the Tribunal's order entitles the assessee to reckon, either the profit or the turnover in respect of the contract business undertaken for processing of cashew for M/s.I.T.C Ltd. We therefore dismiss this appeal with this clarification and leaving freedom to the officer to revise assessment in line with the above observation about the tribunals order.
C.N.RAMACHANDRAN NAIR, Judge T.R.RAMACHANDRAN NAIR, Judge ms