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1 - 9 of 9 (0.35 seconds)Section 28 in The Income Tax Act, 1961 [Entire Act]
Section 263 in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income-Tax vs K.K. Doshi And Co. on 8 August, 2000
In the case of CIT v. K. K. Doshi and Co. [2000] 245 ITR 849 (Bom), the assessee had received Rs. 19.60 lakhs as service charges. It was held that the service charges of Rs. 19.60 lakhs did not have the element of turnover because the charges were received for a seasonal activity which was not an integral part of the manufacturing activity. Therefore, the test to be applied in all such matters is, whether interest, service charges, commission accrue out of the main business activity of the company and whether they were operational income. The case of K. K. Doshi and Co. [2000] 245 ITR 849 (Bom) shows, that service charges of Rs. 19.60 lakhs did not represent operational income and, therefore, came within Explanation (baa). However, we find that the Department just looks at the nomenclature of the receipt and if it finds that the nomenclature is rent, interest, commission then without any further inquiry into the nature of business, the Department invokes Explanation (baa) which is not the purpose and the object of that Explanation. In the present case, the receipt in question is labour charges. However, this nomenclature may not be accurate. In the present case, the assessee is a manufacturer and exporter of garments. In the present case, the Tribunal has recorded a finding of fact which is not challenged, namely, that there was no difference between the activities relating to export business carried on by the assessee and the processes carried on for manufacturing garments for others under job work contracts. The Tribunal has further found, on the facts, that the activity of labour job involved use of machinery, labour and material which were also forming part of the activity of manufacturing garments for its own sales. The Tribunal further found that there was no difference between manufacturing of garments for the assessee's own sales and manufacturing of garments for others on labour job basis. These are findings of fact. They have not been challenged in the memo of appeal. The memo of appeal proceeds only on the basis that because the receipt is by way of labour charges, Explanation (baa) stood attracted. As stated above, each case will have to be examined by the Assessing Officer. As stated above, in each case of receipt of labour charges, rent, interest commission, etc., the Assessing Officer will have to ascertain whether the element of turnover existed. In the present case, the Tribunal has found, on the facts, that there was an element of job work turnover and, therefore, the Tribunal concluded on the facts of this case that the receipt of labour charges was not in the nature of brokerage, commission, rent, interest or charges as mentioned in Explanation (baa) to Section 80HHC. Further, the assessee received Rs. 66,35,083 as processing charges. This can be seen from the profit and loss account. The company is engaged in manufacture and sale of garments, both domestically and by way of exports. The processing charges earned was by using the entire undertaking of the company which also manufactured garments for domestic sales and export sales and which processing charges were earned by incurring expenditure for the factory like wages, electricity charges, etc., debited in the profit and loss account. That, the income of Rs. 66,35,083 was only an income from business and the expenditure for earning this income is included in several items of expenditure debited in the profit and loss account. In these circumstances, we do not wish to interfere with the finding of fact recorded by the Tribunal. As stated above, if the receipt of labour charges (job work charges), interest, commission, etc., accrues by way of operating income then it falls outside Explanation (baa). In the present case, the receipt accrued from manufacturing activity, The Tribunal has found that job processing activity was linked to the manufacturing activity of the assessee. In the circumstances, on the facts, the judgments cited by the Department do not apply to this case. Lastly, we may point out that, in this case, there is no challenge to the findings of facts recorded by the Tribunal in relation to the processing activity forming part of the manufacturing activity of the assessee.
Commissioner Of Income-Tax vs Kantilal Chhotalal on 31 July, 2000
Ltd. [2000] 246 ITR 443 and CIT v. Kantilal Chhotatal [2000] 246 ITR 439.
Section 260A in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income-Tax vs S.G. Jhaveri Consultancy Ltd. on 8 August, 2000
Therefore, job work receipts/labour charges were required to be reduced from the business profits as contemplated by the above Explanation. In this connection, the Department placed heavy reliance on the following judgments of the Bombay High Court to which one of us (Kapadia ].) was a party. They relied upon the judgments in the case of CIT v. S.G. Jhaveri Consultancy ltd. [2000] 245 ITR 854 ; CIT v. K.K. Doshi and Co. [2000] 245 ITR 849 ; CIT v. Ravi Ratna Exports (P.)
Commissioner Of Income-Tax vs Ravi Ratna Exports (P.) Ltd. on 25 July, 2000
Therefore, job work receipts/labour charges were required to be reduced from the business profits as contemplated by the above Explanation. In this connection, the Department placed heavy reliance on the following judgments of the Bombay High Court to which one of us (Kapadia ].) was a party. They relied upon the judgments in the case of CIT v. S.G. Jhaveri Consultancy ltd. [2000] 245 ITR 854 ; CIT v. K.K. Doshi and Co. [2000] 245 ITR 849 ; CIT v. Ravi Ratna Exports (P.)
Section 80I in The Income Tax Act, 1961 [Entire Act]
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