Gujarat Ambuja Exports Ltd.,, Ahmedabad v. The Income tax Officer, Ward-4(1),, Ahmedabad

ITA 2137/AHD/2007 | 2003-2004
Pronouncement Date: 24-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 213720514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 2137/AHD/2007
Duration Of Justice 3 year(s) 7 month(s) 3 day(s)
Appellant Gujarat Ambuja Exports Ltd.,, Ahmedabad
Respondent The Income tax Officer, Ward-4(1),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 24-12-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 24-12-2010
Date Of Final Hearing 13-12-2010
Next Hearing Date 13-12-2010
Assessment Year 2003-2004
Appeal Filed On 21-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MAHAVIR SINGH JUDICIAL MEMBER) ITA.NO.2137/AHD/2007 [ASSTT. YEAR : 2003-2004] GUJARAT AMBUJA EXPORTS LTD. AMBUJA TOWER POST : NAVJIVAN NAVRANGPURA AHMEDABAD. VS. ITO WARD-4(1) AHMEDABAD. ITA.NO.2511/AHD/2007 [ASSTT. YEAR : 2003-2004] ITO WARD-4(1) AHMEDABAD. VS. GUJARAT AMBUJA EXPORTS LTD. AMBUJA TOWER POST : NAVJIVAN NAVRANGPURA AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N.SOPARKAR REVENUE BY : SHRI ANIL KUMAR O R D E R G.D. AGARWAL VICE-PRESIDENT : THESE ARE TWO APPEALS ONE BY THE ASSESSEE AND OTHER BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VIII AHMEDABAD DATED 30.03.20 07 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961. SINCE THE ISSUES ARE INTER-RELATED FO R THE SAKE OF CONVENIENCE WE DISPOSE OF BOTH THE APPEALS BY THIS COMMON ORDER. ITA NO.2137/AHD/2007 (ASSESSEES APPEAL) 2. THE GROUND NOS.1 TO 4 OF THE ASSESSEES APPEAL R EAD AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ENHANCING THE BOOK PROFITS OF THE APPELLANT BY RS.8 77 94 182/- O N ALL TOGETHER DIFFERENT GROUNDS AND REASONING. THIS ACTION OF LD . CIT(A) HAS RESULTED INTO ENHANCEMENT OF INCOME OF THE APPELLAN T ON ENTIRELY DIFFERENT GROUNDS WHICH WERE NOT THE BASIS FOR MAKI NG THE ADDITIONS IN THE ASSESSMENT ORDER AND WHICH ARE FAR FROM THE FACTS AND ITA.NO.2137 AND 2511/AHD/2007 -2- EVIDENCES ON RECORDS AND BASED ON CONJECTURES AND S URMISES. THUS THIS ACTION OF LD. CIT(A) HAS RESULTED INTO ASSESSI NG AN ALTOGETHER NEW SOURCE OF INCOME IN THE HANDS OF THE APPELLANT WHICH IS NOT PERMISSIBLE UNDER THE LAW AND THEREFORE DESERVES TO BE QUASHED. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN RECALCULATING DEDUCTION U/S.80HHC OF THE ACT WHILE QUANTIFYING BO OK PROFITS U/S.115JB OF THE ACT. LD.CIT(A) FURTHER ERRED IN L AW IN REDUCING NET PROFITS AS PER P&L A/C. BY PROFITS ELIGIBLE FOR DED UCTION U/S.80HHC ACTUALLY COMPUTED U/S.80HHC(3)(A/B/C) AS AGAINST TH E SAME HAVING BEEN COMPUTED WITH REFERENCE TO BOOK PROFITS IN THE M MANNER SPECIFIED U/S.80HHC(3) OF THE ACT. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DENYING DEDUCTION U/S.80B OF THE ACT WHILE QUANTIFYING BOOK PROFITS U/S.115JB OF THE ACT. LD.CIT(A) FURTHER ERRED IN L AW IN REDUCING NET PROFITS AS PER P&L A/C. BY INCOME ELIGIBLE FOR DEDU CTION U/S.10B ACTUALLY COMPUTED AFTER SET OFF OF UNABSORBED BROUG HT FORWARD DEPRECIATION OF PRIOR YEARS AS AGAINST THE SAME HAV ING BEEN COMPUTED WITH REFERENCE TO THE AMOUNT OF INCOME ELI GIBLE FOR DEDUCTION U/S.10B OF THE ACT CREDITED TO THE P&L AC COUNT. 4. ALTERNATIVELY AND WITHOUT PREJUDICE UNABSORBED BROUGHT FORWARD DEPRECIATION ONLY IN RESPECT OF UNIT ELIGIB LE FOR DEDUCTION U/S.10B THAT TOO FROM A.Y.2001-02 CAN BE SET OFF AG AINST THE CURRENT YEARS PROFITS WHILE CALCULATING DEDUCTION U/S.10B O F THE ACT. 3. AT THE TIME OF HEARING BEFORE US IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED THE RETURN DECLARING TOTAL INCOME AT NIL AND THE BOOK PROFIT AT RS.4 71 16 061/- UNDER SECTION 115JB OF THE I.T.ACT. THE AO MADE CERTAIN ADJUSTME NTS TO THE TOTAL INCOME DECLARED BY THE ASSESSEE. HOWEVER AFTER ALLOWING THE SET OFF OF CARRY FORWARD DEPRECIATION OF EARLIER YEAR THE RESULTANT TOTAL I NCOME WAS DECLARED AT NIL. HE ACCEPTED THE BOOK PROFIT DISCLOSED AT RS.4 71 16 06 1/-. 4. THE ASSESSEE HAD FILED APPEAL AGAINST CERTAIN DI SALLOWANCE MADE BY THE AO WHILE COMPUTING THE TOTAL INCOME. ON APPEAL TH E CIT(A) MADE ENHANCEMENT OF BOOK PROFIT BY A SUM OF RS.8 77 94 1 82/-. WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB THE AO HAS RED UCED THE NET PROFIT AS PER THE PROFIT AND LOSS ACCOUNT FOR DEDUCTION UNDER SEC TION 80HHC AMOUNTING TO ITA.NO.2137 AND 2511/AHD/2007 -3- RS.1 63 10 271/- AND EXEMPTION UNDER SECTION 10B AM OUNTING TO RS.7 14 83 911/-. IN THE OPINION OF THE CIT(A) BO TH THE ABOVE DEDUCTION SHOULD NOT HAVE BEEN ALLOWED WHILE COMPUTING THE BO OK PROFIT UNDER SECTION 115JB. HE THEREFORE DIRECTED THE AO TO ENHANCE THE BOOK PROFIT BY THE SUM OF RS.8 77 94 182/- (RS.7 14 83 911/- PLUS RS.1 63 10 271/-). 5. THE GROUND NOS.1 TO 4 OF THE ASSESSEES APPEALS ARE AGAINST SUCH ENHANCEMENT MADE TO THE BOOK PROFIT MADE BY THE LEA RNED CIT(A). IT IS STATED BY THE LEARNED COUNSEL THAT THE ENHANCEMENT MADE BY THE CIT(A) WAS ON DIFFERENT GROUNDS AND REASONING THAN THE FINDINGS O F THE AO. HE HAS STATED THAT THE AO HAD ACCEPTED THE BOOK PROFIT AND THEREFORE F OR THE PURPOSE OF ENHANCEMENT THE CIT(A) CANNOT CONSIDER THE ITEMS W HICH WERE NOT CONSIDERED BY THE AO. IN SUPPORT OF THIS CONTENTION THE RELI ED UPON THE FOLLOWING DECISIONS: I) COMMISSIONER OF INCOME-TAX VS SHAPOORJI PALLONJI MI STRY 44 ITR 891 (SC); II) COMMISSIONER OF INCOME-TAX VS JAGDISH MILLS LTD. 51 ITR 266 (GUJ); III) PRABHUDAS RAMJI VS COMMISSIONER OF INCOME-TAX 62 ITR 621 (GUJ); IV) COMMISSIONER OF INCOME-TAX VS RAI BAHADUR HARDUTROY MOTILAL CHAMARIA 66 ITR 443 (SC); V) COMMISSIONER OF INCOME-TAX VS UNION TYRES 240 ITR 556 (DEL) VI) COMMISSIONER OF INCOME-TAX VS SARDARI LAL AND CO. 251 ITR 864 (DEL) (FB) 6. WITH REGARD TO THE DIRECTIONS OF THE CIT(A) THAT WHILE COMPUTING THE BOOK PROFIT NO DEDUCTION IS TO BE ALLOWED UNDER SE CTION 80HHC BECAUSE THE TOTAL INCOME WAS DETERMINED AT NIL IT IS SUBMITTED THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE APEX COURT IN THE CASE OF AJANTA PHARMA LTD. VS COMMISSIONER OF I NCOME-TAX 327 ITR 305 AND THE SPECIAL BENCH OF THE ITAT IN THE CASE OF DC IT S. SYNCOME FORMULATIONS (I) LTD. 106 ITD 193. WITH REGARD T O THE DEDUCTION UNDER SECTION 10B WHILE COMPUTING THE BOOK PROFIT IT IS STATED BY THE LEARNED COUNSEL ITA.NO.2137 AND 2511/AHD/2007 -4- THAT THE AO HIMSELF HAS ALLOWED DEDUCTION UNDER SEC TION 10B WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE AND THE LEARNED CI T(A) HAS NOT DISTURBED THE SAME. MOREOVER THE ABOVE DECISION OF THE HONBLE APEX COURT AS WELL AS THE SPECIAL BENCH OF THE ITAT DELIVERED WITH REFERENCE TO THE SECTION 80HHC WILL BE APPLICABLE WHILE CONSIDERING THE EXEMPTION UNDER SECTION 10B ALSO. HE ALSO STATED THAT THE ITAT DELHI BENCH HAS CONSIDERE D THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 10B WHILE COMPUTING THE BOOK PROFIT IN THE CASE OF DCIT VS. ROXY INVESTMENTS P. LTD. (2008) 24 SOT 22 7 (DELHI). HE THEREFORE SUBMITTED THAT THE ENHANCEMENT MADE BY THE CIT(A) W AS UNJUSTIFIED AND THE SAME SHOULD BE DELETED. 7. THE LEARNED DR ON THE OTHER HAND STATED THAT T HE AO HAS COMPUTED THE BOOK PROFIT UNDER SECTION 115JB AND WHILE COMPUTING THE BOOK PROFIT HE HAS CONSIDERED WHETHER EXEMPTION UNDER SECTION 10B/80HH C IS TO BE ALLOWED OR NOT. THUS HE HAS DULY CONSIDERED THESE ITEMS WHIL E COMPUTING THE BOOK PROFIT THEREFORE THE CONTENTION OF THE LEARNED COUNSEL TH AT THESE ITEMS WERE NOT CONSIDERED BY THE AO IS FACTUALLY INCORRECT. HE AL SO STATED THAT THE HONBLE APEX COURT HAS CONSIDERED THE POWERS OF THE CIT(A) IN THE CASE OF COMMISSIONER OF INCOME-TAX VS NIRBHERAM DALURAM 2 24 ITR 610 AND THEIR LORDSHIPS HAVE HELD THAT THE CIT(A) IS ENTITLED TO DIRECT THE ENHANCEMENT EVEN IN RESPECT OF THE ITEMS OF THE INCOME NOT CONSIDERE D BY THE AO. 8. WITH REGARD TO THE MERIT OF THE ADDITIONS HE HA S STATED THAT BEFORE THE CIT(A) THE ASSESSEE HIMSELF ADMITTED THAT THE DEDUC TION UNDER SECTION 80HHC WAS WRONGLY COMPUTED AND THE ASSESSEE FURNISHED REV ISED COMPUTATION. THIS FACT WOULD BE EVIDENT FROM PARA 14.2 OF THE ORDER O F THE CIT(A). HE ALSO STATED THAT THE CIT(A) HAS ALSO DISCUSSED THE ISSUE AT LEN GTH AND HAS ARRIVED AT THE CONCLUSION THAT WHILE COMPUTING THE BOOK PROFIT TH E ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION UNDER SECTION 80HHC AND 10B. THEREFO RE HE DIRECTED THE AO TO RE-COMPUTE THE BOOK PROFIT WITHOUT ALLOWING ANY DEDUCTION/EXEMPTION UNDER ITA.NO.2137 AND 2511/AHD/2007 -5- SECTION 80HHC/10B. HE THEREFORE SUBMITTED THAT THE ORDER OF THE CIT(A) MAY BE SUSTAINED. 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T THE HONBLE APEX COURT EXAMINED THE POWERS OF THE CIT(A) IN THE CASE OF CO MMISSIONER OF INCOME-TAX VS NIRBHERAM DALURAM (SUPRA) IN WHICH THEIR LORDSH IPS HELD AS UNDER: HELD ALLOWING THE APPEAL THAT THE APPELLATE POWE RS CONFERRED ON THE APPELLATE ASSISTANT COMMISSIONER UNDER SECTION 251 OF THE ACT WERE NOT CONFINED TO THE MATTERS CONSIDERED BY THE INCOME-TAX OFFICER. THEREFORE EVEN IF IT WERE HELD THAT THE S UM OF RS.2 30 000 ADDED BY THE APPELLATE ASSISTANT COMMISSIONER RELAT ED TO NEW SOURCES OF INCOME NOT CONSIDERED BY THE INCOME-TAX OFFICER THE APPELLATE ASSISTANT COMMISSIONER COULD NOT BE HELD TO HAVE EXCEEDED HIS JURISDICTION IN MAKING THE ADDITION OF RS.2 30 000 ON THE BASIS OF THE OTHER 10 ITEMS OF HUNDIS WHICH HAD NOT BEEN EXPLAINED BY THE RESPONDENT FIRM. LET US EXAMINE THE FACTS OF THE ASSESSEES CASE TO ASCERTAIN WHETHER THE CIT(A) HAS CONSIDERED THE NEW SOURCE OF INCOME. THE AO HA S COMPUTED THE BOOK PROFIT UNDER SECTION 115JB AS UNDER: IN THE RETURN OF INCOME THE ASSESSEE HAS COMPUTED BOOK PROFIT U/S.115JB OF THE ACT AS UNDER: PROFIT AS PER PROFIT AND LOSS ACCOUNT RS.13 49 10 2 43/- LESS : EXEMPT U/S. 1 0 B RS.7 14 83 911/ - RS.6 34 26 332/ - LESS : DEDUCTION U/S.80HHC 1 63 10 271 / - BOOK PROFIT RS.4 71 16 061/ - IN THIS CONNECTION THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY DEDUCTION U/S.80HHC IN THE ABOVE SAID WORKING SHOUL D NOT BE TAKEN AT RS.NIL SINCE AS DISCUSSED EARLIER THE DEDUCTION U/S .80HHC FOR STATUTORY PROFITS UNDER THE I.T.ACT 1961 HAVE BEEN COMPUTED AT RS.NIL. IT WAS SUBMITTED BY THE ASSESSEE THAT FOR WORKING U/S.115J B THE DEDUCTION U/S.80HHC HAS TO BE RECOMPUTED AS PER THE FIGURES M ENTIONED IN THE BOOKS OF ACCOUNTS ONLY AND NOT AS COMPUTED FOR INCOME TAX PURPOSES. IT WAS SUBMITTED THAT AS PER C.B.D.T.'S CIRCULAR NO.680 DA TED 21.02.1994 IT HAS BEEN CLEARLY SPECIFIED THAT IT IS ONLY THE MODE OF COMPUTATION GIVEN IN CLAUSE (3) OF SECTION 80HHC WHICH IS TO BE ADOPTED FOR WORKING OF ITA.NO.2137 AND 2511/AHD/2007 -6- DEDUCTION U/S.80HHC AND NOT THE ACTUAL AMOUNT OF DE DUCTION U/S.80HHC COMPUTED FOR INCOME TAX PURPOSES. RELIANCE WAS ALSO PLACED ON THE FOLLOWING CASE LAWS FOR THE SAID PURPOSE. (1) APOLLO TYRES (SC) (255 ITR 273) (2) CIT VS.GTN TEXTILES TD. (48 ITR 3/2) (KER.) (3) KARNATAKA SMALL INDUSTRIES DEVELOPMENT CORPORATION LIMITED VS.C.I.T.(SC) (258 ITR 770) 13. IN VIEW OF THE ABOVE SAID BOARD'S CIRCULAR AND CASE LAWS THE COMPUTATION OF DEDUCTION U/S.80HHC FOR THE PURPOSE OF 115JB IS DONE AS UNDER: PROFIT AS PER PROFIT AND LOSS ACCOUNT RS.13 49 10 243/- LESS: I) EXEMPTION U/S.10B RS.7 14 83 911/- II) DEDUCTION U/S.80HHC AS PER ASSESSEES WORKING RS.1 63 10 271/- RS.8 77 94 182/- BOOK PROFIT RS.4 71 16 061/- FROM THE ABOVE IT IS CLEAR THAT THE AO HAS CONSIDE RED THE ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC WHILE COMPUTING THE B OOK PROFIT. HE HAS ALSO ALLOWED THE EXEMPTION UNDER SECTION 10B WHILE COMPU TING THE BOOK PROFIT. THEREFORE IT CANNOT BE SAID THAT THE DIRECTION OF THE CIT(A) RELATING TO EXEMPTION UNDER SECTION 10B OR DEDUCTION UNDER SECT ION 80HHC ARE THE NEW ITEMS NOT CONSIDERED BY THE AO. BOTH THE ABOVE ITE MS WERE CONSIDERED BY THE AO AND THE CIT(A) DID NOT AGREE WITH THE VIEWS OF T HE AO TAKEN IN THIS REGARD. EVEN OTHERWISE HONBLE APEX COURT IN THE CASE OF N IRBHARAM DALURAM (SUPRA) HAS HELD THAT THE POWER OF CIT(A) ARE NOT CONFINED TO MATTERS CONSIDERED BY THE AO HE MAY CONSIDER EVEN NEW SOURCE OF INCOME. THER EFORE WE ARE OF THE OPINION THAT THE CIT(A) HAD THE POWER TO CONSIDER T HE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC/10B WHILE COMPUTING B OOK PROFIT. 10. NOW WE COME TO THE MERIT OF THE ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC. WE FIND THAT THE HONBLE APEX COURT HAS CONSIDERED THIS ISSUE IN THE CASE OF AJANTA PHARMA LTD. (SUPRA) WHE REIN THEIR LORDSHIPS HELD AS UNDER: ITA.NO.2137 AND 2511/AHD/2007 -7- HELD REVERSING THE DECISION OF THE HIGH COURT AN D RESTORING THAT OF THE APPELLATE TRIBUNAL (I) THAT SECTION 115JA WAS A SE LF-CONTAINED CODE AND APPLIED NOTWITHSTANDING ANY PROVISION IN THE ACT. S ECTION 115JB IS THE SUCCESSOR SECTION TO SECTION 115JA. SECTION 115JB C ONTINUES TO REMAIN A SELF-CONTAINED CODE. (II) THAT ALL ASSESSABLE ENTITIES WERE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC(1B). SIMILARLY ONLY ELIGIBLE GOODS W ERE ENTITLED TO SUCH SPECIAL DEDUCTION UNDER SECTION 80HHC(1). SECTION 8 0HHC(3) WAS GEARED TO THE EXPORTS WHEREAS THE LEVY UNDER SECTI ON 115JB WAS ON THE DEEMED INCOME. THE IDEA WAS TO EXCLUDE 'EXPORT PROF ITS' FROM THE COMPUTATION OF BOOK PROFITS UNDER SECTION 115JB. (III) THAT IF THE DICHOTOMY BETWEEN 'ELIGIBILITY' O F PROFITS AND 'DEDUCTIBILITY' OF PROFITS WAS NOT KEPT IN MIND SEC TION 115JB WOULD CEASE TO BE A SELF-CONTAINED CODE. (IV) THAT THEREFORE THE APPELLATE TRIBUNAL WAS RI GHT IN HOLDING THAT THAT 100 PER CENT. OF THE EXPORT PROFITS EARNED BY THE A SSESSEE AS COMPUTED UNDER SECTION 80HHC(3) WAS ELIGIBLE FOR REDUCTION U NDER CLAUSE (IV) OF THE EXPLANATION TO SECTION 115JB. THE SPECIAL BENCH OF THE ITAT IN THE CASE OF SYNCOM E FORMULATIONS (I) LTD. HELD AS UNDER: THE DEDUCTION UNDER SECTION 80HHC IN A MAT SCHEME IS FROM THE TAXABLE INCOME WHICH IS OTHERWISE THE ADJUSTED BOO K PROFIT. IF NO DEDUCTION IS AVAILABLE TO AN ASSESSEE THE GROSS TO TAL INCOME ITSELF IS THE TAXABLE INCOME OF THE ASSESSEE. MAT SCHEME DOES NOT PROVIDE FOR DEDUCTIONS. THEREFORE THE INTERPRETATION IS THAT T HE ADJUSTED BOOK PROFIT OF A COMPANY ITSELF IS THE GROSS TOTAL INCOME OF TH AT ASSESSEE-COMPANY. THE DEDUCTION UNDER SECTION 80HHC IS IN THAT WAY GI VEN OUT OF GROSS TOTAL INCOME IN A CASE FALLING UNDER MAT. THIS IN T URN MEANS THAT SECTION 80HHC SHOULD BE COMPUTED ON THE ADJUSTED BO OK PROFIT. SECTIONS 115J 115JA AND 115JB COME INTO OPERATION AS THE REGULAR PROFITS HAS BEEN SUBSTITUTED BY THE BOOK PROFIT. ON CE THE SUBSTITUTION IS OVER THERE IS NO WAY TO GO BACK TO THE NORMAL COMP UTATION PROCESS OF STATUTORY PROFIT WHICH HAS ALREADY BEEN OVERWHELME D BY SECTIONS 115J 115JA AND 115JB. THIS RECONCILES THE ALLEGED INCOMP ATIBILITY POINTED OUT BY THE REVENUE THAT THE DEDUCTION AVAILABLE TO AN ASSESSEE UNDER CHAPTER VI-A IS SUBJECT TO SECTION 80AB. THEREFORE WE FIND THAT THE DEDUCTION UNDER SECTION 80HHC IN A CASE OF MAT ASSE SSMENT IS TO BE WORKED OUT ON THE BASIS OF THE ADJUSTED BOOK PROFIT AND NOT ON THE BASIS ITA.NO.2137 AND 2511/AHD/2007 -8- OF THE PROFIT COMPUTED UNDER THE REGULAR PROVISIONS OF LAW APPLICABLE TO THE COMPUTATION OF PROFIT AND GAINS OF BUSINESS OR PROFESSION. FROM THE ABOVE IT IS EVIDENT THAT THE HONBLE APEX COURT AS WELL AS THE SPECIAL BENCH OF THE ITAT HAVE TAKEN THE VIEW THAT THE SECT ION 115JB IS A SELF- CONTAINED CODE AND FOR THE PURPOSE OF SECTION 115JB DEDUCTION IS TO BE COMPUTED WITH REFERENCE TO THE BOOK PROFIT AND NOT WITH REFERENCE TO THE STATUTORY PROFIT. WE ALSO FIND THAT THE AO HIMSELF APPLIED HIS MIND ON THIS ASPECT AND AFTER FOLLOWING THE BOARD CIRCULAR AND O THER JUDICIAL PRONOUNCEMENTS HE ALLOWED THE DEDUCTION UNDER SECT ION 80HHC. THE CIT(A) HAS COME TO THE CONCLUSION THAT THE ASSESSEE WOULD NOT BE ENTITLED TO DEDUCTION UNDER SECTION 80HHC WHILE COMPUTING THE BOOK PROFIT ON THE GROUND THAT AFTER SET OFF OF THE BROUGHT FORWARD DEPRECIATION TOTAL I NCOME WOULD COME TO NIL. HOWEVER AS WE HAVE STATED EARLIER THAT FOR THE PUR POSE OF THE BOOK PROFIT DEDUCTION UNDER SECTION 80HHC IS TO BE COMPUTED WIT H REFERENCE TO THE BOOK PROFIT AND NOT WITH REFERENCE TO THE PROFIT COMPUTE D UNDER THE INCOME TAX ACT. ADMITTEDLY WHILE COMPUTING THE BOOK PROFIT BROUGH T FORWARD DEPRECIATION WAS NOT REDUCED AND THEREFORE FOR THE PURPOSE OF CO MPUTING THE DEDUCTION UNDER SECTION 80HHC FOR THE PURPOSE OF SECTION 115J B BROUGHT FORWARD DEPRECIATION IS NOT REQUIRED TO BE REDUCED. HOWEVER WE FIND THAT THE CIT(A) ALSO POINTED OUT THE MISTAKE COMMITTED BY THE ASSES SEE IN COMPUTING THE DEDUCTION UNDER SECTION 80HHC WITH REFERENCE TO THE BOOK PROFIT. THE ASSESSEE HAS WORKED OUT THE DEDUCTION AT RS.1 63 10 271/- WHILE THE CORRECT DEDUCTION UNDER SECTION 80HHC WITH REFERENCE TO THE BOOK PROFIT WORKS OUT TO RS.1 01 83 701/-. WHEN THIS ERROR WAS POINTED OUT BY THE CIT(A) TO THE ASSESSEE HE ADMITTED HIS MISTAKE AND ALSO FILED A R EVISED CLAIM BY FURNISHING THE REVISED FORM NO.10CCAC. THE RELEVANT FINDINGS OF THE CIT(A) READS AS UNDER: 14.2 AT THIS STAGE THE APPELLANT WAS SPECIFICALLY ASKED AS TO THE WORKING OF DEDUCTION FROM THE BOOK PROFIT U/S.115JB (3) EXPLANATION CLAUSE (IV). IT WAS FAIRLY ADMITTED THAT THE WORKIN G WAS UNDER THE NORMAL COMPUTATION ADDING BOOK DEPRECIATION AND MAKING OTH ER ADJUSTMENTS AS ARE REQUIRED IN THE NORMAL COURSE AND CLAIMING DEPR ECIATION AS PER I.T. ITA.NO.2137 AND 2511/AHD/2007 -9- RULES. IN FACT THE DEDUCTION WAS CLAIMED ON RS.18.1 1 CRORES AS AGAINST 13.49 CRORES BOOK PROFIT. THIS WAS AGAINST THE VERY CLAIM OF THE APPELLANT THAT THE DEDUCTION WAS COMPUTED WITH REFE RENCE TO THE BOOK PROFIT ONLY. THE APPELLANT THEREBY SUBMITTED A REVI SED FORM NO.10CCAC WHEREIN PROFIT OF RS.6 34 65 547/- WAS TAKEN AS THE BUSINESS PROFIT OTHER THAN PROFIT OF THE 10B UNIT AS AGAINST RS.10 16 34 944/- CONSIDERED ORIGINALLY FOR WORKING OUT THIS DEDUCTION. THIS HAD THE EFFECT OF REDUCING THE 80HHC PROFIT FOR BOOK PROFIT COMPUTATION TO RS. 1 01 83 701/- AS AGAINST RS.1 63 10 271/-. THUS IT WAS REQUESTED TO SUBSTITUTE THE ABOVE FIGURES WHICH WILL HAVE THE EFFECT OF ENHANCING THE BOOK PROFIT TO THE TIME OF RS.61 26 570/- (RS.1 63 10 271 RS.1 01 83 701) 11. AT THE TIME OF HEARING BEFORE US ALSO THE LEARN ED COUNSEL FAIRLY ADMITTED THAT THERE WAS SOME CLERICAL ERROR WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC BEFORE THE AO AND CORRECT DEDUCTION PERMISSIB LE UNDER SECTION 80HHC FROM THE BOOK PROFIT IS ONLY RS.1 01 83 701/- . WE THEREFORE DIRECT THE AO TO ALLOW DEDUCTION UNDER SECTION 80HHC AT RS.1 0 1 83 701/- WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB. 12. WITH REGARD TO DEDUCTION UNDER SECTION 10B THE CIT(A) HAS OBSERVED THAT AFTER THE SET OFF OF UNABSORBED DEPRECIATION THE TOTAL INCOME OF THE ASSESSEE WOULD BE NIL AND THEREFORE NO DEDUCTION UN DER SECTION 10B CAN BE ALLOWED EVEN WHILE COMPUTING THE BOOK PROFIT. WE HAVE ALREADY CONSIDERED THE ISSUE OF SET OFF OF THE BROUGHT FORWARD DEPRECI ATION WHILE COMPUTING THE DEDUCTION UNDER SECTION 80HHC FOR THE PURPOSE OF TH E BOOK PROFIT. OUR OBSERVATIONS ABOVE IN PARA-10 & 11 WOULD BE SQUAREL Y APPLICABLE FOR COMPUTING THE EXEMPTION UNDER SECTION 10B FOR THE P URPOSE OF SECTION 115JB. MOREOVER WE FIND THAT THE DELHI BENCH OF THE ITAT HAS CONSIDERED THE IDENTICAL ISSUE IN THE CASE OF ROXY INVESTMENTS P. LTD. (SUPRA) WHEREIN THEIR LORDSHIPS HELD AS UNDER: UNDER THE SCHEME OF PROVISIONS OF SECTION 115JB MI NIMUM ALTERNATE TAX (MAT) IS LEVIED WITH REFERENCE TO THE BOOK PROF IT DISCLOSED IN THE PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF PARTS 11 AND 111 OF SCHEDULE VI OF THE COMPANIES AC T 1956 AS OPPOSED TO 'PROFITS OR GAINS OF BUSINESS OR PROFESS ION' AS COMPUTED TO PER THE PROVISIONS OF THE ACT. THE BOOK PROFIT GETS SUBSTITUTED FOR THE ITA.NO.2137 AND 2511/AHD/2007 -10- TOTAL INCOME AS COMPUTED UNDER THE ACT. THE BOOK PR OFIT HAS THEREFORE TO BE WHOLLY QUARANTINED FROM THE SAID TOTAL INCOME . FOR THE DETERMINATION OF BOOK PROFIT THUS ANY MODE AND MA NNER OF COMPUTATION OF TOTAL INCOME UNDER THE ACT HAS NOT TO BE APPLIED UNLESS SPECIFICALLY PROVIDED FOR. THE EXPLANATION TO SECTION 115JB PROV IDES THE MANNER OF COMPUTATION OF BOOK PROFIT. THE STARTING POINT IS T HE BOOK PROFIT AS DISCLOSED IN THE PROFIT AND LASS ACCOUNT PREPARED I N ACCORDANCE WITH PARTS II AND III OF SCHEDULE VI THE COMPANIES ACT 1956. SUCH PROFIT IS SUBJECT TO ADJUSTMENTS SPECIFIED IN THE EXPLANATION TO SAID SECTION. IN TERMS OF CLAUSE (II) OF THE EXPLANATION TO SECTION 115JB (2) THE AMOUNT OF INCOME TO WHICH PROVISIONS INTER ALL OF SECTION 10A/10B APPLY IF SUCH AMOUNT IS CREDITED IN PROFIT & LOSS ACCOUNT IT IS TO BE REDUCED FROM THE PROFIT AS PER PROFIT & LOSS ACCOUNT THE AMOUNT OF I NCOME TO WHICH INTER ALIA SECTION 10A/10B APPLIES IF SUCH AMOUNT IS CR EDITED IN THE PROFIT & LOSS ACCOUNT IT WOULD ONLY REFER TO SUCH AMOUNT AS IS APPEARING IN THE BOOKS OF ACCOUNT. A CAREFUL PERUSAL OF CLAUSE (II) OF THE EXPLANATION TO SECTION 115JB(2) REVEALS THAT THOUGH THE SAID CLAUSE SPEAKS ABOUT T HE AMOUNT OF 'INCOME; YET IT ALSO SPEAKS OF 'IF ANY SUCH AMOUNT IS CREDI TED IN PROFIT & LOSS ACCOUNT: THUS WHILE READING THE SAID CLAUSE AS A W HOLE IT BECOMES CLEAR THAT THE AMOUNT OF INCOME WHICH CAN BE REDUCE D BY THE ASSESSING OFFICER FOR COMPUTING THE BOOK PROFIT UNDER CLAUSE (II) OF THE EXPLANATION TO SECTION 115JB(2) IT WOULD BE THE AM OUNT WHICH IS CREDITED TO THE PROFIT & LOSS ACCOUNT AND NOT THE A MOUNT OF INCOME WHICH IS CLAIMED BY THE ASSESSEE OR DETERMINED BY T HE ASSESSING OFFICER WHILE ASSESSING THE INCOME UNDER THE REGULAR PROVIS IONS OF THE INCOME- TAX ACT. THEREFORE THE IMPUGNED ORDER OF THE COMMISSIONER ( APPEALS) WAS CORRECT AND DESERVED TO BE UPHELD. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE I TAT DELHI BENCH AS WELL AS THE RATIO OF THE DECISION OF THE HONBLE APEX CO URT IN THE CASE OF AJANTA PHARMA LTD. AS WELL AS THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF SYNCOME FORMULATIONS (I) LTD. (SUPRA) WE H OLD THAT THE CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE BOOK PROFIT BY DISAL LOWING THE DEDUCTION UNDER SECTION 10B. 13. GROUND NO.5 OF THE ASSESSEES APPEAL READS AS U NDER: ITA.NO.2137 AND 2511/AHD/2007 -11- 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF LD. AO IN DISALLOWING THE CLAIM OF DEDUCTION U/S.80HHC OF THE ACT ON THE CURRENT YEARS PROFITS WITHOUT SET OFF OF UNABSORBED BROUGHT FORWARD DEPRECATION OF PRIOR YEA RS. 14. AT THE TIME OF HEARING BEFORE US THE LEARNED C OUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. SHIRKE CONSTRUCTION EQUIPMENT LTD. 291 ITR 380. WE THER EFORE RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE HONBLE APEX C OURT REJECT THE GROUND NO.5 OF THE ASSESSEE. 15. GROUND NOS.6 TO 8 OF THE ASSESSEES APPEAL READ AS UNDER: 6. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ADJUDICATING UPON THE GROUND IN RESPECT OF CLAIM OF DEDUCTIONU/S .80HHC OF THE ACT ON GROSS INCOME WITHOUT REDUCING THE CLAIM OF DEDUC TION U/S.10B OF THE ACT. 7. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT ADJUDICATING UPON THE GROUND IN RESPECT OF CLAIM OF DEDUCTION US /.80HHC OF THE ACT ON THE FOLLOWING OTHER INCOME: FOREX SWAP RS.83 74 012/- FOREX FORWARD RS.75 203/- MISC. BALANCE WRITTEN OFF RS.11 69 347/- TOTAL RS.96 18 561/- 8. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. AO IN DISALLOWING CLAIM OF DEDUCTION U/S.10B OF THE ACT IN RESPECT OF INCOME ON ACCOUNT OF MISC. BALANCE WRITT EN OFF IN THE SUM OF RS.11 69 347/- 16. AT THE TIME OF HEARING BEFORE US IT IS SUBMITT ED BY THE LEARNED COUNSEL THAT THE TAX EFFECT ARISING FROM THESE GROUNDS ARE EITHER NIL OR NEGLIGIBLE. THEREFORE THE ASSESSEE DOES NOT WANT THIS GROUND T O BE PRESSED IN THE YEAR UNDER CONSIDERATION. HOWEVER THE ASSESSEE WILL BE AT LIBERTY TO TAKE UP THE IDENTICAL ISSUE IF SO ADVISED IN OTHER YEARS. HO WEVER SO FAR THE YEAR UNDER ITA.NO.2137 AND 2511/AHD/2007 -12- CONSIDERATION IS CONCERNED THESE GROUNDS OF THE AP PEAL ARE NOT PRESSED. WE THEREFORE REJECT THE SAME AS NOT PRESSED. 17. GROUND NO.9 OF THE ASSESSEES APPEAL READS AS U NDER: 9. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD.AO IN DISALLOWING CLAIM OF DEDUCTION U /S.35D OF THE ACT AMOUNTING TO RS.8 57 760/-. 18. AT THE TIME OF HEARING BEFORE US IT IS SUBMITT ED BY THE LEARNED COUNSEL THAT THIS ISSUE OF ALLOWANCE OF DEDUCTION UNDER SEC TION 35D AROSE FOR THE FIRST TIME IN A.Y.1998-99. THIS ISSUE IS PENDING IN APPE AL BEFORE THE ITAT. HE THEREFORE SUGGESTED THAT THIS ISSUE MAY BE RESTORE D BACK TO THE FILE OF THE AO WITH THE DIRECTION TO FOLLOW THE FINDINGS OF THE IT AT IN A.Y.1998-99. THE LEARNED DR ALSO HAD NO OBJECTION TO THE ABOVE SUGGE STION OF THE LEARNED COUNSEL OF THE ASSESSEE. 19. IN VIEW OF THE ABOVE WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE ISSUE BACK TO THE FILE O F THE AO WITH DIRECTION TO RE- ADJUDICATE THE SAME AS PER THE FINDINGS OF THE ITAT IN A.Y.1998-99. 20. GROUND NO.10 OF THE ASSESSEE IS GENERAL IN NATU RE NEEDS NO SPECIFIC ADJUDICATION. 21. GROUND NO.11 OF THE ASSESSEES APPEAL READS AS UNDER: 11. THE LD.CIT(A) HAS ERRED IN LAW IN CONFIRMING T HE LEVY OF INTEREST U/S.234A/B/C OF THE ACT WHEN THE INCOME WAS BEING T AXED UNDER THE PROVISIONS OF MINIMUM ALTERNATIVE TAX U/S.115JB OF THE ACT. 22. AT THE TIME OF HEARING BEFORE US THE LEARNED C OUNSEL FAIRLY ADMITTED THAT THIS ISSUE IS AGAINST THE ASSESSEE BY THE DECISION OF THIRD MEMBER OF THE ITAT IN THE CASE OF KANEL OIL & EXPORTS IND. LTD. VS. JC IT 126 TTJ 158. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE IT AT WE REJECT THE GROUND NO.11 OF THE ASSESSEES APPEAL. ITA.NO.2137 AND 2511/AHD/2007 -13- 23. GROUND NO.12 REGARDING INITIATION OF PENALTY PR OCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IS PREMATURE AT THIS JUNCTURE THE SAME IS ACCORDINGLY REJECTED. ITAT NO.2511/AHD/2007 (REVENUES APPEAL) 24. GROUND NO.1 OF THE REVENUES APPEAL READS AS U NDER: 1. THE LD.CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE AO TO INCLUDE THE OTHER INCOME CONSIS TING OF FOREX SWAP AT RS.83 74 012/- AND FOREX-FORWARD AT RS.75 203/- OUT OF TOTAL OTHER INCOME OF RS.96 18 561/- FOR COMPUTATION OF DEDUCTI ON U/S.10B OF THE IT ACT 1961 IGNORING THE FACT THAT BOTH THESE INCOME CAN NEVER BE SAID TO BE DERIVED FROM INDUSTRIAL UNDERTAKING AS BOTH THE SAID INCOMES ARISE DUE TO INDEPENDENT FINANCIAL ARRANGEMENTS/REARRANGE MENTS. 25. AT THE TIME OF HEARING BEFORE US IT IS SUBMITT ED BY THE LEARNED COUNSEL THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F COMMISSIONER OF INCOME- TAX VS AMBA IMPEX 282 ITR 144 AS WELL AS NIRMA IND USTRIES LTD. VS DEPUTY COMMISSIONER OF INCOME-TAX (GUJ) 283 ITR 402. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AO. 26. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F AMBA IMPEX (SUPRA) WHEREIN THEIR LORDSHIPS AT PAGE NO.147 OF 282 ITR H ELD AS UNDER: UNDER SUB-SECTION (2) OF SECTION 80HHC OF THE ACT SALE PROCEEDS OF GOODS OR MERCHANDISE EXPORTED OUT OF INDIA AND R ECEIVED IN CONVERTIBLE FOREIGN EXCHANGE BECOME ENTITLED TO THE DEDUCTION SUBJECT TO FULFILMENT OF OTHER REQUISITE CONDITIONS . CLAUSE (A) OF SUB- SECTION (2) OF SECTION 80HHC OF THE ACT PROVIDES TH AT SUCH SALE PROCEEDS HAVE TO BE RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR OR WITHIN ITA.NO.2137 AND 2511/AHD/2007 -14- SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. THUS A PLAIN READING OF THE PROVISION MAKE S IT CLEAR THAT ONCE THE COMPETENT AUTHORITY HAS EXTENDED THE TIME IN A CASE WHERE IT IS NECESSARY OR WHERE THE SALE PROCEEDS HAVE B EEN RECEIVED WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE P REVIOUS YEAR SUCH SALE PROCEEDS ARE DIRECTLY RELATABLE TO THE EXPORTS MADE AND NO FURTHER INQUIRY IS NECESSARY. THEREFORE THE ENTIRE CONTROVERSY AS TO WHETHER SUCH RECEIPT AMOUNTS TO ANY OTHER RECEIPT STIPULATED IN EXPLANATION (BAA)(1) NEED NOT BE TAKEN UP FOR CONSI DERATION. ONCE THE LEGISLATURE HAS PROVIDED FOR TREATING A RECEIPT WITHIN A PERIOD OF SIX MONTHS AFTER THE END OF THE PREVIOUS YEAR OR W ITHIN FURTHER EXTENDED PERIOD AS SALE PROCEEDS RELATABLE EXPORTS IT WOULD NOT BE OPEN TO THE REVENUE TO RAISE SUCH A CONTROVERSY. TH E LEGISLATURE IN ITS WISDOM HAS TAKEN INTO CONSIDERATION THE FACT TH AT IN THE CASE OF EXPORTS MADE SALE PROCEEDS ARE NOT NECESSARILY REA LISABLE WITHIN THE ACCOUNTING PERIOD IN WHICH EXPORTS HAVE BEEN MADE. AS A COROLLARY BY THE TIME SUCH SALE PROCEEDS ARE RECEIVED WITHIN THE PRESCRIBED TIME BY VIRTUE OF EXCHANGE RATE DIFFERENCE THERE MIGHT BE A SITUATION WHERE A LARGER AMOUNT IS RECEIVED THAN THE AMOUNT A S REFLECTED IN THE SHIPPING BILL. HENCE MERELY BECAUSE AN AMOUNT IS RECEIVED IN A YEAR SUBSEQUENT TO THE YEAR OF EXPORT BY WAY OF EXC HANGE RATE DIFFERENCE IT DOES NOT NECESSARILY ALWAYS FOLLOW THAT THE SAME IS NOT RELATABLE TO THE EXPORTS MADE. (EMPHASIS SUPPLIED) THOUGH THE ABOVE DECISION IS WITH REGARD TO SECTIO N 80HHC HOWEVER RATIO OF THE ABOVE DECISION WOULD BE SQUARELY APPLICABLE FOR COMPUTING DEDUCTION UNDER SECTION 10B OF THE I.T.ACT. IT WAS ALSO STAT ED BY THE LEARNED COUNSEL THAT THE NATURE OF THE INCOME ARISING FROM FOREX SWAP AN D FOREX FORWARD IS SIMILAR TO THE INCOME FROM EXCHANGE RATE DIFFERENCE. IN VI EW OF THE ABOVE WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HO NBLE JURISDICTIONAL HIGH COURT UPHOLD THE ORDER OF THE CIT(A) ON THIS POINT AND REJECT GROUND NO.1 OF THE REVENUES APPEAL. 27. GROUND NO.2 OF THE REVENUES APPEAL READS AS UN DER: 2. THE LD.CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE AO TO EXCLUDE THE EXCISE DUTY AT RS.1 11 23 432/- FROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION U/S.10B OF THE ACT. 28. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T THE ISSUE IS ALSO SQUARELY ITA.NO.2137 AND 2511/AHD/2007 -15- COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE APEX COURT IN THE CASE OF CIT VS. LAKSHMI MACHINE WORKS 290 ITR 667. IN THIS CASE THEIR LORDSHIPS HELD AS UNDER: SECTION 80HHC OF THE INCOME-TAX ACT 1961 IS A BE NEFICIAL SECTION : IT WAS INTENDED TO PROVIDE INCENTIVE TO PROMOTE EXPORT S. THE INTENTION WAS TO EXEMPT PROFITS RELATABLE TO EXPORTS. JUST AS COM MISSION RECEIVED BY THE ASSESSEE IS RELATABLE TO EXPORTS AND YET IT CAN NOT FORM PART OF TURNOVER FOR THE PURPOSES OF SECTION 80HHC EXCIS E DUTY AND SALES TAX ALSO CANNOT FORM PART OF TURNOVER. JUST AS INTERE ST COMMISSION ETC. DO NOT EMANATE FROM THE TURNOVER SO ALSO EXCISE D UTY AND SALES TAX DO NOT EMANATE FROM SUCH TURNOVER. SINCE EXCISE DUTY A ND SALES TAX DID NOT INVOLVE ANY SUCH TURNOVER SUCH TAXES HAD TO BE EXCL UDED. COMMISSION INTEREST RENT ETC. DO YIELD PROFITS BUT THEY DO NOT PARTAKE OF THE CHARACTER OF TURNOVER AND THEREFORE THEY ARE NOT IN CLUDIBLE IN THE TOTAL TURNOVER. IF SO EXCISE DUTY AND SALES TAX ALSO CA NNOT FORM PART OF THE TOTAL TURNOVER UNDER SECTION 80HHC(3). RESPECTFULLY FOLLOWING THE ABOVE DECISION WE UPHOL D THE ORDER OF THE CIT(A) ON THIS POINT AND REJECT THE GROUND NO.2 OF THE REV ENUES APPEAL. 29. IN RESULT ASSESSEES APPEAL IS PARTLY ALLOWED WHILE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 24 TH DECEMBER 2010. SD/- SD/- (MAHAVIR SINGH ) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 24-12-2010 ITA.NO.2137 AND 2511/AHD/2007 -16- COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD