- (1.) Leave granted in special leave petitions.
(2.) All the above civil appeals deal with a common question of law and, therefore, they are decided together by this judgment. For the sake of convenience, the facts in C.A. No.4409 of 2005 are mentioned hereinbelow.
(3.) For the assessment year 1993-94 M/s. Lakshmi Machine Works (assessee) filed its return of income declaring its taxable income of Rs.50.80 lakhs. On 10.6.94 intimation under Section 143(1)(a) of the Income Tax Act, 1961 (for short, the Act ) was sent by the Department accepting the returned income. Later on the Department issued notice under Section 143(2) of the Act. One of the items for issuing the said notice was the quantum of deduction under Section 80HHC of the Act. The assessee had computed the allowable deduction under Section 80HHC without taking into account in the total turnover the sales tax and excise duty. The assessee was asked to explain why the total turnover should not be recomputed by including sales tax and excise duty. In this connection, the Department placed reliance on the judgment of this Court in the case of M/s. Chowringhee Sales Bureau (P) Ltd. V/s. C.I.T. West Bengal, 1973 83 ITR 542. The assessee objected to the above inclusion. However, that objection was dismissed by the A.O. on the ground that under Section 80HHC(ba) deduction from "total turnover" was restricted only to three items, namely, profit on sale of import licence, duty drawback and CCS. The A.O. further held that from the profits of business, the assessee was entitled to deduct the above three items and also brokerage, commission, interest, rent, charges or any other receipt of similar nature. Before the A.O., the assessee contended that items which cannot be regarded as profits, the question of treating those items as part of "total turnover" did not arise. The A.O. treated certain miscellaneous receipts and interest receipts as part of business profits to which the assessee objected. The assessee pointed out that under Section 80HHC as it stood in the assessment year 1993-94, a deduction of 10% was allowed whereas the balance 90% stood excluded from the business profits. However, the assessee s argument for non-inclusion of sales tax and excise duty was not accepted by the A.O.;