- (1.) CHANDIGARH Bench 'B', Chandigarh (for short 'the Tribunal') in ITA No. 458/Chd/2000, for the asst. yr. 1995 -96, raising the following substantial question of law : "1. Whether, on the facts and circumstances of case, the Hon'ble Tribunal was justified in law in excluding the amount of sales -tax and excise duty from the total turnover for the purpose of the computation of deduction under s. 80HHC of IT Act, by ignoring that sales -tax and excise duty are part of the billing amount for which the sales have been effected -
(2.) BRIEFLY the facts of the case are that the assessee filed its return of income for the assessment year in question on s. 143(3) of the Act, the deduction claimed by the assessee under s. 80HHC of the Act was recomputed by including sales -tax and excise duty in the total turnover. Aggrieved against this action of the AO, the assessee went in appeal before the Commissioner of Income -tax (Appeals) [for short 'the CIT(A)'], who relying upon the order passed in appeal filed by the assessee for the asst. yr. 1994 -95 decided the issue in favour of the assessee. The Revenue, not accepting the order of CIT(A), further challenged the same before the Tribunal. The Tribunal relying upon a Special Bench decision of the Tribunal, Calcutta, in the case of IFB Agro Industries Ltd. vs. Dy. CIT (2003) 78 TTJ (Cal)(SB) 177 : (2002) 83 ITD 96 (Cal)(SB) rejected the appeal filed by the Revenue. The relevant part of the impugned order of the Tribunal is extracted below : "8. At the very outset, learned counsel for the assessee submitted that the issue is covered in favour of the assessee and against the Revenue by the decision of Tribunal, Calcutta Special Bench, in the case of IFB Agro Industries Ltd. vs. Dy. CIT (2003) 78 TTJ (Cal)(SB) 177 : (2002) 83 ITD 96 (Cal)(SB). 9. The aforesaid contention of the learned counsel for the assessee was not controverted by the learned Departmental Representative for the Revenue. It is noticed that the Special Bench while defining total turnover in the case of IFB Agro Industries Ltd. vs. Dy. CIT (supra) held as under : 'The two terms, namely, 'export turnover' and 'total turnover' should unless a contra -intention appears, be given their natural and general meaning as understood in commercial law as interpreted by the judicial decisions and not the restricted meaning. Though 'total turnover' may include the receipts of excise duty and sales -tax, etc. in its general parlance and under specific statute, because of its wider coverage in the definitions given thereunder, it has to be given a restrictive meaning while computing the 'export profit' for the purpose of s. 80HHC, namely only that part of the receipt for sale consideration is to be taken as part of the total turnover which has an element of profit therein and, accordingly the receipt of excise duty and sales -tax which do not include an element of profit should be excluded from 'total turnover'. In the result, the AO was directly to compute the deduction under s. 80HHC on export profits and arrived at on the basis of the export turnover and total turnover exclusive of the receipts of excise duty and sales -tax.' So by respectfully following the order of the Tribunal (Special Bench) in the aforesaid referred to case, we are of the opinion that learned CIT(A) was fully justified in holding that sales -tax and excise duty should not be included in the 'total turnover' for calculating deduction under s. 80HHC. We, therefore, do not see any merit in this ground of the Departmental appeal."
(3.) WE have heard Dr. N.L. Sharda, advocate, counsel for the Revenue and Shri Akshay Bhan, advocate, counsel for the respondent and perused the record carefully. Dr. N.L. Sharda, learned counsel appearing for the Revenue contended that the removal of the excise duty and sales - ax element from the total turnover would increase the percentage of the export profit vis -a -vis total profits. He further contended that for the purpose of calculation of the deduction under s. 80HHC of the Act, total turnover is to be taken into account and even from the point of view of sales -tax laws, total turnover would include excise duty and sales -tax paid on the goods. He further contended that the excise duty and sales -tax are certainly a trading receipt being part of the sale proceeds of the goods and merely because it is not levied on the goods, which are exported, does not mean that it should not be taken into account for the purpose of calculating total turnover of the assessee.;