N.N.MATHUR, J. - (1.) THESE three income -tax reference applications under section 256(2) of the Income Tax Act, 1961, (hereinafter referred -to as 'the Act') pertain to the assessment years 1993 -94, 1994 -95 and 1995 -96, respectively. The Tribunal, Jaipur by a common order dated 19 -4 -1999, refused to refer the questions set out in the application under section 256 for the opinion of this court. Hence, the revenue by these three applications seeks direction to the Tribunal to make a reference on the following question : 'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in : (a) holding that sales -tax, octroi and excise duty on local sales should not form part of 'total turnover' for the purpose of deduction under section 80HHC, ignoring the principle laid down by the Supreme Court in the case of Chowranghee Sales Bureau (P) Ltd. v. CIT : [1973]87ITR542(SC) and Sinclair Murray and Co. (P) Ltd. v. CIT : [1974]97ITR615(SC) . (b) directing to allow depreciation on the assets of the company, though lying at the guest -house including the guest -house building, furniture, etc., ignoring the fact that the case clearly falls under sub -section (5) of section 37 of the Income Tax Act and further ignoring the Bombay High Court decision in the case of CIT v. Ocean Carriers (P) Ltd. (1995) 211 ITR 357 , and is this direction not contrary to what the Tribunal has itself went on to hold that the expenditure on account of the guest -house in the form of providing food, etc. would fall in the category of disallowance under section 37(4) ?'
(2.) IT is made clear that second question has arisen only in D.B. IT Ref. No. 11/2000. The material fact for the decision on the present applications are that the respondent assessee - company derived income from the export of goods manufactured by it as well as from the sale of such goods in India. By claiming deduction under section 80HHC of the Act, the assessee did not include the amount of excise duty and the sales -tax claimed by it in respect of sales made within India, in the total turnover. The assessing officer however, recomputed the deductions by including the amount of excise duty and sales -tax in the total turnover, which was confirmed by the Commissioner (Appeals). On further appeal, the Tribunal found that according to the method of accounting adopted by the assessee, the sales -tax and the excise duty recovered from the customers was shown separately in the sales invoices. The Tribunal held that since the export turnover excluded the sales -tax, excise and octroi, the total turnover should not include the same. In the opinion of the Tribunal, under section 80HHC the expression 'total turnover' would not include the octroi, sales -tax and excise duty on sale, since the expression 'export turnover' did not include these ingredients. The Tribunal further held that it is only the actual sale price, which is relevant and, therefore, anything charged by way of statutory levies such as excise duty and sales -tax in addition to the sale price, is to be excluded. Accordingly, the Tribunal accepted the claim of the assessee that sales -tax, excise duty and octroi on local sales should not form part of 'total turnover' for the purpose of computation of deduction under section 80HHC. It is contended by Mr. Sundeep Bhandawat, learned counsel appearing for the revenue, that a reading of section 80HHC shows that the intention of the legislature was to extend the benefit of the provisions only to the export turnover in respect of sales -tax, excise duty and octroi and not to the local sale. Relying on the decision of the Apex Court in Sinclair Murray and Co. (P) Ltd. v. CIT (supra), it is submitted that the sales -tax and excise duty collected by the assessee during the normal day -to -day business activity form part of trading receipt. On the other hand, Mr. N.M. Ranka senior advocate, had supported the judgment of the Tribunal. It is submitted that no referable question of law arises from the order of the Tribunal.
(3.) WE have carefully gone through the decision of the Apex Court in the case of Chowringhee Sales Bureau (P) Ltd. v. CIT (supra). In the said case, the assessee, a private limited company, was dealing in the business of furniture. It also acted as an auctioneer. In respect of the sales effected by it as auctioneer, the appellant realised during the year in question, in addition to the commission, Rs. 32,986 as sales -tax. This amount was credited separately in the books under sales -tax collection account. The total balance standing to the credit of said account up to the end of the relevant previous year stood at Rs. 2,71,698. This sum was neither paid over to the exchequer nor refunded to the persons from whom it was collected. The Apex Court found that the assessee did not pay the amount of sales -tax to the actual owner of the goods auctioned because the statutory liability for payment of the sales -tax was that of the assessee. The assessee - company did not deposit the amount realised by it and the sales -tax with the exchequer because it took the position that statutory provision creating a liability upon it was not valid. As the amount of sales -tax was received by the assessee in its character as auctioneer, the amount was held to form part of its trading or business of the assessee. Thus, this case has no application to the facts of the instant case.;