- (1.) THIS Income-tax Appeal is directed against order dated 15th November 2004 passed by Income-tax Appellate Tribunal, Jodhpur Bench, Jodhpur, whereby the Tribunal held that the Sales Tax, Expenditure Tax, which were collected by the assessee as authorized and collected amount having been credited to separate ledger account and the payment having been made from that account, and the gross receipts as computed by the assessing officer as Rs.18,83,68,741.00 against Rs.1,69,18,826.00 declared in the Profit and Loss Account by the assessee cannot be added in the total business receipts for the purpose of computing dedUction under Section 80 HHC.
(2.) THIS Court admitted the appeal of the Revenue on the following substantial aquestions of law. (1)Whether on the facts and in the circumstances of the case, for the purpose of computation of deduction u/s. 80 HHD, the business turnover/gross receipts should be taken inclusive of sales tax and expediture tax collected? (2)Whether on the facts and in the circumstances of the case, the learned Tribunal is justified in allowing full depreciation on imported cars and higher depreciation on Indian cars treating the same to have been used in the business of running them on hire ignoring the fact that running of cars on hire is only an incidental activity to the business of the assessee? So far as question No.2 is concerned, the same was decided against the Revenue while admitting the appeal in view of the judgment delivered in D.B. Income Tax Appeal No.83/2001 (Commissioner of Income Tax Vs. Hotels & Motels Limited.
(3.) SO far as question No.1 is concerned, learned counsel for both the parties agreed that the judgment of the Income Tax Appellate Tribunal is based on the judgment of Madras High Court. On the same point, there was another judgment of Madras High Court, which was decided against Revenue, against which a petition for Special Leave to Appeal (Civil) No.17838/2006 was preferred before Hon'ble Apex Court and it was registered as Civil Appeal No.2331/2007 after grant of leave. The Hon'ble Supreme Court ultimately dismissed the appeal of the Revenue vide judgment dated 3rd May 2007. The Hon'ble Supreme Court held that expenditure tax, luxury tax and sales-tax cannot be included in the total receipts in the formula under Section 80HHD(3). The Supreme Court has relied upon its earlier judgment in Commissioner of Income Tax, Coimbtore Vs. Laxmi Machine Works [2007] 290 ITR 667 (SC).;