Commissioner Of Income Tax Ii Coimbatore v. M/S Ramakrishna Mills (Cbe) Ltd

In the High Court of Judicature at Madras Dated : 21.07.2008 Coram :- The Honourable Mr.Justice K.RAVIRAJA PANDIANandThe Honourable Mr.Justice P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.957 of 2008 Commissioner of Income Tax IICoimbatore... Appellant Vs. M/s Ramakrishna Mills (CBE) Ltd1493, Sathy Road, P.B.No.2007GanapathyCoimbatore 641 006... Respondent TAX CASE (APPEAL) filed under Section 260A of the Income TaxAct against the order of the Income Tax Appellate Tribunal Madras'D' Bench dated 18.11.2004 in I.T.A.No.1545/Mds/97 for theassessment year 1995-96 against the order of the Commissioner ofIncome Tax (Appeals) Coimbatore dated 11.3.1995 in appeal No.375-C/96-97 against the Deputy commissioner of Income Tax, SpecialRange I, Coimbatore dated 29.3.1996 P.A.N./G.I.R.No.CN 9948/SRI/CBE. For Appellant : Mr.T.Ravikumar JUDGMENT JUDGMENT OF THE COURT WAS DELIVERED BY K.RAVIRAJA PANDIAN,J This appeal is filed by the revenue against the order ofthe Income Tax Appellate Tribunal Madras 'D' Bench dated18.11.2004 in I.T.A.No.1545/Mds/97 for the assessment year 1995-96, by formulating the following substantial question of law:- "Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding thatthe sales tax and excise duty have to beexcluded from the total turnover to work out https://hcservices.ecourts.gov.in/hcservices/ the deduction u/s 80 HHC in relation toexport profits? 2. The material facts culled out from the statement of factsin the memorandum of grounds go as follows:- The assessee is a company. On 29.03.1996, the originalassessment of the assessee company under Section 143(3) for theassessment year 1995-96 was complied with at Rs.67,38,530/-. Whilecompleting the assessment, the Assessing Officer found that theassessee had not included sales tax and excise duty in the totalturnover for the purpose of deduction u/s 80HHC. It was furtherheld by the Assessing Officer that the sale tax and excise dutywould form part of the sale receipts in view of the decision of theSupreme Court in 87 ITR 542. The Assessing Officer has alsofurther held that the principle laid down by the Supreme Court in154 ITR 148 would also support that view and hence recomputed thededuction u/s 80HHC including sales tax and excise duty in thetotal turnover. Aggrieved by the order of the assessing officer,the assessee filed an appeal before the Commissioner of Income Tax(Appeals), who by his order dated 06.05.1996, following thedecision of the Income Tax Appellate Tribunal in the case ofChloride India held that the sale tax and excise duty should beexcluded from the total turnover for the purpose of computingdeduction u/s 80HHC. Aggrieved by the order of the Commissioner ofIncome tax (Appeals), the revenue filed an appeal before the IncomeTax Appellate Tribunal and the Tribunal following the decision ofthe Bombay High Court in the case of Sudharshan Chemical IndustriesLtd. reported in 245 ITR 769 held that excise duty and sales taxwere not includible in the total turnover for computation ofdeduction u/s 80HHC and dismissed the Revenue's appeal. Thecorrectness of the said the order of the Income-tax AppellateTribunal is now canvassed before this Court by the Revenue in thisappeal. 3. Learned counsel appearing for the revenue has fairlysubmitted that the issue involved in this appeal is covered by thejudgement of the Supreme Court in the case of Commissioner ofIncome Tax vs. Catapharma (India) P. Ltd., reported in 292 ITR641. 4. We have heard the argument of the learned counsel for theappellant. 5. In the case of Commissioner of Income Tax vs. Catapharma(India) P. Ltd., reported in 292 ITR 641, the Supreme Court hasheld as follows:- 3. Learned counsel appearing for the revenue has fairlysubmitted that the issue involved in this appeal is covered by thejudgement of the Supreme Court in the case of Commissioner ofIncome Tax vs. Catapharma (India) P. Ltd., reported in 292 ITR641. 4. We have heard the argument of the learned counsel for theappellant. 5. In the case of Commissioner of Income Tax vs. Catapharma(India) P. Ltd., reported in 292 ITR 641, the Supreme Court hasheld as follows:- "While calculating the deduction underSection 80HHCa(3)(b) of the Income Tax Act,1961, for computing the "total turnover" ofexports out of India of trading goods, exciseduty and sales tax are not to be included. The Object of the Legislature in enactingSection 80HHC was to confer a benefit onprofits accruing with reference to exportturnover. Just as commission received by anassessee is relatable to exports and yet itcannot form part of "turnover", excise duty andsales tax also cannot form part of the"turnover" for the purposes of section 80HHC.Just as interest, commission, etc., emanatefrom such "turnover" so also excise duty andsales tax do not emanate from such turnover.Since excise duty and sales tax do not involveany such turnover, such taxes have to beexcluded.Commission, interest, rent, etc., do yieldprofits, but they do not partake of thecharacter of turnover and therefore they arenot includible in the "total turnover" underSection 80HHC(3), otherwise the formula becomesunworkable". 6. In the light of the above decision, we are of the view thatthere is no question of law much less substantial question of lawfor entertainment of this appeal. The appeal is thereforedismissed. No costs. Sd/-Asst. Registrar./true copy/ 1.The Assistant Registrar, Income-Tax Appellate Tribunal, Rajaji Bhavan, III Floor, Besant Nagar'D' Bench, Madras. https://hcservices.ecourts.gov.in/hcservices/ 2. The Commissioner of Income Tax (Appeals)-II, Chennai 3. The Deputy Commissioner of Income Tax, Special Range I,CoimbatoreCoimbatore 1 cc to rm.N. Muralikumaran, Advocate, SR. 39000 Tax Case (A)No.957 of 2008 MG (CO)kk 6/8