Commissioner of Income Tax vs Ashok Leyland Ltd.

P.D. Dinakaran, J.—The above tax case appeal is directed against the order of the Income Tax Appellate Tribunal in I.T.A. No. 1302/Mds/2003 dated February 8, 2006.

The Revenue is the appellant. During the relevant assessment year, the assessee''s claim with respect to deduction u/s 80HHC by not considering the excise duty and sales tax receipts as part of the turnover was disallowed by the Assessing Officer. Hence, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner (Appeals) allowed the appeal directing the Assessing Officer to exclude the excise duty and sales tax receipts from the total turnover. On appeal, at the instance of the Revenue, the Income Tax Appellate Tribunal dismissed the appeal, confirming the order of the Commissioner (Appeals).

Aggrieved by the same, the Revenue has preferred this appeal raising the following substantial question of law :

Whether, in the facts and circumstances of the case, the Tribunal was right in law in holding that excise duty and sales tax receipts does not form part of the turnover, for the purpose of calculation of deduction u/s 80HHC?

With respect to the question whether the excise duty and sales tax is not includible in the turnover while calculating the deduction u/s 80HHC, this court in The Commissioner of Income Tax, Tamilnadu-I, Madras Vs. Wheels India Limited, and The Commissioner of Income Tax Vs. Sundaram Fasteners Ltd., , which were followed by this court in Commissioner of Income Tax Vs. India Pistons Limited, , wherein it is held that it is highly impossible to accept the contention that the term "turnover" would include the excise duty and sales tax components which are all indirect taxes and which the assessee has to collect and pay over to the Government and such statutory dues will not have any element of profit of business and, therefore, the sales tax and excise duty are not to be included in the total turnover while computing the deduction u/s 80HHC.

In view of the ratio laid down by this court in the decisions cited supra, we hold that the sales tax collections are not to be included in the total turnover, while computing the deduction u/s 80HHC of the Act.

Finding no substantial question of law arises for our consideration, the appeal is dismissed.