Commissioner of Income Tax vs Smt. K.R. Ushasree

H.L. Dattu, C.J.—This Income Tax appeal u/s 260A of the Income Tax Act is filed against the orders passed by the Tribunal, Cochin Bench, Cochin in ITA No. 61 of 2002 dated 25-2-2004.

The facts in nutshell are : The assessee is an exporter of cashew. During the relevant assessment year 1997-98 the assessing authority had included in the total turnover the amount received as quality claim for imported raw nuts and local raw nuts purchased by the assessee.

Aggrieved by the said quantification made by the assessing authority, the assessee was before the first appellate authority. The first appellate authority has found that the quantification done by the assessing authority is unacceptable and, therefore, had allowed the assessees appeal and had issued a further direction to the assessing authority to grant the claim made by the assessee.

The revenue, being aggrieved by the orders passed by the first appellate authority, had carried the matter by way of second appeal before the Tribunal in ITA No. 61 of 2002. The Tribunal has rejected the revenues appeal and thereby has confirmed the orders passed by the first appellate authority and while doing so, the Tribunal has followed the decision of this Court in the case of Commissioner of Income Tax Vs. T.C. Usha, .

The revenue, being aggrieved by the aforesaid order passed by the Tribunal is before us in this Income Tax appeal.

The revenue has framed the following questions of law for our consideration and decision. They are as under:

Whether, on the facts and in the circumstances of the case will not the amount received by the assessee towards quality claim and raw nut claim form part of the total turnover of the assessee and the Tribunal is right in law in excluding the amounts from the total turnover for the purpose of computing the relief u/s 80HHC of the Income Tax Act ?

Whether, on the facts and in the circumstances of the case and in view of Explanation (ba) to Section 80HHC and Clauses (iiia), (iiib) and (iiic) of Section 28, will not turnover take into account all other receipts other than the excluded items of receipts ?

The question of law raised by the revenue, in our opinion, is no more debatable in view of the decision of this Court in T.C. Ushas case (supra).

In the aforesaid decision, this Court was pleased to observe as under :

The purpose of the formula provided u/s 80HHC of the Income Tax Act, 1961, is to find out the profit attributable to export turnover, that is the profit on export sales. Business income is only reckoned for the purpose of computation of eligible deduction and the business income in the context of total turnover is only the income generated on purchases and sales. Therefore, the total turnover in the context of Section 80HHC is only sales turnover and purchase turnover and not the receipts in the nature of income, which are not attributable to sales.

Following the observations made in the aforesaid decision, the questions of law framed by the revenue require to be answered against the revenue and in favour of the assessee.

Ordered accordingly.