| Case ID |
3241519d-fddb-45a8-9c5a-4dc04d242a31 |
| Body |
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| Case Number |
IT APPEAL NO. 1293 OF 2006 |
| Decision Date |
Jan 22, 2008 |
| Hearing Date |
|
| Decision |
The court held that development charges and service charges should be excluded from the computation of 'business profits' for the purpose of section 80HHC of the Income Tax Act, 1961. The Supreme Court clarified that total turnover refers only to sale and purchase turnover, excluding receipts that do not derive from sales. Therefore, the income from development and service charges does not qualify for the benefits under section 80HHC(3), which must be computed based on a 90 percent exclusion. The ruling reversed the Tribunal's decision and restored the order of the Commissioner (Appeals), emphasizing that only export-related profits should be considered. |
| Summary |
In the case of Commissioner of Income-tax v. Deodhar Electro Design (P.) Ltd., the Bombay High Court addressed critical aspects of the Income Tax Act, specifically section 80HHC, which pertains to tax deductions for exporters. The case revolved around the exclusion of development and service charges from the computation of business profits. The court underscored the Supreme Court's precedent that clarified the definition of total turnover, asserting that it must strictly include only sales and purchase turnover, excluding any income not directly attributable to exports. This ruling is crucial for businesses involved in exporting goods and services, as it delineates the boundaries of what constitutes eligible income for tax benefits. The decision reinforced the need for clarity in tax law application, ensuring that only profits from actual exports are considered for deductions under section 80HHC. This case serves as a significant reference point for future income tax appeals and clarifies the interpretation of income tax deductions, making it essential reading for tax professionals and businesses engaged in international trade. |
| Court |
Bombay High Court
|
| Entities Involved |
Deodhar Electro Design (P.) Ltd.
|
| Judges |
F. I. Rebello,
R. S. Mohite
|
| Lawyers |
P.S. Sahadevan
|
| Petitioners |
Commissioner of Income-tax
|
| Respondents |
Deodhar Electro Design (P.) Ltd.
|
| Citations |
2008 SLD 2985,
(2008) 300 ITR 103
|
| Other Citations |
CIT v. Ravindranathan Nair [2007] 295 ITR 228,
CIT v. K. Ravindranathan Nair [2007] 295 ITR 228,
CIT v. Lakshmi Machine Works [2007] 290 ITR 667
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
80HHC
|