The Commissioner Of Income Tax vs Shri.R. Ganapathy on 28 February, 2008

       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

ITA.No. 170 of 2002()


1. THE COMMISSIONER OF INCOME TAX,
                      ...  Petitioner

                        Vs



1. SHRI.R. GANAPATHY, GANESH EDIBLE
                       ...       Respondent

                For Petitioner  :SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT

                For Respondent  :SRI.JOSEPH MARKOSE

The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR

 Dated :28/02/2008

 O R D E R
  C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR JJ.

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                       I.T.A No.170 of 2002
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             Dated this the 28th day of February, 2008

                         J U D G M E N T

C.N.RAMACHANDRAN NAIR, J.

Question raised is whether the processing charge received by

the assessee from M/s.I.T.C Ltd. for processing and supply of

cashew nut is to be treated as turnover for the purpose of

computation of deduction in respect of eligible export profit under

Section 80 HHC.

2. On going through the order of the Tribunal and after

hearing the parties, we find that the tribunal has given a clear

finding that the assessee has entered into contract with M/s.I.T.C

Ltd. for the processing of cashew nuts and the execution of the

contract was, in turn, given on sub contract by the assessee to

another party. In fact, the amount received is credited by the

assessee and the amounts simultaneously given to the sub-

contractors towards processing charges is debited in the accounts.

Since the tribunal found that it is an independent transaction and

that the assessee has not processed any cashew nuts but had

directly purchased cashew kernels and exported the same,

assessee was rightly treated as merchant-exporter. We find from

I.T.A No.170 of 2002
-: 2 :-

the order of the Tribunal that the entire transaction is not related

to the export business but to be excluded from the computation of

deduction in respect of eligible export profit under Section 80 HHC

of the IT Act.

3. However, the learned Standing Counsel pointed out

that it is clear from the assessment order that the assessee has

taken the contract amount towards business income of assessee in

the computation of eligible export profit. If the contract receipt

does not constitute turnover as claimed by the assessee in the

computation of eligible deduction under Section 80HHC, then the

profit from that contract also cannot be reckoned at all. We do not

think that the Tribunal’s order entitles the assessee to reckon,

either the profit or the turnover in respect of the contract business

undertaken for processing of cashew for M/s.I.T.C Ltd. We

therefore dismiss this appeal with this clarification and leaving

freedom to the officer to revise assessment in line with the above

observation about the tribunals order.

C.N.RAMACHANDRAN NAIR,
Judge

T.R.RAMACHANDRAN NAIR,
Judge
ms