COMMISSIONER OF INCOME TAX Vs. AHUJA RADIOS

JUDGEMENT

(1.) THESE appeals under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the "said Act") pertain to the same assessee but to different assessment years. ITA 337/2002 relates to assessment year 1993 -94, ITA 1127/06 relates to assessment year 1997 -98, ITA 1054/06 relates to assessment year 1998 -99 and ITA 289/2007 relates to the assessment year 2000 -01. In all these appeals the following substantial question of law has been framed for determination:

(2.) IT is not necessary for us to set out the facts in respect of each of the assessment years. It is sufficient to note that the assessee claimed deduction under Section 80HHC of the said Act. The claim of deduction by the assessee was based on a computation of total turnover which did not include the amount of modvat credit which was availed by the assessee in respect of excise duty paid on raw materials and inputs and adjusted against the excise duty payable by the assessee in respect of its finished products. The assessee is involved in the manufacture and sale of public address equipments such as amplifiers, microphones and loud speakers. The Assessing Officer was of the view that in computing total turnover for the purposes of arriving at the deduction allowable under Section 80HHC the modvat credit availed by the assessee had to be included. The Assessing Officer was of the view that it should be so included because it formed part of the cost of the final product.

(3.) ACCORDING to the learned Counsel for the revenue/appellant, the Tribunal erred in law in holding that the modvat credit was to be excluded from the total turnover for the purposes of computing the deduction under Section 80HHC. The learned Counsel for the revenue submitted that the definition of total turnover given in Explanation (ba) at the end of Section 80HHC had not excluded modvat credit from total turnover whereas it had specifically excluded freight and insurance attributable to the transfer of goods from the customs stations. Mrs Bansal, appearing on behalf of the revenue, submitted that only the specific items of freight and insurance as indicated in the said Explanation (ba) could be excluded from total turnover. Since modvat credit was not specifically mentioned as an excluded item, it had to be included in total turnover for the purposes of Section 80HHC. The learned Counsel for the Assessee submitted to the contrary.