Whether proceeds from sale of scrap constitutes turnover for Section 80HHC of Income Tax Act, 1961?

Last updated: 13 May 2014

Court :
Supreme Court of India

Brief :
Section 80 HHC has been enacted in the Income Tax Act, 1961 to encourage exports for the purpose of earning foreign exchange. The exporter gets certain deduction from the income, which is derived from the profits from export of goods, while computing taxable income.The assessee is a manufacturer and exporter of stainless steel utensils. Substantial amount from sale of scrap and the receipt from the sale of scrap was a regular feature of its business. For the purpose of availing deduction under Section 80HHC of the Act for the relevant Assessment Year, the assessee was not including the sale proceeds of scrap in the total turnover but was showing the same separately inP & L Account. The Revenue contended that the sale proceeds from the scrap should have been included in the ‘total turnover’ and was alsopart of the sale proceeds. Held that sale proceeds from scrap is not “turnover” for section 80HHC.

Citation :
Commissioner of Income Tax - Appellant versus Punjab Stainless Steel Industries - Respondent