THE COMMISSIONER OF INCOME TAX, TVM. vs. SMT.B.SHYLAJA, QUILON

Whether, on the facts and in the circumstances of the case while computing the relief under section 80HHC of the Incometax Act the processing charges could be excluded from the turnover of the business?

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 ? “ ( [2004] 265 ITR 35). In the said decision, the court has observed as under: “In the instant case, the assessee admittedly was a registered dealer under the Kerala General Sales Tax Act. The word “turnover “ defined in section 2(xxvii) of that Act means the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, either directly or through another , on his own account or on account of others, whether for cash or for deferred payment of other valuable consideration. The definition of sale contained in section 2(xxi) of that Act means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration. Processing charges received from third parties do not form part of the “turnover” even under the provisions of the Kerala General Sales Tax Act for that Act is attracted only in a case where there is sales of goods. The assessee had processed raw cashew nuts belonging to third parties in his factory and had only collected the processing charges. The processing charges received by the assessee could not be included in the definition of total turnover in clause (ba) of the Explanation to section 80HHC. The provisions of clauses (iiia), (iiib) and (iiic) of section 28 did not alter the position.”