Excise duty and sales tax to be excluded from total turnover for deduction u/s 80HHC

ACIT Vs Wyeth Ltd  (ITAT Mumbai)

ITAT Mumbai held that excise duty and sales tax is to be excluded from total turnover while claiming deduction under section 80HHC of the Income Tax Act.

Facts- The present appeal is preferred by revenue on the ground that the CIT(A) erred in deleting the addition on account of custom duty benefit against the advances which was not offered to taxation and CIT(A) has erred in directing the A.O to grant of benefit u/s 80HHC of the Act in respect of advance import license covered u/s clause (iiib) of Sec. 28 of the Act.

Revenue also contended that that the CIT(A) erred in directing the AO to excluded excise duty and sales tax from total turnover while computing deduction under 80HHC.

Conclusion- In assessee’s own case, for the A.Y 1996-97, [2007] 108 TTJ 889 (Mum), it was held that export incentive is not a part of the profits of the business u/s 80HHC (1), but it is entitled for the benefit of the proviso to section 80HHC(3). Accordingly, the AO is directed to grant the benefit of the proviso to sec 80HHC(3) in respect of export benefit.

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