Law:

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Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporter Development charges and service charges have to be excluded from computation of 'business profits' of assessee for purpose of section 80HHC It was held by the Supreme Court in CIT v. Ravindranathan Nair [2007] 295 ITR 228, that in the context of section 80HHC the total turnover refers to sale and purchase turnover and it does not include receipts in the nature of income which income is not attributable to sales. In view of the ratio of the Supreme Court decision, since the development charges and service charges do not fall within the ambit of export turnover and total turnover, the development and service charges have to be excluded from the computation of the business profits of the assessee-company. Thus, the income from development charges and service charges would not fall with the 'Business profits' and the assessee would not be entitled to the benefit under section 80HHC(3) and it has to be computed based on 90 per cent exclusion. JUDGMENT F.I. Rebello, J.-Notice was served on the respondent that the matter would be finally decided. None present for the respondent. 2. The Revenue has preferred this appeal on the following question : "The question is whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal erred in allowing the claim made by the assessee under section 80HHC to the extent of Rs. 3,45,120 ?" 3. In the instant case, the respondent preferred an appeal against the order of the Assessing Officer before the Commissioner (Appeals). The Commissioner (Appeals) held that the export profits for the purpose of deduction under section 80HHC(1) shall be the profit related to the export of goods manufactured by the respondent computed by allocating over all profits of the business in the ratio of export turnover of the manufactured goods to the total turnover of the manufactured goods. The Commissioner (Appeals) also noted that the working of profit for the purpose of deduction under section 80HHC(1) of the Income-tax Act has been introduced by the Finance (No. 2) Act 1991, and the provision has been clarified by the Board's Circular No. 621, dated December…

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