Law:

Section:

I. Section 37(4) of the Income-tax Act, 1961 - Guest house expenses - Assessment years 1995-96 and 1996-97 - Whether expenditure on renting and maintaining a guest house is allowable as a business expenditure - Held, no II. Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters - Assessment years 1995-96 and 1996-97 - Whether sales tax and excise duty are to be included in total turnover for purpose of calculation of deduction under section 80HHC - Held, no CASE REVIEW Britannia Industries Ltd. v. CIT [2005] 278 ITR 546 / 148 Taxman 468 (SC) [Para 4] and CIT v. Lakshmi Machine Works [2007] 290 ITR 667 / 160 Taxman 404 (SC) [Para 5] followed. CIT v. Ramaraju Surgical Cotton Mills [2007] 294 ITR 328 (SC) followed and relied upon. CASES REFERRED TO CIT v. South India Viscose Ltd. [2003] 259 ITR 107 (Mad.) [Para 4],Britannia Industries Ltd. v. CIT [2005] 278 ITR 546/ 148 Taxman 468 (SC) [Para 4], CIT v. Lakshmi Machine Works [2007] 290 ITR 667 / 160 Taxman 404 (SC) [Para 5], CIT v. Ramaraju Surgical Cotton Mills [2007] 294 ITR 328 (SC) [Para 6] and CIT v. Janakiram Mills Ltd. [2005] 275 ITR 403 / 146 Taxman 40 (Mad.) [Para 6]. Mrs. Pushya Sitaraman for the Appellant. P.J. Rishikesh for the Respondent. JUDGMENT K. Raviraja Pandian, J. - The revenue on appeal against the order of the Income-tax Appellate Tribunal, dated 7-10-2005 passed in ITA Nos. 950, 951, 1044, 1128/Mad./2000 in respect of the assessment years 1995-96 and 1996-97. 2. For the assessment years 1995-96 and 1996-97, the assessee filed its return of income. The Assessing Officer inter alia disallowed the rent paid for guest house under section 37(4); expenditure on sieve cylinder and motor and templates as capital expenditure. The Assessing Officer also held that sales tax and excise duty elements are to be included in the total turnover for the purpose of calculation of deduction under section 80HHC. On appeal, the Commissioner of Income-tax (Appeals) confirmed the disallowance on guest house expenditure, upheld the action of the Assessing Officer on the issue of inclusion of sales tax and excise duty in the total turnover for 80HHC, and decided the issue regarding replacement of machinery…

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