Total turnover not includes Scrap sale while computing deduction

For the purpose of calculating the deduction, according to the export related deduction provisions such as Section 10AA,80HHC, etc of the Income Tax Act, one has to take into account the profits from the business of the assessee, export turnover and total turnover.

The deduction is determined as under:

Profits of the Business          X              Export Turnover/Total Turnover

Thus, to determine the amount of deduction, the assessee and the Revenue must be aware of the following three ingredients:
i) Profits of the business
ii) Export turnover
iii) Total turnover

The term ‘turnover’ has neither been defined in the Act nor has been explained by any of the CBDT circulars. In the aforestated circumstances, one has to look at the meaning of the term ‘turnover’ in ordinary accounting or commercial parlance.

Now the dispute is that, whether sale proceed of scrap is constitute as a part of total turnover or not ?

One can very well see that if the total turnover increases, the advantage of deduction would decrease because the amount deductible substantially depends upon the ratio between the export turnover and total turnover.

IN THE SUPREME COURT OF INDIA, Commissioner of Income Tax-VII, New Delhi Versus Punjab Stainless Steel Industries Continue reading

On transfer of technical manpower upto 50%, deduction u/s 10A/AA cannot be denied.

Mere transfer or redeployment of existing technical manpower to the extent of “50% of total technical manpower actually deployed in new unit” from an existing unit to a new SEZ unit in the first year of commencement of business will not construed as splitting up or reconstruction of an existing business. Hence deduction under section 10A or 10AA of the act cannot be denied.

Earlier, CBDT had issued circular no. 12/2014 dated 18th July, 2014 to clarify that mere transfer or re-deployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of commencement of business will not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred does not exceed 20 percent of the total technical manpower actually engaged in developing software at any point in the given year in the new unit.
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