IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CM No.18197-CII of 2007 and ITA No.382 of 2007 Date of decision: 22.1.2008 The Commissioner of Income Tax-III, Ludhiana ......Appellant Versus M/s. Nahar Exports Ltd., 376-Indl. Area-A, Ludhiana ......Respondent CORAM:- HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG * * * Present: Mr. Sanjiv Bansal, Advocate for the appellant. * * * Rakesh Kumar Garg, J . CM No.18197-CII of 2007 For the reasons mentioned in the application, delay of 144 days in refiling the appeal is condoned. CM stands disposed of. ITA No.382 of 2007 1. The revenue has filed the present appeal against the order of the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’ Chandigarh passed in ITA No.371/Chandi/2005 dated 31.7.2006 for the assessment year 2001-02 on the following substantial question of law:- “Whether on the facts and the circumstances of the case, the Hon’ble ITAT was right in law in holding that Sales Tax, and Central Sales Tax be excluded from the total turnover of the assessee while computing deduction u/s 80HHC.” 2. The respondent is a Limited company which derives income from manufacturing and trading of cotton yarn fabrics and garments. The assessee-Company filed its return of income for the assessment year 2001-2002 showing income of Rs.6,77,14,160/- on 31.10.2001. The assessment was framed by the ACIT, CC-V, Ludhiana on 5.5.2003 at an income of Rs.12,28,82,539/-. 3. While completing assessment AO had included Sales Tax and Central Sales Tax amounting to Rs.81,01,622/- in the total turn over while computing deductions under Section 80HHC. The learned CIT(Appeals)-1, Ludhiana vide his order dated 7.12.2004 has partly allowed the appeal on this issue in favour of the assessee wherein it has been held that the Central and State Sales Tax (Rs.81,01,622/-) has no profit element and is not to be included in the total turn over. Against this the revenue preferred an appeal before the Income Tax Appellate Tribunal and the Income Tax Appellate Tribunal decided the issued in favour of the assessee relying upon its own decision given in the case of M/s Nahar Spinning Mills Ltd. in ITA No.198/Chandi/2001 for assessment year 1995-96. Similar issue was involved in the assessee’s own case for the assessment year 1992-93 in ITA No.1130/Chandi/95 decided on 23.4.2004. 4. Feeling aggrieved against the said order of the Tribunal, the revenue has filed the present appeal under Section 260(A) before this Court on the following substantial question of law as stated in para No.1 of the judgement. 5. At the very outset, Sh. Sanjiv Bansal, counsel for the revenue has very fairly stated that the above referred substantial question of law arising out of the Tribunal’s order is squarely covered by a judgement of this Court in the case of Commissioner of Income-Tax v. Vardhman Polytex Ltd. (2008)296 ITR 382 (P&H) wherein the similar question of law has been answered in favour of the assessee and against the revenue, and it has been held as under:- “While computing the deduction under section 80HCC of the Income-tax Act, 1961, it is only the actual sale price which is relevant. Anything charged by the assessee by way of excise duty and sales tax cannot be taken into account as it does not have any element of profit. Even according to accounting principles such levies do not form part of the profit and loss account. In fact, they are shown as liability in the balance sheet.” 6. In view of above settled proposition of law, the present appeal has no merit and no substantial question of law arises for the determination of this Court in the present case. Hence, the appeal is dismissed. (RAKESH KUMAR GARG) JUDGE January 22, 2008 (SATISH KUMAR MITTAL) ps JUDGE