Judgment :- (P.P.S. Janarathana Raja, J.) 1. The Revenue has come up on appeal as against the order of the Income Tax Appellate Tribunal, Chennai 'C' Bench dated 25.06.2004 passed in ITA.No.1070/Mds/96. When the matter came up before this Court, this court admitted the Tax Case (Appeal) on the following substantial question of law:- "1. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in setting aside the order of the Commissioner of Income-tax under Section 263 of Income-tax Act directing the Assessing Officer to recompute the deduction under section 80HHC excluding 90% of retreading charges and other miscellaneous receipts from the profits of business in terms of explanation (baa) to Section 80 HHC of the Act?" 2. The brief facts of the Tax Case (Appeal) are as under:- The assessment year was 1992-93 and corresponding year ended on 31.03.1992. The assessee is a company and is engaged in the business of Tyre re-treading. The Assessing Officer completed the original assessment under Section 143(3) of the Income Tax Act on 10.01.1993 and determined the taxable income at Rs.4,33,410/-. Subsequently, a revision order was passed by the Assessing Officer by giving effect to the order of the Commissioner of Income Tax (Appeal) and determined the revised total income of Rs.3,67,19,940/-. Subsequently, the Commissioner of Income-Tax, passed the order under Section 263 of the Income Tax Act on the ground that the assessment made by the Assessing Officer was erroneous and prejudicial to the interest of the revenue since the Assessing Officer has not excluded 90% of 11 items of receipts from profits of the business under Explanation (baa) to Section 80 HHC while allowing the deduction under Section 80 HHC of the Income Tax Act. Hence, the Commissioner of Income Tax set aside the assessment with a direction to the Assessing Officer to recompute the deduction under Section 80 HHC of the Income Tax Act after excluding 90% of 11 items of receipts aggregating to Rs.3,52,97,412/-. Aggrieved by that, the Assessee filed an appeal before the Appellate Tribunal. The Income Tax Appellate Tribunal following the Bombay High Court judgment in CIT Vs. Bangalore Clothing Co (2003) (260 ITR 371) allowed the assessee's appeal. Aggrieved by the same, the Revenue filed the present appeal. 3. Aggrieved by that, the Assessee filed an appeal before the Appellate Tribunal. The Income Tax Appellate Tribunal following the Bombay High Court judgment in CIT Vs. Bangalore Clothing Co (2003) (260 ITR 371) allowed the assessee's appeal. Aggrieved by the same, the Revenue filed the present appeal. 3. Learned Counsel appearing for the Revenue submitted that the order passed by the Tribunal is wrong, illegal and without justification and further submitted that the Tribunal ought to have noticed that the re-treading charges had to be considered as miscellaneous income and 90% of such income had to be excluded while computing profit for deduction under Section 80 HHC in view of Explanation (baa) to Section 80 HHC. The said explanation defines the expression "profits of the business" for the purposes of Section 80 HHC to mean profits of the business as computed under Section 28 of the Act as reduced by 90% of any sum referred to in clause (iiia), (iiib) and (iiiic) of Section 28 or receipts by way of brokerage, commissioner, interest, rent charges or any other receipt of a similar nature included in such profits. Therefore, it was contended that the Tribunal ought to have held that the re-treading charge would come under "any other receipt of a similar nature included in such profits" and therefore, contended that the order passed by the Tribunal is not in accordance with law and the same has to be set aside. 4. Learned counsel appearing for the assessee contended that the re-treading charges cannot be excluded while computing profit for deduction under Section 80 HHC of the Act. It was further contended that the re-treading is the main business activity of the company and these receipts are part and parcel of business income and do not require to be excluded from the computation under Section 80 HHC. It is further contended that the Tribunal has correctly followed the Bombay High Court Judgment reported in (2003) (260 ITR 371). Further, the assessee has relied on the judgment of the Supreme Court in the case of Southern Sea Foods Ltd., Vs. Joint Commissioner of Income Tax reported in (2009) 225 CTR (SC) 256 and also the judgment of this Court in the case of K.R.M.Marine Exports Ltd., Vs. Asstt. Further, the assessee has relied on the judgment of the Supreme Court in the case of Southern Sea Foods Ltd., Vs. Joint Commissioner of Income Tax reported in (2009) 225 CTR (SC) 256 and also the judgment of this Court in the case of K.R.M.Marine Exports Ltd., Vs. Asstt. CIT (2006) 201 CTR (Mad)1 : (2007) 288 ITR 151 (Mad) and contended that the order of the Appellate Tribunal is in accordance with law. 5. Heard the counsel and perused the records. 6. There are total of 11 items of receipts and details are as follows:- 1. Retreading Receipts30,988.625 2. Octrol collected 16,838 3. Miscellaneous income 166,312 4. Installation and commission receipts 944,445 5. Service charges 371, 803 6. Cash discount 859,559 7. Packing charges collected 536,755 8. Freight charges collected 1,230,787 9. Insurance collected 57,711 10. Profit on exchange fluctuation 2,869 11. Insurance claim received 121,708 Total 35,297,412 In respect of the re-treading receipt, the amount involved is Rs.30,988,625/-. In the present case, the assessee is engaged in re-treading tyres. There is no dispute with regard to the main business activity of the assessee and the assessee is doing manufacture and sale of tread rubber, machinery and tyre re-treading. In some places, the asssessee is having own re-treading unit. The assessee company has many branches all over India. Re-treading was done on job basis also by utilizing the assessee's machinery. The assessee is having re-treading units at eleven places in India. The entire retreading charges collected is grouped under one head. It is also contended that re-treading charges could have been included in the sales account, however, for the purpose of identification, it was shown differently in the books of account, as re-treading charges. Therefore, the same cannot be excluded in the computation under Section 80 HHC of the Income tax Act. The Tribunal also considered the same in paragraph 4 of its order and came to the conclusion that since the assessee is doing business of manufacture of tyres and re-treading tyres under own machinery and also it is undertaking job work for the purpose of re-treading tyres for others and the process of re-treading was undertaken by the assessee along with their own manufacturing activity and the job processing activity was linked to manufacturing activity of the assessee. Therefore, Explanation (baa) to Section 80 HHC is not applicable in respect of receipts by the assessee towards re-treading charges. Explanation (baa) to Section 80 HHC reads as follows:- "(baa)' profits of the business' means the profits of the business as computed under the head 'Profits and gains of business or profession as reduced by - (1) ninety per cent, of any sum referred to in clauses (iiia), (iiib) and (iiic) of Section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits ; and...." 7. The learned counsel appearing for the revenue is unable to state how the re-treading charges as well as the miscellaneous receipts will come under any of the receipts stated in the above provision. In the case of K.R.M.MARINE EXPORTS LTD. VS. ASSISTANT COMMISSINER OF INCOME TAX (T.C.NOS.17,18,20 and 21/2003) SOUTHERN SEA FOODS LTD VS. JOINT COMMISSIONER OF INCOME TAX (T.C.No.37/2003) reported in (2007) 288 ITR 151(Mad), this court considered the similar provision and held as follows:- "It is the case of the assessee that the assessee apart from exporting the goods for themselves and through Export House is also processing marine products for other exporters. The income derived in a sum of Rs.35,21,735/- out of the processing of the goods, which were ultimately exported by other exporters for whom freezing and processing has been made by the assessee have been claimed as business profit. The Assessing Officer rejected the claim on the ground that the sum received did not have any direct nexus with the export activity. On appeal, before the Commissioner of Income-tax, it was argued by the assessee that the freezing and processing charges received involves utilisation of the entire resources of the assessee like machinery, power and the other manufacturing and administrative set up. The only difference between the regular manufacturing and processing for others is that the assessee did not own the goods in respect of which processing has been carried out. However, the Commissioner rejected the claim by saying that on a careful reading of the above explanation offered by the assessee itself shows that the freezing and processing charges do not have any nexus with the export activity. However, the Commissioner rejected the claim by saying that on a careful reading of the above explanation offered by the assessee itself shows that the freezing and processing charges do not have any nexus with the export activity. On appear before the Tribunal also, the assessee has taken a point that the finding of the Commissioner of Income-tax (Appeals) that the freezing and processing charges do not have any nexus with the export profit is incorrect. The frozen and prcessed goods were exported and the charges relating to the same are directly linked to the export receipts. However, the Tribunal also without assigning any reason held that freezing and processing charges stand as a distinct and separate payment purely for service rendered and not to be treated as forming part of the sale proceeds of the goods sold to the TEL Export House. We are not able to approve the way in which this point was dealt with by the authorities. The export profits are required to be computed in the ratio of export turnover to total turnover as contemplated in the formula i.e., export profit = business profit x export turnover/total turnover. If we consider the business of the assessee, which is manufacturing and processing and export of marine products, the income derived for freezing and processing of marine products-but for that operation the export cannot be made-is an income earned by using the entire undertaking of the company i.e., machinery and power and other manufacturing and administrative set up. The sum so received could be regarded as business profit. The said factual findings have not been disputed by any of the authorities. In these circumstances, we are of the view that the freezing and processing charges would definitely form part of one of the components of business profits, as the activity of freezing and processing would have a direct and immediate nexus to the activity of export. Useful reference can be had to the judgments of this Court in CIT Vs. N.S.C., Shoes reported in (2002) 258 ITR 749, though concerned about the assessment year prior to the insertion of clause (baa) and of the Bombay High Court in the case of CIT Vs. Bangalore Clothing Co., reported in (2003) 260 ITR 371. " Against the above judgment, the Revenue filed appeal and the Supreme Court in SOUTHERN SEA FOODS LTD VS. Bangalore Clothing Co., reported in (2003) 260 ITR 371. " Against the above judgment, the Revenue filed appeal and the Supreme Court in SOUTHERN SEA FOODS LTD VS. JOINT COMMISSIONER OF INCOME TAX reported in (2009)225 CTR (SC) 256, in paragraph 4 after taking into consideration the principle enunciated in the judgment reported in (2007) 288 ITR 151 (Mad) cited supra held that freezing and processing charges would definitely form part of one of the components of business profits, as the said activity would have a direct and immediate nexus to the activity of export. In the present case also, when there is a categorical finding given by the Tribunal that since the process of re-treading was undertaken by the assessee along with their own manufacturing activity, job processing activity was linked to manufacturing activity of the assessee, re-treading charges have to be included in the business profit for the purpose of computing the relief under Section 80 HHC of the Income Tax Act and also the said finding is in conformity with the above cited judgments, we necessarily hold in favour of the assessee that the re-treading charges cannot be excluded in the business profit for the purpose of computing relief under Section 80 HHC of the Income Tax Act. The total receipts involved in the present case amounts to Rs.35,297,412 and for Rs.30,988,625 viz., re-treading receipts alone, the Tribunal has considered and given a finding, however, in respect of other miscellaneous income, there is no discussion at all in the Tribunal order. Therefore, both the counsel fairly states that in respect of the balance amount of the total receipts, suitable direction may be given to the Tribunal to reconsider the matter. Accordingly, direction is given to the Tribunal to consider the balance amount in respect of the other miscellaneous income and decide the matter in accordance with law after giving opportunity to both parties and pass orders as expeditiously as possible. 8. In the result, we answer partly in favour of the assessee in respect of the re-treading charges and in respect of the other miscellaneous receipts, the matter is remanded back to the Tribunal to consider the matter and pass orders in accordance with law. The Tax Case (Appeal) stands disposed of accordingly. No costs.