The Gauhati High Court has held that filing of turnover in a tender process would not exempt from furnishing the income tax return ( ITR ). The court held that the words “Turnover” and “Income Tax Return” are different.
Chayanika Handloom Products, the petitioner an MSME submitted that its bid for empanelment as manufacturer and supply of handloom was disqualified on the ground that it did not submit ITR for three previous years, as prescribed under Clause 13(h) of the e-Tender Notice (NIT). Clause 13(h) of the NIT provided that ITR and annual audited report for the last 3 financial years should be submitted.
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The issue was whether the above said documents would come within the ambit of “Average Annual Financial Turnover”. The question was essential since Clause 3(e) of the NIT exempts MSME from eligibility criteria of having not less than Rs. 50 Lakhs average annual financial turnover during the last three years. Petitioners claimed that ITR is proof of Annual Financial Turnover, thus being an MSME it is exempted in terms of Clause 3(e).
A single bench of Justice Michael Zothankhuma held that Annual Turnover refers to the total revenue generated from the sale of goods or services during a financial year before deducting any expenses. It is a measure of business activity and operational performance. It is focused solely on the sales and revenue generated in the normal course of business. It does not factor in expenses, taxes, or other financial liabilities.
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An Income Tax Return is a formal document filed with the tax authorities that reports income, deductions, and taxes owed for a given financial year. It encompasses various sources of income, including but not limited to turnover. It may also reflect income from investments or other non-operational sources. Income Tax Returns require adherence to specific tax regulations and formats prescribed by the tax authorities, which may include the inclusion of various forms and schedules.
The Court held that Average Annual Financial Turnover would have to be considered to be different from an Income Tax Return and the exemption given under Clause 3(e) to MSEs does not include within its ambit the ITR.
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