Export deduction under section 80HHC excludes interest and similar non-export receipts from business profits

Receipts such as interest, commission, labour charges and similar items lacking nexus with export activity cannot be included in business profits for deduction under section 80HHC(3). On a combined reading of clauses (b) and (ba) of the Explanation, only profits linked to export sale proceeds enter the statutory formula, so brokerage, commission, interest, rent and comparable receipts are excluded. The assessee's computation was therefore rejected.

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Issues: Whether, while computing deduction under section 80HHC(3), receipts such as labour charges, assistance and service charges, and interest could be included in the business profits for the purpose of the formula business profits x export turnover / total turnover.

Analysis: The court applied its earlier view that receipts like interest, commission and similar items have no nexus with export activities and therefore cannot form part of business profits for the section 80HHC computation. On a combined reading of clauses (b) and (ba) of the Explanation to section 80HHC, business profits for the formula do not include brokerage, commission, interest, rent or other similar receipts lacking linkage with export sale proceeds.

Conclusion: The inclusion of such receipts in business profits was disallowed and the assessee's computation was rejected.

Ratio Decidendi: For deduction under section 80HHC, receipts unconnected with export activity and lacking nexus with export sale proceeds are excluded from business profits for the statutory formula.

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