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Issues: Whether the assessee was entitled to deduction under section 80HHC of the Income-tax Act, 1961 in respect of exports routed through export houses, where the export houses had the contract with foreign buyers and had already claimed the deduction.
Analysis: For the relevant assessment year, section 80HHC allowed the deduction to the exporter, and the statutory scheme contemplated that the benefit would not be availed simultaneously by more than one person in respect of the same export. The assessees were processors who acted under separate agreements with the export houses, had no privity of contract with the foreign buyers, and shipped the goods only on account of the export houses. The export houses were the contracting parties with the foreign buyers and were the persons entitled to receive the foreign exchange. The Court applied the principle that the real exporter, and not the party whose name appears in ancillary documentation, is entitled to the export deduction.
Conclusion: The assessee was not entitled to deduction under section 80HHC for the exports effected through export houses, because the export houses were the real exporters and had already claimed the benefit.
Final Conclusion: The references were answered against the assessee and in favour of the Revenue.
Ratio Decidendi: Under the unamended section 80HHC, the export deduction belongs only to the real exporter having privity of contract with the foreign buyer and entitlement to the export proceeds, and the same export cannot yield simultaneous deduction to another participant in the transaction.
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