Assessees can claim deduction under Section 80HHC despite export business losses. Court supports formula for export profit calculation.

The High Court held that assessees are eligible for deduction under Section 80HHC despite losses in export business. The judgment emphasized the formula for computing export profits and supported the Tribunal's reliance on previous judgments. The decision favored the respondents, rejecting the Revenue's appeals.

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Issues:
1. Eligibility for deduction under section 80HHC for assessees incurring a loss in export business.
2. Justification of relying on previous judgments by the Tribunal.

Issue 1 - Eligibility for deduction under section 80HHC:
The case involved two cashew exporters engaged in both export and domestic business, claiming deduction under Section 80HHC. The Assessing Officer disallowed the claim, citing substantial profits from high sea sales not included in business profits for the deduction. The first appellate authority directed inclusion of high sea sales profit in total business profits for deduction. The Tribunal upheld this decision. The Revenue argued profits from high sea sales should not be included, relying on precedent. However, the respondents argued for inclusion based on the law. The High Court held that the loss in export business does not affect eligibility for deduction under Section 80HHC, emphasizing the formula for computing profits derived from export.

Issue 2 - Justification of relying on previous judgments:
The Revenue contested the Tribunal's reliance on a previous judgment, arguing it was not applicable. They referred to a Supreme Court case to support their stance. Conversely, the respondents justified the reliance on the previous judgment, emphasizing the computation method under Section 80HHC. The High Court supported the Tribunal's reliance on the precedent, stating that the formula for deduction calculation includes total turnover and export turnover, irrespective of profit or loss in export business. The judgment favored the respondents, rejecting the Revenue's appeal.

In conclusion, the High Court upheld the eligibility of assessees for deduction under Section 80HHC, even in cases of losses in export business. The judgment emphasized the formula for computing profits derived from export and supported the Tribunal's reliance on previous judgments. The decision favored the respondents, rejecting the Revenue's appeals and leaving the parties to bear their respective costs.

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