Export deduction under section 80HHC is computed on export turnover alone, excluding losses from manufacturing or other activities.

Section 80HHC computation is confined to export turnover and export-linked income, so the deduction is to be worked out under that provision without importing losses from manufacturing or other unrelated business activities. The analysis states that the deduction is not to be quantified by reference to gross total income, but by the export activity alone. Accordingly, losses from non-export operations do not reduce the eligible deduction under section 80HHC, and the amount is to be recalculated on that basis.

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Issues: Whether, for computing deduction under section 80HHC, only export income and export turnover are to be considered, and whether loss from manufacturing or other activities can be brought into the computation.

Analysis: Section 80HHC was held to be geared to export turnover and the export activity alone, rather than to gross total income. The deduction had to be quantified with reference to export turnover, and the loss from manufacturing activity or other activities could not be deducted while computing the eligible amount. The order followed the view that the deduction under section 80HHC is to be allowed in accordance with that provision itself and not by importing losses from unrelated business activity into the computation.

Conclusion: The issue was decided in favour of the assessee. The deduction under section 80HHC is to be recalculated with reference only to export turnover, without bringing in loss from manufacturing or other activities.

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