2026 (1) TMI 911 - AT - Income Tax

Deductions for exporters under Section 80HHC clarified to apply equally to taxpayers with turnover below or above 10 Crore

Amendments concerning deductions for exporters clarify that amended provisions of the Income Tax Act must be interpreted so that exporters with turnover ... Deductions u/s. 80HHC - cases of exporters, having a turnover below and those above 10 Crores - Scope of amended provisions of Section 28 and Section 80HHC of the I.T. Act.- HELD THAT:- As relying on M/S AVANI EXPORTS & ANR. [2015 (4) TMI 193 - SUPREME COURT] cases of exporters, having a turnover below and those above 10 Crores, should be treated similarly and eligible for duction under section 80HHC - Appeal filed by the assessee is allowed. Issues: (i) Whether the assessee is entitled to deduction under section 80HHC of the Income-tax Act, 1961 for Assessment Year 2004-05 as claimed in the return, having export turnover below Rs. 10 crores, in view of the amendment effected by the Taxation Laws (Second Amendment) Act, 2005 and subsequent judicial pronouncements.Analysis: The issue requires application of the amended section 80HHC(3) and the effect of the Taxation Laws (Second Amendment) Act, 2005 which introduced conditions in the third and fourth provisos and was held to have retrospective operation. The controlling authority is the Hon'ble Supreme Court judgment in CIT vs. M/s. Avani Exports & Anr., which addressed severability of the conditions and directed that exporters with turnover below and above Rs. 10 crores be treated similarly so as to afford the benefit. The factual matrix shows the assessee had export turnover below Rs. 10 crores and claimed deduction in the return; the Assessing Officer and CIT(A) limited the deduction after applying the amended provisos and set-off rules. The Tribunal applied the Supreme Court's ruling to the present facts and found no contrary material from Revenue to distinguish the precedent.Conclusion: The deduction under section 80HHC claimed by the assessee in the return is allowable in accordance with the binding Supreme Court authority; decision is in favour of the assessee.