TaxTMI 
TaxTMI 
2005 (10) TMI 235
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Rs. 25.49,584. In the original return, the deduction under s. 80HHC was claimed at Rs. 2.45,98.416 by proportionately reducing the deduction in respect of export incentive. Thereafter, the assessee revised the return by claiming the deduction under s. 80HHC at Rs. 2,60,23,142 on the entire export incentive. The calculation of deduction under s. 80HHC made in the original return and revised return are as under: Particulars Amount Profit of the business 2,60,23,143 Net profit as per computation under s. 28 Less: 90% of export incentive 25,49,584 (90% of 28,32,871) Profit of the business 2,34,73,559 Total turnover 10,18,90,229 Direct export turn....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ------------ 4. The deduction under s. 80HHC in the original return was claimed by the assessee in proportion to export sales turnover and total turnover whereas in the revised return the deduction under s. 80HHC was without taking the proportion as in the original return and the assessee's contention was that export house is also an export and, therefore, same should be considered for the purpose of working under s. 80HHC. 5. From the definition of convertible foreign exchange, export out of India, export turnover, supporting manufacturer it is clear that goods must have been exported out of India and in turn, convertible foreign exchange must have been received by the assessee in India from those countries, That only be treated (as) export out of India and will be included in the export turnover. The export which is made through supporting manufacturer is not a direct export to outside India while same is made through an Indian company or a person resident in India and no convertible fore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uction under s. 80HHC is available to the assessee under s. 80HHC on entire export incentive and it need not to be restricted by treating the turnover through export house as local turnover. Therefore, AO was directed to allow the deduction under s. 80HHC at Rs. 2,60,23,142 as against Rs. 2.45,98,416 allowed by AO. 9. We have heard the rival submissions and perused the material on record. The main issue in this appeal is whether the export turnover as a supporting manufacturer, will or will not form part of export turnover for the purpose of claiming deduction under s. 80HHC in respect of export incentive or, in other words, where assessee the direct exporter as well as supporting manufacturer (is) selling goods to export house for which disclaimer certificate is issued by export house, how the benefit of deduction under s. 80HHC is to be calculated. Before we reach any conclusion we have to analyse the various definitions under s. 80HHC which are as under: "8OHHC(3) For the purposes of sub-s. (1): (a) Where the export out of India is of goods or merchandise manufactured (or processed) by the assessee, the profits derived from such export shall be the amount which bears to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder; (aa) 'export out of India' shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situate in India, not involving clearance at any Customs station as defined in the Customs Act, 1962 (52 of 1962); (b) 'export turnover' means the sale proceeds received in, or brought into India by the assessee in convertible foreign exchange in accordance with cl. (a) of sub-s. (2) of any goods or merchandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the Customs station as defined in the Customs Act, 1962 (52 of 1962); (d) 'supporting manufacturer' means a person being an Indian company or a person (other than a company) resident in India manufacturing (including processing) goods or merchandise and selling such goods or merchandise to an export house or a trading house for the purposes of export." 10. Under s. 80HHC(1) where an assessee being an Indian company or a person (other t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....supporting manufacturer. 14. But from s. 80HHC(3A)(b) r/w s. 80HHC(1A) which deals with computation of export profit for the supporting manufacturer, it is very clear that the profits derived by a supporting manufacturer from sale of goods or merchandise shall be in a case where the business carried on by the supporting manufacturer does not consist exclusively of sale of goods or merchandise to one or more export houses or trading houses, the amount which bears to the profits of the business the same proportion as the turnover in respect of sale to the respective export house or trading house bears to the total turnover of the business carried on by the assessee. In such cases as is the case of the assessee, s. 80HHC(3A)(b) applies and not s. 80HHC(3A)(a). Therefore, the profit derived by supporting manufacturer on sale of goods or merchandise shall be the amount which bears to the profits of business the same proportion as the turnover in respect of sale to the respective export house or trading house bears to total turnover of the business carried on by the assessee. As per Expln. (b) to s. 80HHC, export turnover means the sale proceeds received in or brought into India by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is appeal is that on the facts and in the circumstances of the case, the learned CIT(A) has erred in quashing the order under s. 154 and in directing to allow deduction under s. 80HHC at Rs. 6,63,57,215 following his order in asst. yr. 1998-99. 18. In this appeal, the facts of the case are similar as in assessee's own case in the asst. yr. 1998-99. The assessee declared a total income of Rs. 32,61,492 and the return was processed under s. 143(1)(a) subsequently the assessee filed a revised return declaring an income of Rs. 3,12,949 and in the revised return the assessee has claimed deduction under s. 80HHC of Rs. 6,63,57,215 instead of deduction of Rs. 6,34,08,672 as claimed in the original return of income. The learned CIT(A) following his decision in asst. yr. 1998-99 in assessee's appeal No. 486/Jp/2001 allowed the claim of Rs. 6,63,57,215 under s. 80HHC of the Act. 19. Facts and circumstances in this case are similar to the assessee's own case for asst. yr. 1998-99 in which a decision have been taken by this Bench vide ITA No. 638/Jp/2003 of even date. Following the ratio in the said case the deduction of Rs. 6,34,08.672 under s. 80HHC and returned income of Rs. 32,61,492 all....