TaxTMI 
TaxTMI 
2011 (5) TMI 827
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....t and learned counsel appearing for the respondent-assessee. 3. The facts leading to the controversy are the following : The assessee is a plantation company, which is also engaged in trading of goods. The assessee purchases cardamom from farmers, clean up the same by washing, sort and grade it, and exports the best quality cardamom. However, the net result of the trading activity for the previous year relevant for the assessment year was a loss, that disentitles the asses-see to claim exemption on export profit in respect of trading of goods covered by clause (b) of section 80HHC(3) of the Act. Even though the assessee is entitled to deduction of profit derived from export of goods, i.e., cardamom, the assessee put forward a c....
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.... are extracted hereunder for easy reference. "80HHC. Deduction in respect of profits retained for export business.-(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from the export of such goods or merchandise : . . . (3) For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured or processed by the assessee, the pro....
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....eduction under clause (b) above stated. It is to overcome this difficulty, the assessee canvassed for the position that the cardamom exported by it is "processed goods" entitling it for deduction under clause (a) above stated. Therefore, the only question to be considered is whether the cardamom purchased by the assessee and exported is "processed goods" falling within the meaning of clause (a) above stated entitling the assessee for deduction as held by the first appellate authority and confirmed by the Tribunal. 7. Learned standing counsel for the Revenue relied on the decision of the honourable Supreme Court of India in the case of Delhi Cold Storage P. Ltd. v. CIT reported in [1991] 191 ITR 656 (SC), wherein the honourable cou....
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....o consider exhaustively which are the activities that amount to "processing". We have to only consider whether the activities carried on by the assessee on the cardamom purchased before the export or sale amount to "processing of goods" or the goods exported is "processed goods". While considering the claim of the assessee we have to keep in mind the scope of clause (b) read with clause (f) of the Explanation to the said section above stated, and if the assessee falls within those clauses then certainly the assessee cannot be said to be an exporter of processed goods. In other words, what is first to be considered is whether the assessee is engaged in export of goods in the form in which it is purchased (trading goods) and if so then the as....
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.... under trading of goods falling under clause (f) read with clause (b) above referred, and, therefore, we cannot say that the very same item falls under clause (a) above referred which provides for export of manufactured or processed goods. In other words, the purchased commodity is exported in the same form and prior to such export the assessee washed and cleaned the product which does not involve any change physically or otherwise whatsoever to the commodity. In our view, the first appellate authority as well as the Tribunal did not consider the issue in the correct perspective because if they have considered as to whether the assessee was engaged in trading of goods, i.e., purchase and export of the commodity in the same form, there was n....