TaxTMI 
TaxTMI 
2011 (10) TMI 493
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....T, Delhi-I set aside the order on the ground that for the purpose of deduction under section 80-HHC the turnover of 100 per cent export oriented unit should be taken into account for determination of the total turnover. The assessee did not prefer any appeal against the order of the ld. CIT setting aside the assessment order. The assessing officer completed assessment as per the directions contained in order u/s 263 of the Act. Before the ld. CIT (Appeals) the assessee had taken this ground also. The ld. CIT(A) rejected this ground of the appeal on the reason that the ground of appeal related to order under section 263 by CIT-I, New Delhi was beyond the scope of section 246A of the Act. We have heard both the parties. Since the assessee had not preferred any appeal against order of the ld. CIT-I passed under section 263; no ground relating to order under section 263 can be taken in appeal against the order passed consequent to directions contained under section 263 of the Act. In view of these facts in our considered opinion the ld. CIT(A) was justified in dismissing the ground raised by the assessee. Accordingly, we do not find any infirmity in the order passed by the ld. CIT (App....
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....Income-tax Act was not required to be included into the income while calculating the quantum of deduction under section 80-HHC. Any amount which is exempt under any other provision of the Act were to be excluded for the purpose of calculation of deduction under section 80-HHC of the Act. Therefore, it was submitted that deduction under section 80-HHC has been wrongly calculated by the AO by including turnover of hundred per cent of export-oriented unit in the total turnover of the business carried on by the assessee. The ld. CIT (Appeals) on consideration of submissions made by the assessee observed that an assessee is allowed a deduction in respect of profits derived by the assessee from export of goods or merchandise under section 80-HHC(3)(a). The total turnover of the business is taken into account and not the turnover from a particular unit. The term 'total turnover' has been defined in explanation (baa) of section 80-HHC according to which total turnover shall not include freight or insurance attributable to the transport of goods or merchandise beyond the customs station as defined in Customs Act, 1962. The ld. CIT(A) further observed that provisions of section 80-HHC(4)(b) ....
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....s eligible for deduction under section 10-B of the Income Tax Act, 1961 whereas the other unit was eligible for deduction under section 80-HHC of the Act. Under section 10-B(1), a deduction of such profits and gains as are derived by a hundred per cent export oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years within which the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee. The provisions of section 10-B(1) have been substituted by Finance Act, 2000 with effect from 1/04/2001. Prior to its substitution the profits and gains derived by an assessee from a hundred per cent export oriented undertaking was not to be included in the total income of the assessee. Thus after substitution of section 10-B with effect from 1/04/2001 the export profit derived from hundred per cent export oriented undertaking is deductible from the total income of the assessee. The expression "shall be allowed from the total income of the assessee" appearing in sect....
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....by the assessee, the profits derived from such export shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee. However, under clause (c) of section 80-HHC(3) where export of goods is of goods or merchandise manufactured or processed by the assessee and of trading goods, the profits derived from such exports shall in respect of goods or merchandise manufactured or processed by the assessee, be the amount which bears to adjusted profits of the business, the same proportion as the adjusted export turnover in respect of such goods bears to be adjusted total turnover of the business carried on by the assessee. The term "adjusted export turnover", "Adjusted profit of business" and "adjusted total turnover of the business" have been defined in explanation to section 80-HHC(3) which are determined by reducing the respective amounts relating to trading goods. In other words, in order to arrive at adjusted export turnover, the export turnover in respect of trading goods will be reduced from the export turnover. Similarly, from profits of business ....
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....perating profits in respect of non-hundred per cent export oriented unit shall be considered for computation of deduction under section 80-HHC of the Act. 9.5 In the case of Suresh B. Mehta (supra) the assessee was carrying on business of manufacture and sale of jewellery and gold ornaments at Chennai and export of diamonds and precious stones from Bombay. The assessee for assessment year 1997-98 claimed deduction under section 80-HHC treating the export as separate business. The AO restricted the benefit to Rs. 37,43,000/- on the ground that entire business of local sales and export sales was one and the same thereby calculating deduction on the basis of total turnover of all the business of the assessee. Hon'ble Madras High Court in view of these facts held that the assessee was maintaining separate accounts independent of other business and that there was no inter-mingling of expenditure or inter-lacing of funds of any kind whatsoever. Hon'ble Madras High Court upheld the order of the ld. CIT (Appeals) allowing the relief. Hon'ble Madras High Court did not find any error or illegality in the order of the ITAT. 9.6 In M. Gani & Co. case (supra) for AY 2001-02 the assessee claim....