TaxTMI 
TaxTMI 
Deduction in respect of profits retained for export business
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....amount of deduction in the case of the assessee shall be reduced by such amount which bears to the ^4[total profits derived by the assessee from the export of trading goods, the same proportion as the amount of export turnover specified in the said certificate bears to the total export turnover of the assessee in respect of such trading goods]. (1A) Where the assessee, being a supporting manufacturer, has during the previous year, sold goods or merchandise to any Export House or Trading House in respect of which the Export House or Trading House has issued a certificate under the proviso to sub-section (1), there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, ^5[a deduction to the extent of profits, referred to in sub-section (1B),] derived by the assessee from the sale of goods or merchandise to the Export House or Trading House in respect of which the certificate has been issued by the Export House or Trading House.] ^6[(1B) For the purposes of sub-sections (1) and (1A), the extent of deduction of the profits shall be an amount equal to- (i) eighty per cent thereof for an assessment....
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....emed to be the sale proceeds thereof.] ^15[(3) For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured ^16[or processed] 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 ; (b) where the export out of India is of trading goods, the profits derived from such export shall be the export turnover in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export ; (c) where the export out of India is of goods or merchandise manufactured ^17[or processed] by the assessee and of trading goods, the profits derived from such export shall,- (i) in respect of the goods or merchandise manufactured ^18[or processed] by the assessee, be the amount which bears to the adjusted profits of the business, the same proportion as the adjusted export turnover in respect of such goods bears to the adjusted total turnover of the business carried on by the asses....
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....t proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiie) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee, if the assessee has necessary and sufficient evidence to prove that,- (a) he had an option to choose either the duty drawback or the Duty Free Replenishment Certificate, being the Duty Remission Scheme; and (b) the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Free Replenishment Certificate, being the Duty Remission Scheme. Explanation.-For the purposes of this clause, "rate of credit allowable" means the rate of credit allowable under the Duty Free Replenishment Certificate, being the Duty Remission Scheme calculated in the manner as may be notified by the Central Government :] ^20[Provided also that in case the computation under clause (a) or clause (b) or clause (c) of this sub-section is a loss, such loss shall be set off against the amount which bears to ninety per cent of- (a) any sum referred to in clause....
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....ntant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed ^26[in accordance with the provisions of this section:]] ^27[Provided that in the case of an undertaking referred to in sub-section (4C), the assessee shall also furnish along with the return of income, a certificate from the undertaking in the special economic zone containing such particulars as may be prescribed, duly certified by the auditor auditing the accounts of the undertaking in the special economic zone under the provisions of this Act or under any other law for the time being in force.] ^28[(4A) The deduction under sub-section (1A) shall not be admissible unless the supporting manufacturer furnishes in the prescribed form along with his return of income,- (a) the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed on the basis of the ^29[profits] of the supporting manufacturer in respect of his sale of goods or merchandise to the Export House or Trading House; and (b) a certificate from the Export House or Tradi....
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....se beyond the customs station as defined in the Customs Act, 1962 (52 of 1962) : Provided that in relation to any assessment year commencing on or after the 1st day of April, 1991, the expression "total turnover" shall have effect as if it also excluded any sum referred to in clauses (iiia), (iiib) ^36[, (iiic), (iiid) and (iiie)] of section 28;] ^37[(baa) "profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by- (1) ninety per cent of any sum referred to in clauses (iiia), (iiib) ^38[, (iiic), (iiid) and (iiie)] of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits ; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India;] (bb) ^39[****] ^ 40[****] ^41[(c)] "Export House Certificate" or "Trading House Certificate" means a valid Export House Certificate or Trading House Certificate, as the case may be, issued by the Chief Controller of Imports and Exports, Governme....
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....es of this section, - (a) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder; (b) "export turnover" means the sale proceeds of any goods or merchandise 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)." Earlier, Inserted vide Section 24 of the Finance Act, 1983 w.e.f. 01-04-1983 2. Substituted vide Section 24 of the Finance Act, 1988 w.e.f. 01-04-1989 before it was read as, "(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 equal to the aggregate of- (a) four per....
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....sp;w.e.f. 01-04-1991 11. Substituted vide Section 46 of the Finance Act, 1999 w.e.f. 01-06-1999 before it was read as, "where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf." Earlier, Inserted vide Section 22 of the Finance Act, 1990 w.e.f. 01-04-1991 12. Inserted vide Section 46 of the Finance Act, 1999 w.e.f. 01-06-1999 13. Inserted vide Section 28 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1991 14. Inserted vide Section 28 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1992 15. Substituted vide Section 28 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1992 before it was read as, "(3) For the purposes of sub-section (1), profits derived from the export of goods or merchandise out of India shall be the amount which bears to the profits of the business (as computed under the head "Profits and gains of business or profession"), the same proportion as the expor....
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....sp; Earlier, Amended vide Section 15 of the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 01-04-1989 27. Inserted vide Section 37 of the Finance Act, 2003 w.e.f. 01-04-2004 28. Inserted vide Section 24 of the Finance Act, 1988 w.e.f. 01-04-1989 29. Substituted vide Section 15 of the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 01-04-1989 before it was read as, "income" 30. Inserted vide Section 46 of the Finance Act, 1999 w.e.f. 01-04-1992 31. Inserted vide Section 37 of the Finance Act, 2003 w.e.f. 01-04-2004 32. Inserted vide Section 28 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1986 33. Substituted vide Section 22 of the Finance Act, 1990 w.e.f. 01-04-1991 before it was read as, "receivable" 34. Inserted vide Section 22 of the Finance Act, 1990 w.e.f. 01-04-1991 35. Inserted vide Section 28 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1987 36. Substituted vide Section 4 of the Taxation Laws (Amendment) Act, 2005 w.e.f. 01-04-1998 before it was read as, "and (iiic)" 37. Inserted vide Section 28 of the....