TaxTMI 
TaxTMI 
Deduction in respect of profits retained for export business
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....e 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 year beginning on the 1st day of April....
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....re 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 assessee ; and (ii) in respect of trading goods, be the export turnover in respect of such trading goods as reduced by the dir....
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....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 (iiia) or clause (iiib) or clause (iiic), as the case may be, or (b) any sum referred to in clause (iiid) or clause (iiie), as the case may be, of section 28, as applicable in the c....
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....on (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 Trading House containing such particulars as may be prescribed and verified in the manner prescribed that in respect of the export turnover mentioned in the certificate, the Export House or Trading House has not claimed the deduction under this section : Provided that the certificate ....
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.... 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, Government of India ; 42[(d)] "supporting manufacturer" means a person being an Indian company or a person (other than a company) resident in India, 43[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;] 44[(e) "special economic zone" shall have the meaning assigned to it in clause (viii) ....
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.... 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 cent of the net foreign exchange realisation; and (b) fifty per cent of so much of the profits derived by the assessee from the export of such goods or merchandise as exceeds the amount referred to in clause (a): Provided that the deduction under this sub-section shall not exceed the profits derived by the assessee from the export of such goods or merchandise: Provided further that an amount equal to the amount of the deduction claimed under this sub-section is debited to the profit and loss account of the previous year in respect o....
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....inance (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 export turnover bears to the total turnover of the business carried on by the assessee." Earlier, Substituted vide Section 22 of the Finance Act, 1990 w.e.f. 01-04-1991 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,- (a) in a case where the business carried on by the assessee consists exclusively of the export out of India of the goods or merchandise to which this section applies, the profits of the business as computed under the head "Profits and gains of busi­ness or profession"; (b) in a case where the business carried on by the assessee does not....
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....ead 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 Finance (No. 2) Act, 1991 w.e.f. 01-04-1987 38. Substituted vide Section 4 of the Taxation Laws (Amendment) Act, 2005 w.e.f. 01-04-1998 before it was read as, "and (iiic)" 39. Omitted vide Section 28 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1991 before it was read as, "(bb) "total turnover" shall not include any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28;" Earlier, Inserted vide Section 22 of the Finance Act, 1990 w.e.f. 01-04-1991 40. Omitted vide Section 15 of the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 01-04-1989 before it was read as, "(c) "net foreign exchange realisation" means the total free on board value of exports out of India of goods and merchandise, to which this section applies as r....