2016 (8) TMI 97

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.... in ITA No.1192/Ahd/1999 for the Assessment Year 1996-97, the revenue has preferred the present Tax Appeal for consideration of the following substantial question of law: "Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer not to deduct the amount of Rs. 4.34 crores in respect of disclaimer certificate issued by the assessee under the proviso to sub-section (1) of Section 80HHC of the Act and directing the Assessing Officer to allow the assessee's claim for deduction amounting to Rs. 17,68,39,739/-?" 2. The assessee company was a recognized Export House during the accounting year relevant to A.Y. 1996-97 prior to which the assessee used to export only pharmaceutical products. The assessment ....

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....at the amount of profit on export turnover passed on to supporting manufacturers had been worked out in accordance with the provision to Section 80HHC(1). Mr. S.N. Soparkar, learned Senior Counsel appearing with Mr. B.S. Soparkar, learned advocate for the assessee submitted that the issue involved in the present Tax Appeal is now not res integra in view of the decision of the Honble Supreme Court in the case of Jeyar Consultant and Investment Pvt. Ltd. vs. Commissioner of Income Tax reported in [2015] 373 ITR 87 (SC) wherein the Hon'ble Supreme Court has held as under: "18) It stands settled, on the co-joint reading of IPCA and A.M. Moosa, that where there are losses in the export of one type of goods (for example selfmanufactured goo....

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....et result is that there is profit of the business, then the deduction under Section 80HHC should be given. However, having regard to the law laid down in IPCA and A.M. Moosa, we cannot agree with the learned counsel for the appellant. From the scheme of Section 80HHC, it is clear that deduction is to be provided under sub-section (1) thereof which is "in respect of profits retained for export business". Therefore, in the first instance, it has to be satisfied that there are profits from the export business. That is the pre-requisite as held in IPCA and A.M. Moosa as well. Sub-section (3) comes into picture only for the purpose of computation of deduction. For such an eventuality, while computing the "total turnover", one may apply the formu....