2004 (5) TMI 26

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....ess resulted in a loss of Rs. 6,372? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that commission and brokerage for procuring export contracts for other exporters is exempt under section 80HHC of the Act on the ground that the same is export profits?" The matter relates to the assessment year 1990-91. For the aforesaid assessment year, the gross total income derived by the assessee as commission and brokerage for procuring export contracts for other exporters was to the tune of Rs. 56,69,321. The assessee had also exported goods outside India to the extent of Rs. 3,67,600. However, in respect of such export, the assessee had incurred a loss of Rs. 6,372. In other words, his gro....

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....bject 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; (proviso is not quoted as unnecessary)... (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 'profit and gains of business or professions'), the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee." Learned counsel appearing for the Department has submitted that so far as the first question is concerned, a similar matter had been alre....

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....itted that the real intention of the Legislature was to encourage export, and therefore, irrespective of the profit in the export itself, exemption is to be granted. To combat the aforesaid submission, learned counsel appearing for the Department on the other hand has relied upon another decision of the Bombay High Court reported in IPCA Laboratories Ltd. v. Deputy CIT (No. 1) [2001] 251 ITR 401. The decision of the Kerala High Court reported in CIT v. A.V. Thomas and Co. Ltd. [1997] 225 ITR 29 was relied upon by the Bombay High Court in CIT v. Shirke Construction Equipments Ltd. [2000] 246 ITR 429. These two decisions, evidently support the contention raised by the assessee. On the other hand, the decision of the Bombay High Court in....

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....e taken to be "positive profit" and not "loss". The observation of the Supreme Court would be equally applicable in the present case wherein there being a loss from export business, the question of getting deduction of the income derived from other business would not arise. As a matter of fact, any other construction would give rise to an absurd situation. For example, if a person has got income from other business unconnected with the export worth crores of rupees and he makes some token export incurring "loss", he would claim exemption in respect of the entire income from other sources. Such a construction, which would give rise to absurdity cannot be accepted. The decision of the Madras High Court reported in Jeyar Consultant and Inve....