TaxTMI 
TaxTMI 
2005 (3) TMI 75
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.... section 80HHC(3) the Assessing Officer excluded sales to export houses from "export turnover" and reworked relief at Rs. 12,63,532. Aggrieved by the said order, the assessee took up the matter before the Commissioner of Income-tax (Appeals). The Commissioner (Appeals) upheld the order of the Assessing Officer on the ground that export turnover for the purpose of the proviso to sub-section (3) includes only direct export since sub-section (3) deals with the quantification of deduction in the case of direct exports and the quantum of deduction can be computed only on the basis of the direct export turnover. He also took note of the deduction separately granted on indirect exports under section 80HHC(1A) of the Act. The assessee took up the matter before the Tribunal. The Tribunal following the decision of the Delhi Bench of the Tribunal in the case of Eastern Leather Products (P.) Ltd. v. Deputy CIT [1999] 68 ITD 358 directed the Assessing Officer to recompute the income of the assessee and to allow whatever benefits would have been allowed to the export house had they not issued the disclaimer certificate. The Commissioner of Income-tax is aggrieved by that order and has come up wi....
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....ection (3) and also the provisos thereunder. Under the proviso the assessee is entitled to 90 per cent, of any sum referred to in clause (iiia) and clauses (iiib) and (iiic) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. We may in this connection extract section 80HHC for easy reference. "80HHC. Deduction in respect of profits retained for export business.- (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 of the profits derived by the assessee from the export of such goods or merchandise .... (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 su....
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...., 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 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 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 direct and indirect costs attributable to export of such trading goods:... Explanation.- For the purposes of this sub-section,- (a) 'adjusted export turnover' means the export turnover as reduced by the export turnover in resp....
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....r the provisions of this Act or under any other law. Explanation.- For the purposes 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; (aa) 'export out of India' shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situate in India, not involving clearance at any customs station as defined in the Customs Act, 1962 (52 of 1962); (b) 'export turnover' means the sale proceeds, received in, or brought into India by the assessee in convertible foreign exchange in accordance with clause (a) of sub-section (2) of any goods or merchandise to which this section applies and which are 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); (ba) 'total turnover' shall not include freight or insurance attributable to the transport of the goods or merchandise beyond th....
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.... section 80HHC the assessee is entitled to deduction in respect of profits derived from export of any goods or merchandise. Relief is also available under sub-section (1A) to the assessee being a supporting manufacturer which sold goods or merchandise to any export house or trading house in respect of which the export house or trading house had issued a disclaimer certificate. Similarly, the quantum of deduction in the case of the supporting manufacturer is to be computed in the manner provided under sub-section (3A). We have already indicated that under the proviso to sub-section (3) the assessee would be entitled to deduction in respect of any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28 which in fact is granted. However, the dispute in this case is as to whether sales to export houses by the assessee should be treated as export turnover for computing relief under the said proviso. Export turnover for the purpose of the proviso to sub-section (3) includes only direct export since subsection (3) deals with the quantification of deduction in the case of an exporter. The term "export turnover" has been defined in Explanation (b) below section 80HHC. The definit....