AI Drafter 
TaxTMI 
TaxTMI 
2003 (7) TMI 24
X X X X Extracts X X X X
X X X X Extracts X X X X
....-tax Act 1961, to a sum of Rs. 13,54,636? 2. Whether there were materials for the Tribunal to hold that the computation under section 80HHC(3)(b) was relevant and not section 80HHC(3)(a) in the applicant's case?" The brief facts necessary for consideration of this case are as follows: The applicant-assessee is a partnership firm carrying on business in the purchase and sale of raw rubber, coconut, oil and pepper. Pepper trade consists of both export sales and local sales. The assessee had maintained separate accounts for raw rubber which consists of local sales only. In the assessment for the year 1988-89, in working out the relief under section 80HHC of the Act, the assessee had applied the provisions of section 80HHC(3)(a) and ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act. Counsel also relied on the decision of the Madras High Court in CIT v. Madras Motors Ltd./M.M. Forgings Ltd. [2002] 257 ITR 60. Counsel also submitted that the decision of this court in CIT v. Parry Agro Industries Ltd. [2002] 257 ITR 41 is distinguishable, in that in the said decision, the assessee therein was engaged in the export sale and in the local sale of the very same commodity and further the question therein was as to whether, in a case where the assessee had kept separate books of account both in respect of export sales and in respect of local sales there is any question of application of clause (b) of section 80HHC(3) of the Act. Sri P.K.R. Menon, learned senior Central Government standing counsel for taxes appearing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o in clause (a). It further provides some other conditions also with which we are not concerned. There is no difficulty in finding out 4 per cent of the net foreign exchange realisation. The only problem in the present case is to find out 50 per cent of the profits derived by the assessee from the export of such goods referred to in the sub-section. Sub-section (3) of section 80HHC provides for the method of finding out the profits of export business referred to in sub-section (1) thereof which reads as follows: "(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 I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ope in the sale proceeds of local sale of other goods also in the "total turnover" for the computation of the profits contemplated under clause (b) of sub-section (1) of section 80HHC of the Act. True, the decision of the Madras High Court in Madras Motors Ltd./M.M. Forgings Ltd.'s case [2002] 257 ITR 60 has held that clause (b) of subsection (3) of section 80HHC applies only to a case where the assessee is engaged in the business of export sales as well as local sales of the same commodity and that the turnover of sale of other commodities dealt with by the assessee cannot form part of the total turnover of the assessee for the purpose of relief under section 80HHC of the Act. The Madras High Court has taken the said view on the basis of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to and specifically relates to export trade. Sub-section (3) thereof indicates the manner of computation of the profits derived from the export of goods out of India where the assessee indulges in domestic trade as well. Clause (a) may not be applied here as admittedly the assessee is carrying on domestic trade as also export. The procedure in clause (b) would take when there is export as well as domestic trade. The argument of Mr. Jayasankar is that in this case where the profit derived by the assessee by export business is separately maintained and separately ascertained there is no need to have recourse to section 80HHC(3)(a) and (b). In such a situation section 80HHC(1) can be applied in exclusion of sub-section (3). Therefore, th....