TaxTMI 
TaxTMI 
2018 (2) TMI 305
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....r, on the facts and in the circumstances of the case the assessee having incurred a loss in export business is eligible for a deduction under section 80HHC ? 2. Whether, on the facts and in the circumstances of the case and considering the facts and the question of law involved in 257 ITR 41 the Tribunal is justified in relying on the same ? Both the assessees were cashew exporters, who were engaged in export as also domestic business. The claim under Section 80HHC was declined by the Assessing Officer, finding that the assessee had effected high sea sales and earned substantial profit from such sale on import and the same is not includable in the business profits for permitting the deduction envisaged under Section 80HHC. The A....
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....sioner of Income Tax v. K.Raveendranathan Nair, [2007] 295 ITR 228 (SC), to contend that when there is a loss occasioned in the export business, there could be no claim raised for deduction under Section 80HHC, especially since the benefit is one specifically conferred for the foreign exchange brought into the Country. The assessee's having suffered loss in the export business, cannot claim the benefit under the incentive clause, as it has been termed by the Honourable Supreme Court, is the compelling argument raised. 4. The learned Counsel appearing for the respondentsassessees, Shri Gopinath Menon, would argue that the reliance placed on Parry Agro Industries Ltd. is perfectly in order. There were two types of businesses, which is ....
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....entitled to computation under clause (a) or (b) of sub-section (3), depending upon whether it is a manufacture or production or a trading; and (ii) one engaged in domestic & export business, on which the benefit would be computed under clause (c) of subsection (3), which takes in the processed and manufactured goods in clause (i) and trading goods in clause (ii). The contention raised by the assessee was specifically negatived by the Court, holding that if it is accepted, that would result in the Court reading into the provision a third category, which is an assessee, who maintains separate accounts for the export business. There being no such category available as per the provisions, the Court found that it cannot redraw or rewrite the Sec....
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.... export of both selfmanufactured goods and trading goods, the profits and losses in both the trades have to be taken into consideration. If after such adjustments there is a positive profit, the assessee would be entitled to deduction under section 80HHC(1). If there is a loss he will not be entitled to any deduction." We do not think that the Court, in the above extract intended that export alone should be considered, and if it is a loss, the benefit under Section 80HHC should be declined. If there was no business profit at all, there could be no exemption claimed. The dictum from the above extract is only to the extent that in calculating the total profits, the profits and losses of both the manufacturing and trading business should be....
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....he provisions and found that earlier it read as "deduction in respect of export turnover", while later, as it even now exists, "it is deduction in respect of profits retained for export business". This, however, does not lead to a necessary conclusion that only the profits for export business would be available for deduction under Section 80HHC. It is trite that a decision is an authority for the law it lays down and not every observation made in it. 10. Reading the provision under sub-section (1), we notice that the incentive, is insofar as a deduction, while computing the total income of the assessee, to the extent of profits, referred to in sub-section (1B), derived by the assessee from the export of such goods or merchandise. As has ....
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....ise 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." 12. K.Raveendranathan Nair succinctly stated the formula to be employed as: Export turnover ------------- x Bus....