TaxTMI 
TaxTMI 
2006 (12) TMI 110
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....Act. The respondent-assessee incurred loss from export of goods. This loss was assessed at Rs. 1,42,73,242. Against this loss, the assessee disclosed by way of sale of licence and duty draw back at Rs. 83,63,431. Though the assessee incurred loss from export business, the Assessing Officer allowed the relief under section 80HHC of the Act. The Commissioner, noticing that the said order is prejudicial to the interests of the Revenue, issued notice under section 263 of the Act. Reply was obtained. Thereafter, an adverse order was passed by the revising authority. Appeal was filed before the Income-tax Appellate Tribunal by the assessee. The appeal stood allowed. The Revenue is therefore is before us raising the following questions of law: "(....
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.... 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, the following deductions, namely:- (a) a deduction of an amount equal to one per cent. of the export turnover of such goods or merchandise during the previous year; and (b) a deduction of an amount equal to five per cent. of the amount by which the export turnover of such goods or merchandise during the previous year exceeds the export turnover of such goods or merchandise during the immediately preceding previous year. (2) (a) This section applies to all goods or merchandise (other than those specified in clause (b)) if the sale proceeds of such goods or merchandise export....
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....ion of the amount of deduction is geared to the export turnover and not to the income. It further observes that the term "export turnover" was defined as "sale proceeds of any goods", etc. exported out of India. Section 80HHC was introduced by the Finance Act, 1983, to encourage export. The Kerala High Court therefore held that the assessee in that case was entitled to claim deduction under section 80HHC even if it had suffered loss in its business of export of cardamom. The Kerala High Court in CIT v. V.T. Joseph [1997] 225 ITR 731, has chosen to hold that the claim for deduction under section 80HHC was restricted by the provisions of section 80AB and that the deduction under section 80HHC was to be allowed only to the extent of the incom....