TaxTMI 
TaxTMI 
2008 (9) TMI 7
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment Year on the export sales. The relevant Assessment Year is AY 1990-91. The I.T.O. allowed the claim of deduction under Section 80HHC at Rs.15,81,389/-. It may be noted that according to the calculations made by the I.T.O. the business income stood at Rs.55,31,941/- to which the I.T.O. applied the ratio in terms of Section 80HHC(3)(b). Applying that ratio the export profits worked out to Rs.15,81,389/-The formula adopted was as follows :- Export Profits = 90,91,063 x 55,31,941 3,18,01,941 4. Aggrieved by the decision of the I.T.O. the Department went in revision. The Revisional Authority and the Tribunal accepted the contention advanced on behalf of the Department. The revision was under Section 263 of the Income Tax Act.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmissioner of Income-Tax reported in 266 ITR , Page 521 since the assessee had not earned profits from export sales during the year in question, the assessee was not entitled to deduction under Section 80HHC. Accordingly, the Department's appeal came to be allowed. Hence, this Civil Appeal by the assessee. 5. At the outset it may be stated that Section 80HHC falls under Chapter VI-A which refers to deductions to be made in computing total income. Under Section 80A it is inter alia provided that in computing total income of an assessee, there shall be allowed from his gross total income deductions specified in Section 80C to 80U. It is further provided that the aggregate amount of deductions under Chapter VI-A shall not exceed the gross t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....twodifferent figures in the denominator and nominator. This calculation has been correctlydone by the I.T.O. as indicated hereinabove. The I.T.O. took into account the businessincome at Rs.55,31,941/- to which he correctly applies the ratio of Rs. 90,91,063/Rs.3,81,01,941. In the case of composite business, as stated above, the figure of export turnover is quite different from total turnover. The entire object for applying the principle of proportionality is to derive export profits from total business profits. As stated above, this formula applies both under Section 80HHC(3)(a) as well as 80HHC(3)(b). 6. In the present case, it appears that the High Court has decided the matter against the assessee overruling the decision of the Trib....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ort turnover" under the existing provisions, means the sale proceeds (excluding freight and insurance) receivable by the assessee in convertible foreign exchange. In other words, the FOB value of exports. The Finance Act, 1990 has restricted the definition of the term "export turnover" to mean FOB sale proceeds actually received by the assessee in convertible foreign exchange within six months of the end of the previous year or within such further period as the Chief Commissioner/Commissioner may allow in this regard. 9. Thus, in the case of an assessee who is doing export business exclusively, "export turnover and total turnover" would be identical, if the entire sale proceeds are brought into India in convertible foreign exchange withi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts 100 100 100 100 (b) Domestic rate ... 50 100 200 (c) Total turnover 100 150 200 300 (ii) Business profits before incentives (assu....