TMI Blog2008 (5) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... note that by the same Finance Act, 1990, cl. (iiib) was inserted into s. 28 and changes were also made in s. 80HHC(3). Therefore, s. 80HHC as it stood at the relevant time was required to be read with s. 28(iiib) because both the sections have been amended by the same Finance Act of 1990. This vital aspect has not at all been considered by the High Court. Thus the words "business profits" in the above formula under s, 80HHC(3) would include cash compensatory allowance and duty drawback and accordingly we direct the AO to work out the deduction in accordance with the law as it stood during the relevant asst. yr. 1991-92. Appeal allowed of assessee. - 3245 of 2008 - - - Dated:- 1-5-2008 - Judge(s) : S. H. KAPADIA., B. SUDERSHAN REDDY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the question as to whether the sum of Rs. 7,74,785 + Rs. 34,565 received by the appellant during the accounting year ending 31st March, 1991, constitute eligible income under s. 80HHC(3) of the IT Act, 1961, as it stood at the relevant time. 5. One more fact needs to be mentioned. Assessee was maintaining at the relevant time cash system of accounting. There is no dispute on that aspect. 6. According to the AO, admittedly, appellant had not made export sales during asst. yr. 1991-92 and, therefore, the said duty drawback and cash compensatory allowance did not constitute eligible income deductible from the gross total income under s. 80HHC. 7. Aggrieved by the assessment order the assessee had carried the matter in appeal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty drawback shall be taxable under s. 28 of the IT Act, 1961. By the said Finance Act. 1990. cl. (iiib) came to be inserted as one of the incomes chargeable to income-tax under the head "business profits" vide s. 28. Clause (iiib) covers cash assistance (by whatever name called) 'received or receivable' by any person against exports under any scheme of the Government of India. At the relevant time an issue arose as to whether cash assistance though includible in business profits under s. 28 (iiib) would or would not constitute eligible income for the purposes of deduction under s. 80HHC. Since there was some doubt, CBDT had issued a circular. By the said circular, CBDT clarified that export incentives, namely, cash compensatory support an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was inserted into s. 28 and changes were also made in s. 80HHC(3). Therefore, s. 80HHC as it stood at the relevant time was required to be read with s. 28(iiib) because both the sections have been amended by the same Finance Act of 1990. This vital aspect has not at all been considered by the High Court. 13. In the circumstances, we are of the view that the words "business profits" in the above formula under s, 80HHC(3) would include cash compensatory allowance and duty drawback and accordingly we direct the AO to work out the deduction in accordance with the law as it stood during the relevant asst. yr. 1991-92. 14. For the aforestated reasons, the assessee succeeds and the Civil Appeal is allowed with no order as to costs. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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