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2010 (2) TMI 893 - AT - Income TaxDeduction u/s.80-HHC(1) - whether the deduction is admissible only in the case of sale proceeds receivable and not the processing charges as shown by the assessee? - Held that:- With regard to observation of the CIT(A) that the raw material should be owned by the assessee for the purpose of claiming deduction u/s.80-HHC it is found that sec.80-HHC does not specify any such requirement as has been held by the Tribunal in DCIT vs. Shashi Kant Mittal (2009 (1) TMI 310 - ITAT DELHI-G), wherein it has also been held that the definition of 'manufacture' as defined by the Supreme Court in Aspinwall and Co. Ltd. 2001 (9) TMI 3 - SUPREME Court), also does not give any indication that ownership of raw material is a primary condition for manufacturing. Further, the section specifies that the assessee should engage in the business of exports out of India of any goods or merchandise, the assessee be allowed a deduction to the extent of profits derived by the assessee from the export of such goods or merchandise. It is not the case of the revenue that the VSF was not exported out of India or the assessee has not received sale proceeds in convertible foreign exchange or the assessee has not furnished report of an accountant in the prescribed Form No.10CCAC. Further as it is now settled law that book entries are not determinative factor to deal with the income/expenditure whether taxable or deductible thus assessee is entitled to the deduction u/s. 80-HHC(3) on the amount received as a result of exports to M/s. P.T. Indo Bharat Rayon, Indonesia. The AO is directed to compute and allow the same in accordance with the provisions of the law, assessee's appeal stands allowed.
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