TMI Blog2007 (2) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... worded and we reframe the same as under: "Whether in the facts and circumstances of the case, the Tribunal was right in holding that the unabsorbed depreciation, unabsorbed business loss and unabsorbed investment allowance of the earlier years cannot be deducted before granting deduction under section 80HHC?" 3. The assessment year involved in this appeal is 1994-95. The assessee computed the deduction under section 80HHC of the Income-tax Act, 1961 (in short, 'the Act') before setting off of the unabsorbed depreciation, business loss and investment allowance. But, the assessing officer computed the deduction under section 80HHC of the Act after reducing the unabsorbed business loss, unabsorbed depreciation and unabsorbed investment allowance from the profit of the business. 4. On appeal by the assessee, the Commissioner of Income-tax (Appeals) confirmed the order of the assessing officer. 5. On further appeal by the assessee, the Appellate Tribunal held that the unabsorbed depreciation, unabsorbed business loss and unabsorbed investment allowance of the earlier years cannot be deducted before granting deduction under section 80HHC of the Act, and allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin such further period as the competent authority may allow in this behalf. Explanation.-- For the purposes of this clause, the expression "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange. (b) This section does not apply to the following goods or merchandise, namely:-- (i) mineral oil; and (ii) minerals and ores (other than processed minerals and ores specified in the Twelfth Schedule). Explanation 1.-- The sale proceeds referred to in clause (a) shall be deemed to have been received in India where such sale proceeds are credited to a separate account maintained for the purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India. Explanation 2.-- For the removal of doubts, it is hereby declared that where any goods or merchandise are transferred by an assessee to branch, office, warehouse or any other establishment of the assessee situate outside India and such goods or merchandise are sold from such branch, office, warehouse or establishment, then, such transfer shall be deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ninety per cent. of any sum referred to in clause (iiid) or clause (iiie), as the case may be, of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee : Provided also that in the case of an assessee having export turnover exceeding rupees ten crores during the previous year, the profits computed under clause (a) or clause (b) or clause (c) of this sub-section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent. of any sum referred to in clause (iiid) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee, if the assessee has necessary and sufficient evidence to prove that, - (a) he had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme; and (b) the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Entitlement Pass Book Scheme, being Duty Remission Scheme : Provided also that in the case of an assessee having expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business; (b) in a case where the business carried on by the supporting manufacturer does not consist exclusively of sale of goods or merchandise to one or more Export Houses or Trading Houses, the amount which bears to the profits of the business the same proportion as the turnover in respect of sale to the respective Export House or Trading House bears to the total turnover of the business carried on by the assessee. (4) The deduction under sub-section (1) shall not be admissible unless the assessee furnishes in the prescribed form along with the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section. (4A) The deduction under sub-section (1A) shall not be admissible unless the supporting manufacturer furnishes in the prescribed form along with his return of income,-- (a) the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed on the basis of the profits of the supporting manufacturer in respect of his sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits ; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India ; (c) "Export House Certificate" or "Trading House Certificate" means a valid Export House Certificate or Trading House Certificate, as the case may be, issued by the Chief Controller of Imports and Exports, Government of India; (d) "supporting manufacturer" means a person being an Indian company or a person (other than a company) resident in India, manufacturing (including processing) goods or merchandise and selling such goods or merchandise to an Export House or a Trading House for the purposes of export. 8. It is not in dispute that section 80HHC of the Act, which provides for deduction in respect of profits retained for export business, has been incorporated in the Income-tax Act, 1961, with a view to providing incentive for earning foreign exchange. A plain reading of section 80HHC makes it clear that in arriving at profits earned from export of both s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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