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COMMISSIONER OF INCOME TAX Versus TORRENT LIMITED (FORMERLY KNOWN AS TORRENT EXPORTS LTD.)

2016 (8) TMI 97 - GUJARAT HIGH COURT

Method of computation of deductions under Section 80HHC(3) - ITAT directing AO not to deduct the amount in respect of disclaimer certificate issued by the assessee under the proviso to sub-section (1) of Section 80HHC of the Act and directing the Assessing Officer to allow the assessee’s claim for deduction - Held that:- Cconsidering the decision of the Honble the Supreme Court in the case of Jeyar Consultant and Investment Pvt. Ltd (2015 (4) TMI 195 - SUPREME COURT ), the question, which is rai .....

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ss from the gross profit and the benefit is rightly granted on the basis of net profit. Since the supporting manufacturer has made loss, there is no question of claim being made by assessee. Accordingly, the question is answered against the appellant – revenue and in favour of the assessee. - TAX APPEAL NO. 1985 of 2006 - Dated:- 8-7-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR NITIN K MEHTA, ADVOCATE FOR THE OPPONENT : MR SN SOPARKAR, SENIOR COUNSEL WITH MR BS SOPARKAR, .....

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ght in law and on facts in directing the Assessing Officer not to deduct the amount of ₹ 4.34 crores in respect of disclaimer certificate issued by the assessee under the proviso to sub-section (1) of Section 80HHC of the Act and directing the Assessing Officer to allow the assessee s claim for deduction amounting to ₹ 17,68,39,739/-? 2. The assessee company was a recognized Export House during the accounting year relevant to A.Y. 1996-97 prior to which the assessee used to export on .....

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export turnover. The Assessing Officer disallowed loss of ₹ 3,62,87,480/- suffered by the assessee for the export of soyaben, rice etc which were the goods of supporting manufacturers and restricted issuance of disclaimer certificate u/s 80HHC(4A). On appeal the CIT (Appeals) dismissed the same. 3. On appeal before the Tribunal by the assessee, by impugned judgment and order, Tribunal partly allowing the appeal, upheld the disallowance of loss of ₹ 3.63 crores and directed not to ded .....

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red in passing the impugned order. He submitted that the amount of profit on export turnover passed on to supporting manufacturers had been worked out in accordance with the provision to Section 80HHC(1). Mr. S.N. Soparkar, learned Senior Counsel appearing with Mr. B.S. Soparkar, learned advocate for the assessee submitted that the issue involved in the present Tax Appeal is now not res integra in view of the decision of the Honble Supreme Court in the case of Jeyar Consultant and Investment Pvt .....

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n 80HHC of the Act. If the net result was loss from the export business, then the deduction under the aforesaid Act is not permissible. As a fortiori, if there is net profit from the export business, after adjusting the losses from one type of export business from other type of export business, the benefit of the said provision would be granted. 19) It is also to be borne in mind that in both the aforesaid cases namely IPCA and A.M. Moosa, the Court was concerned with two business activities, bo .....

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the business as a whole i.e. including profits earned from the goods or merchandise within India will also be taken into consideration. In this manner, argues the appellant, even if there are losses in the export business, but profits of indigenous business outweigh those losses and the net result is that there is profit of the business, then the deduction under Section 80HHC should be given. However, having regard to the law laid down in IPCA and A.M. Moosa, we cannot agree with the learned co .....

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ting the "total turnover", one may apply the formula stated in clause (b) of sub-section (3) of Section 80HHC. However, that would not mean that even if there are losses in the export business but the profits in respect of business carried out within India are more than the export losses, benefit under Section 80HHC would still be available. In the present case, since there are losses in the export business, question of providing deduction under Section 80HHC does not arise and as a co .....

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