TMI Blog2003 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 9-7-2003 - Judge(s) : G. SIVARAJAN., KURIAN JOSEPH. JUDGMENT The Income-tax Appellate Tribunal, Cochin Bench, has referred the following two questions of law under section 256(1) of the Income-tax Act, 1961 (for short "the Act"), for decision by this court at the instance of the assessee: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the lower authorities restricting the claim under section 80HHC of the Income-tax Act 1961, to a sum of Rs. 13,54,636? 2. Whether there were materials for the Tribunal to hold that the computation under section 80HHC(3)(b) was relevant and not section 80HHC(3)(a) in the applicant's case?" The brief facts necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation only to a case where the assessee is engaged in the export of pepper and also in local sale of pepper. According to counsel in a case where the assessee is having local sales of rubber and coconut also the turnover of the same cannot be taken into account for the purpose of computation of the profits of the export business under section 80HHC of the Act. In other words, the profits in the export business has to be worked out only in accordance with the provisions of section 80HHC(3)(a) of the Act. Counsel also relied on the decision of the Madras High Court in CIT v. Madras Motors Ltd./M.M. Forgings Ltd. [2002] 257 ITR 60. Counsel also submitted that the decision of this court in CIT v. Parry Agro Industries Ltd. [2002] 257 ITR 41 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction equal to the aggregate of four per cent of the net foreign exchange realisation and 50 per cent of so much of the profits derived by the assessee from the export of such goods or merchandise as exceeds the amount referred to in clause (a). It further provides some other conditions also with which we are not concerned. There is no difficulty in finding out 4 per cent of the net foreign exchange realisation. The only problem in the present case is to find out 50 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of India shall be worked out in accordance with the provisions of clause (b). There is no doubt that in a case where the assessee is engaged in the business of export of goods or merchandise as well as in the business of local sale of the very same goods, clause (b) of sub-section (3) will apply. The only dispute is that if the assessee is also engaged in the business of local sale of other goods (goods other than the goods exported) whether clause (b) of sub-section (3) is attracted to rope in the sale proceeds of local sale of other goods also in the "total turnover" for the computation of the profits contemplated under clause (b) of sub-section (1) of section 80HHC of the Act. True, the decision of the Madras High Court in Madras Mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the scope of clauses (a) and (b) of sub-section (3) of section 80HHC: "What section 80HHC provides is that in a case where the assessee is engaged wholly in the business of export out of India of any goods, the deduction granted should be in accordance with section 80HHC(1). The stress under sub-section (1) is that it is attracted only if the profits are derived by the assessee exclusively from exports and not by indulging in any domestic trade. As such sub-section (1) is confined to and specifically relates to export trade. Sub-section (3) thereof indicates the manner of computation of the profits derived from the export of goods out of India where the assessee indulges in domestic trade as well. Clause (a) may not be applied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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