9911796707
TMI Blog2003 (3) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to deduction under section 80HHC of the Income-tax Act? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the business income of the assessee as computed by the Assessing Officer in a sum of Rs. 96,49,307 which entered the total income of the assessee amounting to Rs. 1,04,40,020 should be deemed to include the income by way of exports in an extent of a sum computed in accordance with clause (b) of sub-section (3) of section 80HHC?" The brief facts necessary for decision of this case are as follows: The respondent-assessee is a company in which the public are substantially interested. It has income from growing and manufacturing of tea besides trading activities. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the Revenue is that in the computation of profits derived from business as profit under clause (b) of section 80HHC(3), the loss suffered has to be deducted. He, in support of the above, has relied on the decisions of the Supreme Court in CIT v. Harprasad and Co. P. Ltd. [1975] 99 ITR 118 and in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84. Thus, senior counsel submits that the profits derived from the business contemplated under section 80HHC(3) has to be computed in accordance with the provisions of the Act, and in such a case, the loss suffered from the business has necessarily to be deducted in arriving at the profits derived from the export business. On the other hand, the contention of learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee, being an Indian company or a person (other than a company) resident 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 - (a) four per cent. of the net foreign exchange realisation ; and (b) fifty 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): Provided that the deduction under this sub-section shall not exceed the profits derived by the assessee from the export of such goods or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in computing the total income of the assessee a deduction equal to the aggregate of - (a) 4 per cent. of the net foreign exchange realisation ; and (b) 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). The proviso states that the deduction under this sub-section shall not exceed the profits derived by the assessee from the export of such goods or merchandise. At present, we are not concerned with the applicability of the said proviso. Sub-section (3) provides that for the purpose of sub-section (1), profits derived from the export of goods or merchandise out of India shall be, in a case where the business carried on by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being determined by a fiction, that is by applying the formula. That formula as we have already noted is, profits of the business x export turnover divided by total turnover. In other words, what is required is that there must be profit in the business of the assessee. If there is profit in the business of the assessee, then the profits of the export turnover for the purpose of clause (b) of subsection (1) have to be arrived at by applying the formula. In the present case, admittedly, there is profit in the business, which was determined by the assessee at Rs. 96,49,307. Therefore, what is required to be done as provided under clause (b) of sub-section (3) is to find out the figure by applying the formula, that is, Rs. 96,49,307 x 7,24,00,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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