TMI Blog1996 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... on the statute book, apart from the statutory provisions thereof, if necessary. The question is now fully answered in all its perspective by the decision of the Constitution Bench of the apex court in Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120, finally settling the position which unfortunately however, does not appear to have been brought to the notice of the Income-tax Appellate Tribunal when it decided the matter on February 28, 1992. Otherwise the Tribunal would not have been required to despatch the proceedings to this court for a reference to answer the question as has been brought before us by the Revenue. In essence, the question is relating to the deduction in accordance with the provisions of section 80HHC of the Income-tax Act, 1961, and as a result thereof what would be really relevant for the matter of deduction, whether the export turnover or, as held by the Tribunal, that the deduction should be computed without being restricted to the quantum of income derived from export, making computation of export profit for ascertaining the quantum of deduction as not necessary at all. The assessee is an exporter of sea-foods. When the assessment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined the balance income of Rs. 33,103. In the process of reasoning, the Commissioner has observed that the maximum amount admissible as deduction under section 80HHC would be restricted to Rs. 33,103. In accordance with this conclusion, the Income-tax Officer was directed to redetermine the admissible deduction under section 80HHC of the Act, taking into account all the facts and circumstances of the case and on giving due weightage to the assessee's submissions and contentions in regard to the nature of the notional profit under section 41(2) of the Act, and such related matters. Accordingly, the assessment order was modified by the order dated February 27, 1990, under section 143(3) read with section 263 of the Income-tax Act, 1961. The assessee approached the Commissioner of Income-tax (Appeals), Trivandrum, and the first appellate authority by the order dated December 31, 1990, dismissed the appeal confirming the assessment order limiting the question of deduction under section 80HHC referable to the amount of Rs. 33,103 arrived at in the above process. The first appellate authority has emphasised certain aspects in the following manner : "It is not in dispute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch, shows that the Tribunal took the view that section 80AB is not applicable to the facts of the case. Even then the Tribunal has emphasised that the fact that the assessee derived income from export business of marine food products is not in dispute. The Tribunal concentrated on the position according to it that the dispute is in respect of computation under section 80HHC alone and therefore the deduction has to be calculated on the income from export business. The Tribunal has also referred to the new proviso added for the assessment year 1987-88 to the following effect : "Provided that the deduction under this sub-section shall not exceed the profits derived by the assessee from the export of such goods or merchandise." It is on the basis of the above proviso the Tribunal continues with the reasoning that the deduction is computed without being restricted to the quantum of income derived from export as per the law as stood at the relevant time. In other words, the Tribunal relied on the proviso coming on the statute for the assessment year 1987-88 as a situation of its being inapplicable till then. The Tribunal held that section 80AB is not applicable and consequently a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of deduction with reference to the provisions of section 80M(1) of the Act and it has ruled in this connection that the deduction is required to be calculated with reference to the amount of dividend computed in accordance with the provisions of the Act and forming part of the gross total income and not with reference to the full amount of dividend received by the assessee. In this context, the Constitution Bench has particularly observed that section 80AA is merely declaratory of the law and, therefore, retrospective in operation. The Constitution Bench was also more than aware of the ordinary and consistent reluctance to overturn the earlier decision given by a Bench. Reading of the judgments of the Constitution Bench, this awareness is writ large. The apex court has declared that what is included in the gross total income in such a case is a particular quantum of income belonging to the specified category and has in the context of the reasoning emphasised the statutory provisions with particular emphasis on the phrase "such income by way of dividends" to hold that such income must be referable not only to the category of income included in the gross total income, but a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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