TMI Blog2019 (9) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... rt turnover exceeds rupees ten crores, in the manner provided by the third proviso. What is conspicuous by their absence is any of the provisos in sub-section (3) insofar as sub-section (3A) is concerned, which makes it clear that the profits derived by a supporting manufacturer shall be strictly in accordance with the provisions contained in Section 80HHC (3A) read with the explanation to the section, which then defines Profits of the business Exporter stands on a completely different footing from the supporting manufacturer as the parameters and scheme for claiming deduction relatable to exporters under 80HHC(1) read with (3) is completely different from that of supporting manufacturers under Section 80HHC (1A) read with (3A) thereof. We, therefore, answer the question referred to us by stating that Baby Marine Exports [ 2007 (3) TMI 206 - SUPREME COURT] deals with an entirely different question and cannot be relied upon to arrive at the conclusion that the supporting manufacturers are to be treated on par with the direct exporter for the purpose of deduction under Section 80HHC of the Act, as has been pointed out by us herein above. Consequently, the decision in SUSHIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee from the export of trading goods, the same proportion as the amount of export turnover specified in the said certificate bears to the total export turnover of the assessee in respect of such trading goods. (1A) Where the assessee, being a supporting manufacturer, has during the previous year, sold goods or merchandise to any Export House or Trading House in respect of which the Export House or Trading House has issued a certificate under the proviso to sub-section (1), 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 to the extent of profits, referred to in sub-section (1B), derived by the assessee from the sale of goods or merchandise to the Export House or Trading House in respect of which the certificate has been issued by the Export House or Trading House. Xxx xxx xxx (3) For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured or processed by the assessee, the profits derived from such export shall be the amount which bears to the profits of the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 the Duty Remission Scheme : 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 (iiie) of section 28, the same proportion as the export turnover bears to the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l turnover; (f) trading goods means goods which are not manufactured or processed by the assessee. (3A) For the purposes of sub-section (1A), profits derived by a supporting manufacturer from the sale of goods or merchandise shall be, - (a) in a case where the business carried on by the supporting manufacturer consists exclusively of sale of goods or merchandise to one or more Export Houses or Trading Houses, the profits of the 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. 3) It will be noticed on an analysis of Section 80HHC(1) that where the assessee has engaged in the business of export out of India of any goods or merchandise to which this section applies, what shall be allowed in computing the total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) We may mention in passing that this matter has been placed before a bench of three judges by the judgment in Commissioner of Income Tax, Karnal (Haryana) vs. Carpet India, Panipat (Haryana) (2018) 6 SCC 620, where this Court analysed the provisions of Section 80HHC (3A) and thereafter adverted to the decision in Baby Marine Exports (supra) as follows:- 15) In Baby Marine Exports (supra), the question of law involved was whether the export house premium received by the assessee is includible in the profits of the business of the assessee while computing the deduction under Section 80HHC of the Income Tax Act, 1961? . The said case mainly dealt with the issue related with the eligibility of export house premium for inclusion in the business profit for the purpose of deduction under Section 80HHC of the IT Act. Whereas in the instant case, the main point of consideration is whether the assessee-firm, being a supporting manufacturer, is to be treated at par with the direct exporter for the purpose of deduction of export incentives under Section 80HHC of the IT Act, after having regards to the peculiar facts of the instant case. 16) While dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of peculiar facts and circumstances of the instant case, supporting manufacturer who receives export incentives in the form of duty draw back (DDB), Duty Entitlement Pass Book (DEPB) etc. is entitled for deduction under Section 80HHC of the Income Tax Act, 1961? 6) We agree with the reasoning and analysis of the referring judgment, namely, that Baby Marine Exports (supra) dealt with an issue related to the eligibility of export house premium for inclusion in business profit for the purpose of deduction under Section 80HHC of the Act. Whereas in the present appeals, the point for consideration is completely different, being as to whether the assessees being supporting manufacturers, are to be treated on par with the direct exporter for the purpose of deduction of export incentives under Section 80HHC of the Act. We, therefore, answer the question referred to us by stating that Baby Marine Exports (supra) deals with an entirely different question and cannot be relied upon to arrive at the conclusion that the supporting manufacturers are to be treated on par with the direct exporter for the purpose of deduction under Section 80HHC of the Act, as has been pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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