TMI Blog1997 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... to the tune of Rs. 46,90,353. As per Form No. 10CCAC, the assessee was eligible for deduction under s. 80HHC to the tune of Rs. 1,51,48,405 but the same was restricted to Rs. 46,90,353 because of the availability of gross total income only to these extent of Rs. 46,90,353. The working of deduction under s. 80HHC was carefully perused. The assessee-company has not followed the provisions of s. 80HHC, so far as the method of calculation is concerned correctly. If the provisions of the relevant portion is of s. 80HHC pertaining to mixed exporter are summarised, it will be clear that the deduction has to be calculated as per the following formula: (a) Profit derived from export of goods or merchandise manufactured of processed (b) Profit derived from export of trading goods (c) 90 per cent of export incentives x Export turnover Total turnover Thus, s. 80HHC has given a formula which is required to be followed strictly. If the working is strictly done, it would appear that while the figure (a) comes to (—) Rs. 1,67,3,374 (b) to (—) Rs. 140,53,431, the figure (c) comes to Rs. 1,52,34,291. This is as per Annexure-A to Form No. 10CCAC. In place of these negative figures, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A). It was contended before him that the interpretation of s. 80HHC given by the AO was erroneous. In support of this contention, reliance was placed on the order of the Tribunal Cochin Bench in the case of A.M. Moosa vs. Asstt. CIT (ITA No. 498/Coch/1995 decided on 14th Sept., 1995, reported in (1996) 54 TTJ (Coch) 193 where exactly the opposite point of view which is the same as the view put forward by the assessee is taken. Reliance was placed on the decision of the Supreme Court in the case of CIT vs. J.H. Gotla (1985) 48 CTR (SC) 363 : (1985) 156 ITR 323 (SC) and K.P. Verghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC) wherein it was held that the statutory provisions must be so construed if possible that absurdity and mischief may be avoided. It was also submitted before him that the object of s. 80HHC was to promote exports and hence liberal interpretation needs to be construed in respect of incentive section and in support of this view, the reliance was placed on the following authorities: (1) Bajaj Tempo Ltd. vs. CIT (1992) 104 CTR (SC) 116 : (1992) 196 ITR 188 (SC); (2) CIT vs. U.P. Co-op. Federation Ltd. (1989) 76 CTR (SC) 22 : (1989) 176 ITR 435 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h this case was specifically relied upon before the CIT(A), the CIT(A) simply brushed it aside without giving any cogent reasons as to why the ratio laid down by the Cochin Bench of the Tribunal was not applicable to the facts of the case of the assessee. The learned counsel for the assessee submitted that the CIT(A) is not justified in holding that there is no scope for having two views when the opposite point of view is not only possible but it has in fact been taken by no less a judicial authority than by another Bench of this Tribunal at Cochin. He submitted that the assessee had relied upon well known decision of the Supreme Court in the case of CIT vs. Vegetable Products Ltd. 1973 CTR (SC) 177 : (1973) 88 ITR 192 (SC) wherein it had been laid down that where two views are possible, the one in favour of the assessee should be taken. According to the assessee's counsel, it is in order to get over this decision of the Supreme Court that the CIT(A) has gone to the length of saying that only one view is possible in the face of the existing view of the Tribunal in the case of A.M. Moosa. 6. Ramesh Chander, the learned Departmental Representative strongly supported the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We feel it our bounden duty to liberally construe the provisions of sub-s. (3) and the proviso thereunder of s. 80HHC as the section was enacted to give a fillip to the exporters who earned precious foreign exchange" is the incorrect interpretation of the provisions of s. 80HHC. In support of these contentions, the learned Departmental Representative relied upon the decision of the Tribunal Indore Bench in the case of Prestige Foods Ltd. vs. Dy. CIT (1997) 58 TTJ (Ind) 300. He further relied upon the judgment of the Supreme Court in the case of CIT vs. N.C. Budharaja Co. Anr. (1993) 114 CTR (SC) 420 : (1993) 204 ITR 412 (SC). 7. We have considered the rival submissions and perused the facts on record. The vital issue before us is interpretation of s. 80HHC especially the words "as reduced by" as incorporated in sub-cl. (baa) in the Explanation after sub-s. (4A). Do these words mean any negative figure or at the most not less than "Nil" figure? According to the authorities below the interpretation put is that after taking into account the formula envisaged in s. 80HHC if the deduction comes to a 'negative figure', than this (negative figure' has to be considered as 'neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) 118 : (1994) 208 ITR 649 (SC) as under: "Literal construction may be the general rule in construing taxing enactments, but that does not mean that it should be adopted even if it leads to a discriminatory or incongruous result. When a literal interpretation leads to an absurd or unintended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity." The Hon'ble Supreme Court has further observed in CIT vs. Gwalior Rayon Silk Mills Co. Ltd. (1994) 104 CTR (SC) 243 : (1992) 196 ITR 149 (SC) that it is settled law that the expressions used in a taxing statute would ordinarily be understood in the sense in which it is harmonious with the object of the statute to effectuate the legislative intention and if the language is plain and unambiguous, one can only look fairly at the language used and interpret it to give effect to the legislative intention. Their Lordships have further observed that nevertheless, tax laws have to be interpreted reasonably and in consonance with justice adopting a purposive approach. The contextual meaning has to be ascertained and given effect to". Accordingly, taking a harmonious view w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id decision we also find that the Indore Bench has not differed from the basic decision of the Cochin Bench of the Tribunal in the case of A.M. Moosa. 7.4 The Hon'ble Supreme Court's decision in the case of CIT vs. Harprasad Co. (P) Ltd. and the observations at pp. 124 and 125 on which the CIT(A) has relied upon, have no application to the case before us. That was a case where the question was whether carry forward of capital loss is to be allowed to be carried forward when capital gain was not taxable. Thus, it was a case of real loss unlike this case. The so-called loss here is not to be deducted from any gain or carried forward for a future purpose. The word 'and' between cl. (i) and cl. (ii) is significant if either cl. (i) or cl. (ii) is taken as negative and not as Nil the result will be different from the result which will follow if 3(a) and 3(b) are taken separately although cl. (c) is nothing more than the combination of (a) and (b). In other words, the fact that the person is exporting trading goods would be a handicapped or have negative effect on his export of goods manufactured by him and vice versa. 7.5 In the light of the above discussion, we reverse the find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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