TMI Blog1997 (8) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... port business under the name of M/s Clit Exports. The assessee declared profit of Rs. 3,98,288 of M/s Clit Exports on total export sales of Rs. 18,86,933 and the same was claimed as a deduction under s. 80HHC. The AO noted that the local sales of silver ornaments during the year was of Rs. 87,45,527 apart from labour charges received at Rs. 4,30,901 and as against that the export sales were only of Rs. 18,86,933. He also noted that export sales also included sales of Rs. 44,150 made to Maharshi Ayurved Product, Gaziabad. The assessee claimed deduction under s. 80HHC in respect of the profit on these sales treating the same as deemed export. According to the AO, no foreign exchange was received against such sale and as such deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness which consists exclusively of the export of goods out of India, and for this business separate accounts are kept, the profits from this business have to be held to be eligible for deduction under s. 80HHC. On the other hand the AO has taken a view that the case of the appellant will fall within cl. (b) of sub-s. 80HHC because the business carried on by the appellant does not consist exclusively of the export business only. I have carefully considered the submissions made by the appellant. Sub-s. (3) of s. 80HHC reads as under: '(3) For the purposes of sub-s. (1), profits derived from the export of goods or merchandise out of India, shall be— (a) In case where the business carried on by the assessee consists exclusively of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or has only one line of business, the provisions of sub-cl. (b) will apply if the entire business is not exclusively for exports out of India. Therefore, the computation of deduction made under s. 80HHC by the AO appears to be correct. It may also be mentioned here that if the intention of the legislature was that in those cases, where separate accounts are being maintained for export business, profits from that business should be taken to be as shown in those accounts, it would have provided so. The way the provisions has been worded clearly shows that when the business of the appellant consists of export business as well as other business, the rule of proportionality has to be applied to work out export profits, even though such profit ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of pharmaceutical machinery as one business, whereas both the units are separate and the income for which benefit under s. 80HHC is claimed was exclusively earned from export business from pharmaceutical machinery having no connection with the business of manufacture and sale of silver ornaments. He also pointed out that books of accounts of both the business were also maintained separately and accounts were prepared accordingly. The learned counsel has, therefore, submitted that the claim made is valid and the same deserves to be allowed fully. 6. We have considered the facts and rival submissions. Admittedly the assessee carried out from different premises and they had no inter-connection, inter-lacing and inter-dependence. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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