TMI Blog2006 (7) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover in Explanation (ba) below section 80HHC(4B), as distinct from the definition of export turnover in Explanation (b), does not provide for such exclusion and in the mercantile system of accounting followed by the assessee turnover depends on sale and not on the realization of sale proceeds. (2) On the facts and circumstances of the case and in law, learned CIT(A) erred in directing the Assessing Officer to exclude direct costs pertaining to the export of the goods whose export proceeds were not realized, from the direct cost attributable to export of trading goods in the computation of deduction under section 80HHC, without appreciating the fact that the definition of direct costs in Explanation (d) below section 80HHC(3) referrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer at Rs. 3,61,488 as against Rs. 8,58,453 claimed by the assessee. On appeal, learned CIT(A) accepted the contention of the assessee that since only trading export, of which sale proceeds is realized, is considered for the purpose of calculating deduction under section 80HHC with regard to profit from trading export, direct cost and indirect cost should be considered with regard to realized trading export only; and, hence, deduction allowable to the assessee with regard to trading export should be as claimed by the assessee. Regarding calculation of deduction under section 80HHC for export of self-manufactured goods, the Assessing Officer took into account the self-manufactured export turnover at Rs. 33,82,083 i.e., realized export t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, the sale proceeds received in or brought into India by the assessee in convertible foreign exchange and, hence, only the realized trading export turnover has to be reduced from total turnover to arrive at adjusted total turnover. It was submitted that the order of learned CIT(A) on both accounts should be reversed and that of the Assessing Officer should be restored. 4. As against this, learned AR of the assessee supported the order of learned CIT(A). 5. We have considered the rival submissions and perused the materials on record. We find that Explanation (c) to section 80HHC(3) defines adjusted total turnover which reads as under :- "'Adjusted total turnover' means total turnover of the business as reduced by the export turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered and hence, we are of the considered opinion that the Assessing Officer has correctly calculated the adjusted total turnover by reducing the realized trading export turnover of Rs. 57,71,508 from total turnover of Rs. 99,49,072 and in view of this, Ground No.1 of the revenue is allowed and order of learned CIT(A) on this aspect is reversed and that of the Assessing Officer is restored. Before parting, we want to point out that if contention of the assessee is accepted and both realized and unrealized trading export turnover is reduced from total turnover, the assessee will get extra deduction because profit on account of unrealized trading export turnover stands included in adjusted profit of business because only profit on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utable to such export i.e., trading export turnover. Since as per definition of 'export turnover' as per Explanation (b) to section 80HHC(4C), the export turnover means, sale proceeds received in or brought into India by the assessee in convertible foreign exchange, export turnover of trading goods for the purpose of above clause (b) of Explanation to section 80HHC(3) should also be realized trading export turnover and direct cost to be considered should be direct costs attributable to such export i.e., realized trading export turnover and in this view of the matter, we have no hesitation in holding that the Assessing Officer was not correct in deducting the direct cost of unrealized trading export also from trading export turnover for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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