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Issues:
Computation of deduction under section 80HHC of the I.T. Act based on premium received on surrender of import licenses. Analysis: The judgment involved cross-appeals regarding the assessment year 1994-95 by a partnership firm engaged in the diamond trade. The primary dispute revolved around whether the premium received on surrender of import licenses, both owned and purchased, should be included in the "total turnover" for calculating the deduction under section 80HHC of the I.T. Act. The assessee argued that the premium received was a cash incentive for exports under section 28(iiib) and should be excluded from the total turnover. The Assessing Officer disagreed, stating that the premium compensated for disadvantages due to currency fluctuations and should be considered part of the turnover. The CIT(A) partially upheld the assessee's claim, excluding premium from own licenses but including it from market licenses in the turnover calculation. The Tribunal referred to a previous judgment by the Bombay High Court in a similar case, where it was held that such premiums were incentives and should be excluded from the total turnover. Following this precedent, the Tribunal ruled in favor of the assessee, excluding premiums from both own and market licenses from the turnover calculation. The Tribunal concluded that the premiums received on surrender of import licenses, whether own or purchased, were to be treated as incentives under section 28(iiib) and hence should be excluded from the total turnover for computing the deduction under section 80HHC. No other arguments were presented, leading to the allowance of the assessee's appeal and the dismissal of the Department's appeal.
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