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Interpretation of section 80HHC for deduction calculation. Analysis: The case involved appeals by the Revenue regarding the interpretation of section 80HHC for calculating deductions. The assessee, a partnership firm, engaged in both transportation and export activities, claimed deductions under section 80HHC by considering total receipts from both activities as total turnover. The Assessing Officer disagreed, restricting the calculations to profits and turnover related only to the export business. The ld. CIT(A) upheld the assessee's approach, citing a CBDT circular, which stated that the deduction should be based on the proportion of export turnover to total turnover of the business. The Revenue argued that certain receipts, like service charges from transportation, should not be included in export profits. The ld. AR emphasized the self-contained computation method of section 80HHC, supporting the CIT(A)'s decision. The Revenue relied on decisions by the Jurisdictional High Court, emphasizing the exclusion of certain receipts not directly linked to export activities from export profits. The ld. AR countered with the CBDT circular, asserting that the export profit calculation method should follow the circular's guidelines, which align with section 80HHC. The AR argued that the export profit calculation should start with overall business profits, considering export turnover and total turnover proportionately, not limited to trading activities. The Tribunal noted the need for a direct nexus between profits and export activities, as per the CBDT circular and upheld the Revenue's appeals, setting aside the CIT(A)'s orders. The Tribunal clarified that the export profit calculation, based on export turnover to total turnover proportion, is a simplified method for implementation and not strictly profits derived from exports. The Tribunal found no conflict between the CBDT circular and the High Court's interpretation of section 80HHC. Additionally, the Tribunal addressed the treatment of income from the sale of gunny bags as part of export profit for the relevant assessment year. Consequently, the Tribunal allowed the Revenue's appeals, overturning the CIT(A)'s decisions and restoring the Assessing Officer's orders.
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