2009 (5) TMI 574 - HC - Income Tax

Deduction for export profit under section 80HHC - Section 80-IB(13) read with section 80-IA(9) of the Act - Held that - the assessee will not be entitled to claim deductions both under section 80-IB and under section 80HHC of the Act Computing the Deduction under section 80HHC deduction granted under section 80-IB cannot be reckoned or has to be excluded - Appeal on this issue is rejected . Supporting manufacturer - Held that - in view of the decision of the Supreme Court in Janatha Cashew Exporting Co. v. CIT (2007 -TMI - 32545 - SUPREME COURT), the assessee is entitled to deduction of export profit arising from export of goods made through export houses the assessee acting as supporting manufacturer - Assessment on this does not warrant any modification - The assessee s claim for determination of deduction before excluding carry forward or set off loss is concerned - Appeal is partly disposed in favour of assessee.

Issues:
1. Computation of deduction for export profit under section 80HHC of the Income-tax Act, 1961.
2. Entitlement to deductions under sections 80-IB and 80HHC of the Act simultaneously.
3. Reconsideration of relief under section 80HHC based on the Supreme Court's decision in Janatha Cashew Exporting Co. v. CIT.
4. Claim for determination of deduction before excluding carry forward or set off loss based on the Supreme Court's decision in CIT v. Shirke Construction Equipment Ltd.

Analysis:
1. The judgment addressed the issue of computation of deduction for export profit under section 80HHC of the Income-tax Act, 1961. The appellant, having an industry in a backward area, was entitled to deduction under section 80-IB of the Act. However, it was noted that under section 80-IB(13) read with section 80-IA(9), the appellant could not claim deductions simultaneously under both sections 80-IB and 80HHC. The Tribunal disallowed the deduction under section 80-IB(13) but granted it under section 80HHC. The court held that the appellant was not entitled to claim deductions under both sections simultaneously, as section 80-IB(13) specifically excluded such concurrent deductions. Therefore, the appeal on this issue was rejected.

2. The judgment also considered the entitlement to deductions under sections 80-IB and 80HHC of the Act simultaneously. It was clarified that while computing the deduction under section 80HHC, the deduction granted under section 80-IB had to be excluded due to the specific exclusion under section 80-IB(13) of the Act. The court found the Tribunal's decision consistent with statutory provisions, leading to the rejection of the appeal on this issue.

3. Regarding the reconsideration of relief under section 80HHC, the court referred to the Supreme Court's decision in Janatha Cashew Exporting Co. v. CIT. The appellant was deemed entitled to deduction of export profit under certain conditions, such as the availability of a disclaimer certificate issued by export houses. The court directed the appellant to produce the disclaimer certificate in the revised assessment proceedings for the officer's consideration. The judgment partially allowed the claim and instructed the Assessing Officer to rework the relief under section 80HHC in line with the Supreme Court's decision.

4. The judgment also addressed the appellant's claim for the determination of deduction before excluding carry forward or set off loss, citing the Supreme Court's decision in CIT v. Shirke Construction Equipment Ltd. The court found that the assessment did not warrant any modification based on the proposition advocated by the appellant. The appeal was disposed of partly, allowing the claim and directing the Assessing Officer to reevaluate the relief under section 80HHC after providing the appellant with an opportunity for a hearing.

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