2007 (11) TMI 282 - SC - Income Tax

Benefit of the proviso to Section 80 HHC (3) there is no factual finding recorded by the High Court as to whether the sales made through the export houses by the assessee is supported by a disclaimer certificate from such export houses - if the assessee is a supporting manufacturer on his producing such disclaimer certificate the assessee would be entitled to claim the benefit - fresh computation is now required to be done - matter is remitted for fresh computation by the Assessing Officer

Summary

Issues:
Interpretation of Section 80 HHC (3) of the Income Tax Act 1961 for assessment year 1992-93.

Analysis:
In this civil appeal, the main issue was whether the assessee was entitled to the benefit of the proviso to Section 80 HHC (3) of the Income Tax Act 1961 for the assessment year 1992-93. The assessee, a cashew exporter, had claimed deductions under Section 80 HHC (1) and Section 80 HHC (1A) for direct and indirect exports totaling Rs.97,54,515/-. The Assessing Officer granted deductions under these sections but excluded sales to export houses from export turnover while granting deduction under the proviso to Section 80 HHC (3), resulting in a re-worked relief of Rs.12,63,532/-.

The matter was taken up before the Commissioner of Income Tax (Appeals) by the assessee, who upheld the Assessing Officer's order, stating that export turnover included only direct exports as per Section 80 HHC (3). The Tribunal, however, referred to a previous case and directed the Assessing Officer to recompute the income and allow benefits if a disclaimer certificate was issued by the export house. The High Court overturned the Tribunal's decision, ruling that the assessee was not entitled to benefits for indirect exports through export houses as Section 80 HHC (3) only applied to direct exports.

The Supreme Court, in its judgment, noted the absence of a factual finding on whether sales through export houses were supported by a disclaimer certificate and highlighted the need for fresh computation based on recent judgments. The Court referred to judgments in other cases and remitted the matter to the Assessing Officer for fresh computation in line with the new legal interpretations. Consequently, the impugned judgment was set aside, and the appeal was allowed with no order as to costs.