2000 (8) TMI 242 - AT - Income Tax

Summary

Issues:
Interpretation of deduction under section 80HHC for export operations resulting in a loss.

Analysis:
The appeal was filed against the order of the CIT(A) regarding the deduction under section 80HHC. The assessee claimed Rs. 3,94,62,341, but the CIT(A) upheld the figure at Rs. 1,98,62,147. The dispute arose from whether the loss from export operations should be adjusted with 10% of the export incentive for the deduction. The Assessing Officer contended that profit includes loss, while the assessee argued otherwise.

The assessee's contention was that section 80HHC(3) did not explicitly state that profit includes loss. They argued that the computation of profit under 'profit and gains of business or profession' and deduction under section 80HHC were distinct. The CIT(A) disagreed, stating that profit includes loss as per the Income-tax Act. The CIT(A) confirmed the Assessing Officer's order based on this interpretation.

In the appeal, the assessee maintained that since there was no provision for loss in section 80HHC(3), the profit should be considered nil in case of losses. They cited relevant case laws to support their argument. The Departmental Representative (D.R.) supported the Assessing Officer's method, asserting that the cases cited by the assessee were not applicable to the current scenario.

The tribunal analyzed the case laws cited by the assessee and distinguished them from the present case. It noted that the profit computed under section 80HHC(3) was negative, and the adjustment made by the Assessing Officer was in line with the proviso to the section. The tribunal upheld the decisions of the lower authorities, concluding that no interference was necessary in the CIT(A)'s order. Consequently, the appeal was dismissed, affirming the deduction amount determined by the CIT(A).

This detailed analysis highlights the core issue of interpreting the deduction under section 80HHC concerning losses from export operations and the tribunal's decision based on the provisions of the Income-tax Act and relevant case laws.