2002 (1) TMI 263 - AT - Income Tax

Summary

Issues:
- Interpretation of Section 80HHC for deduction eligibility based on profits derived by a supporting manufacturer from sales to an export house.
- Determining the turnover in respect of sales to the export house for the purpose of calculating the deduction under Section 80HHC.

Analysis:
1. The appeal by the Revenue was against the CIT(A)'s order regarding the deduction under Section 80HHC for a supporting manufacturer who sold goods to an export house.
2. The assessee claimed deduction based on the profit from the sale value to the export house, but the AO disagreed and calculated the deduction based on the turnover realized by the export house.
3. The CIT(A) allowed the appeal, directing the deduction calculation based on sales to the export house, citing CBDT Circular No. 528 and Section 80HHC provisions.
4. Despite the absence of the assessee during the appeal process, the Tribunal decided to proceed and hear the Departmental Representative.
5. The Departmental Representative argued that Section 80HHC aims to allow deduction only on profits contributing to foreign exchange, urging to set aside the CIT(A)'s order.
6. The Tribunal analyzed Section 80HHC(3A) regarding profits eligible for deduction by a supporting manufacturer, emphasizing the turnover in respect of sales to the export house.
7. The Tribunal highlighted that the legislature did not restrict the meaning of "turnover in respect of sale to the export house" to profits brought into India, dismissing the Departmental Representative's argument for a restricted interpretation.
8. Due to the lack of a restrictive definition in Section 80HHC, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to calculate the deduction based on sales to the export house.

This judgment clarifies the interpretation of Section 80HHC for supporting manufacturers selling to export houses, emphasizing the turnover in respect of sales to determine deduction eligibility. The Tribunal's analysis underscores the legislative intent and rejects a restrictive approach, ultimately upholding the CIT(A)'s decision and dismissing the Revenue's appeal.