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Issues: Interpretation of sub-section (1A) of section 80HHC for claiming deduction by a supporting manufacturer for goods sold to an export house.
Analysis: 1. The appeal involved a dispute regarding the deduction claimed by an assessee-company under section 80HHC for the assessment year 1991-92. The assessee had sold goods to an export house during that year, which were subsequently exported by the export house in the following year. The Assessing Officer disallowed the deduction, stating that the goods were not exported through the export house during the same year. The Ld. CIT(A) upheld the contention of the assessee, emphasizing that the condition for deduction under section 80HHC(1A) is the sale of goods to the export house, regardless of the export timing by the export house. 2. The Departmental Representative argued that the deduction under section 80HHC should be limited to the extent certified by the export house and that the goods must be exported during the relevant accounting year. He contended that the primary condition for the deduction is the export of goods, as mentioned in Form 10CCAB, and that the supporting manufacturer can claim deduction only when the goods are exported by the export house. The Department further argued that if goods remain unsold by the export house, the supporting manufacturer's benefit should be restricted accordingly. 3. The Departmental Representative also presented an illustration suggesting that the supporting manufacturer should be entitled to the deduction based on the actual exports certified by the export house. However, the counsel for the assessee relied on the legislative intent to boost exports and earn foreign currency, emphasizing that the deduction should be allowed in the year of sale itself to encourage export activities. The supporting manufacturer's claim for deduction on goods sold to the export house during the sale year was supported by the Ld. CIT(A) in a similar case. 4. The Tribunal analyzed the provisions of sub-section (1A) of section 80HHC, which allow the supporting manufacturer to claim deduction based on the profits derived from the sale of goods to the export house, as certified by the export house. The Tribunal highlighted that the legislative intent was to promote exports and provide incentives to deserving assessees. It emphasized that denying the deduction based on the timing of export by the export house would lead to unjust results and defeat the purpose of the legislation. 5. The Tribunal rejected the argument that the deduction should be linked to the year of export by the export house, stating that the certificate issued by the export house confirms the ultimate export of goods purchased from the supporting manufacturer. It concluded that the deduction should be allowed in the year of sale to the export house, as intended by the legislation. The Tribunal upheld the order of the Ld. CIT(A) and dismissed the appeal of the revenue, ruling in favor of the assessee regarding the deduction claim under section 80HHC.
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