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Calculation of export profit rebate entitlement based on Income-tax (Determination of Export Profits) Rules, 1962. Analysis: The case involved a question referred by the Income-tax Appellate Tribunal regarding the entitlement of the assessee to the export profit rebate. The key issue was whether the assessee was entitled to the export profit rebate on a sum of Rs. 2,01,107 or the sum of Rs. 96,690 only under rule 2(3) of the Income-tax (Determination of Export Profits) Rules, 1962. The assessee was engaged in timber, cashewnuts, and coffee seeds businesses, with a significant profit in timber and a loss in cashew business. The Tribunal's view was that the total income in rule 2(3) should only refer to income from the timber business, but the High Court disagreed. The interpretation of the term "total income" was crucial in determining the qualifying income for the export profit rebate. The High Court referred to the definitions in section 2(7) of the Act and section 2(45) of the Income-tax Act, 1961, to clarify that total income should be computed as per the provisions of the Income-tax Act, including deductions and set-offs. The Court emphasized that the total income must encompass the entirety of the assessee's business activities, not just a specific portion. The High Court rejected the Tribunal's view that the qualifying income should be Rs. 2,01,107 and held that it should be Rs. 96,690. The Court emphasized that the qualifying income must be determined based on the total income as computed under the Income-tax Act. Therefore, the deduction permissible under section 2(5) of the Act should be calculated on the sum of Rs. 96,690, as determined by sub-rule (1) of rule 2 of the Income-tax (Determination of Export Profits) Rules, 1962. In conclusion, the High Court answered the question by stating that the export profit rebate entitlement should be calculated based on the qualifying income of Rs. 96,690. The judgment directed the parties to bear their respective costs and mandated the submission of a copy of the judgment to the Appellate Tribunal as per the requirements of the Indian Income-tax Act, 1961.
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