Section 28 - Amendment of section 80HHC - Finance (No. 2) Act, 1991

28. Amendment of section 80HHC In section 80HHC of the Income-tax Act,- (a) in sub-section (2),- (i) in clause (b), in sub-clause (ii), after the words minerals and ores , the brackets and words (other than processed minerals and ores specified in the Twelfth Schedule) shall be inserted; (ii) the following Explanations shall be inserted at the end, with effect from the 1st day of April, 1992, namely:- Explanation 1.-The sale proceeds referred to in clause (a) shall be deemed to have been received in India where such sale proceeds are credited to a separate account maintained for the purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India. Explanation 2.-For the removal of doubts, it is hereby declared that where any goods or merchandise are transferred by an assessee to a branch, office, warehouse or any other establishment of the assessee situate outside India and such goods or merchandise are sold from such branch, office, warehouse or establishment, then, such transfer shall be deemed to be export out of India of such goods and merchandise and the value of such goods or merchandise declared in the shipping bill or bill of export as referred to in sub-section (1) of section 50 of the Customs Act, 1962 (52 of 1962), shall, for the purposes of this section, be deemed to be the sale proceeds thereof. ; (b) for sub-section (3), the following sub-section shall be substituted with effect from the 1st day of April, 1992, namely- (3) For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured by the assessee, the profits derived from such export shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; (b) where the export out of India is of trading goods, the profits derived from such export shall be the export turnover in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export; (c) where the export out of India is of goods or merchandise manufactured by the assessee and of trading goods. the profits derived from such export shall,- (i) in respect of the goods or merchandise manufactured by the assessee, be the amount which bears to the adjusted profits of the business, the same proportion as the adjusted export turnover in respect of such goods bears to the adjusted total turnover of the business carried on by the assessee; and (ii) in respect of trading goods, be the export turnover in respect of such trading goods as reduced by the direct and indirect costs attributable to export of such trading goods: Provided that the profits computed under clause (a) or clause (b) or clause (c) of this sub-section shall be further increased by the amount which bears to ninety per cent. of any sum referred to in clause (iiia) (not being profits on sale of a licence acquired from any other person). and clauses (iiib) and (iiic) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. Explanation. For the purposes of this sub-section. (a) adjusted export turnover means the export turnover as reduced by the export turnover in respect of trading goods; (b) adjusted profits of the business means the profits of the business as reduced by the profits derived from the business of export out of India of trading goods as computed in the manner provided in clause (b) of sub-section (3); (c) adjusted total turnover means the total turnover of the business as reduced by the export turnover in respect of trading goods; (d) direct costs means costs directly attributable to the trading goods exported out of India including the purchase price of such goods; (e) indirect costs means costs, not being direct costs, allocated in the ratio of the export turnover in respect of trading goods to the total turnover; (f) trading goods means goods which are not manufactured by the assessee. ; (c) in sub-section (3A), with effect from the 1st day of April, 1992,- (i) in clause (a), the words as computed under the head Profits and gains of business or profession shall be omitted; (ii) in clause (b), the brackets and words (as computed under the head Profits and gains of business or profession ) shall be omitted; (d) in sub-section (4), for the words on the basis of the amount of export turnover , the words in accordance with the provisions of this section shall be substituted, with effect from the 1st day of April, 1992; (e) in the Explanation, (i) after clause (a), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1986, namely: (aa) export out of India shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situate in India, not involving clearance at any customs station as defined in the Customs Act, 1962 (52 of 1962); ; (ii) (1) after clause (b), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1987, namely:- (ba) total turnover shall not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as detined in the Customs Act, 1962 (52 of 1962): Provided that in relation to any assessment year commencing on or after the 1st day of April, 1991, the expression total turnover shall have effect as if it also excluded any referred to in clauses (ilia), (iiib) and (iii) of section 28; ; (2) after clause (be) as so inserted, the following clause shall be inserted, with effect from the 1st day of April, 1992, namely:- (baa) profits of the business means the profits of the business as computed under the head Profits and gains of business or profession as reduced by- (1) ninety per cent. of any gum referred to in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India; ; (iii) clause (bb) shall be omitted.