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TMI Blog1988 (12) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... over after excluding freight and insurance came to Rs. 56,36,617. The assessee claimed deduction of 1 per cent of the turnover of tendu leaves as well as an additional deduction of 5 per cent on the increase of the total export turnover for this year over the total export turnover of last year. The ITO rejected both the claims on the ground that firstly, tendu leaf was an agricultural primary commodity and therefore not eligible for the deduction and secondly, the additional deduction was available only on the increase in the turnover of the same goods and not with reference to export of other goods. On appeal, the CIT (Appeals) accepted the contention of the assessee that tendu leaves are not agricultural primary commodity but rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excepting a few specified items." The Notes on Clauses stated as under : "Clause 24 seeks to Insert a new section 80HHC in the Income-tax Act relating to deduction in respect of export turnover. Sub-section (1) of the now section provides that a taxpayer being an Indian company or a person (other than a company) who is resident in India exports out of India during the previous year any goods or merchandise to which this section applies, will be allowed deduction of an amount equal to five per cent of the amount by which the export turnover of such goods or merchandise during the previous year exceeds the export turnover of the goods or merchandise during the immediately preceding previous year. Sub-section (2) of the new section pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for providing a deduction with reference to the export turnover. The broad features of the new section are as follows : (i) The tax concession will be available to Indian companies and non-corporate taxpayers resident in India who have exported out of India any qualifying goods are merchandise during the relevant accounting year. (ii) The tax concession consists of deductions in the computation of taxable profits, calculated as under : (a) A deduction of an amount equal to one, per cent of the export turnover of the qualifying goods are merchandise during the accounting year ; plus (b) A deduction of an amount,equal to five per cent of amount by which the export turnover of the qualifying goods or merchandise during the previous y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The expression "agricultural primary commodity" has not been defined in the Act. But a reading of this phrase clearly refers to two aspects of the commodity, viz., that it should be agricultural and that it should be primary in the sense that it should not be processed. "Agricultural" denotes that the commodity is the product of agricultural operations on land. It is not in dispute that the assessee has acquired the tendu leaves under a forest contract and had not grown tendu leaves by application of any agricultural operations. The only decision which is of some assistance in deciding this issue is the case of Haji Latif Abdullah CIT [1963] 48 ITR 242 (Cal.) where it was held that the plucking, tendu leaves from the forest cannot be regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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