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TMI Blog2010 (3) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... AND SHRI MAHAVIR SINGH, JJ. Represented by: Shri Anil kumar for the Appellant. Shri S.N. Soparkar and Ms. Urvashi Shodhan for the Respondent. ORDER Shri N.S. Saini,- This is an appeal filed by the Revenue against the order of the learned Commissioner of Income-tax (Appeals)-XI, Ahmedabad, dated March 19, 2004. 2. The grounds of the appeal of the Revenue read as under : "1. The learned Commissioner of Income tax (Appeals)-XI Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow deduction under section 80HHC of Rs. 1,81,50,397 instead of Rs. 1,34,51,904 computed and allowed. 2. The learned Commissioner of Income-tax (Appeals)-XI, Ahmedabad has further erred in law and on facts in not appreciating that computing profit from export trading is different from allowing the deduction under section 80HHC to the extent of actual realisation of export sale proceeds. 3. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals)-XI, Ahmedabad ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the learned Commissioner of Income-tax (Appeals) may be set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or computation of the same instead of Rs. 80,83,698 deducted in the profit and loss account. In this regard the appellant filed its submissions vide its letter dated March 4, 2002 which was reproduced by the Assessing Officer in the assessment order. The contention of the appellant was not considered by the Assessing Officer to be satisfactory. Therefore, after discussing the issue at length in the assessment order, the Assessing Officer worked out the admissible deduction under section 80HHC and allowed the same at Rs. 1,34,51,904 as against Rs. 1,83,46,196 computed by the appellant and thereby disallowed excess deduction under section 80HHC of Rs. 48,94,291. Aggrieved by the said order, the appellant is in appeal before the undersigned. 3.1 During the course of appellate proceedings, the authorised representative for the appellant filed written submissions. It was submitted by the authorised representative that the Assessing Officer has wrongly computed the deduction under section 80HHC at Rs. 1,34,51,904 as against Rs. 1,83,46,195 computed by the appellant and added alleged excess deduction under section 80HHC of Rs. 48,94,291. It was submitted by the authorised representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort turnover should be considered at the time of calculation of deduction under section 80HHC. It was submitted by the authorised representative that in the instant case, as per section 80HHC(1), 80HHC(2)(a) and 80HHC(3) the appellant has rightly calculated the deduction on the export turnover on which the section applies. It was submitted by the authorised representative that the disallowance of the appellant's claim of deduction under section 80HHC made by the Assessing Officer was not correct on the facts and also in law as the disallowance was not in the purview of this section. In view of the above facts, it was claimed that considering the factual position of the case, the deduction under section 80HHC as claimed by the appellant should be allowed in full. 3.2 I have considered the facts of the case and submissions of the authorised representative of the appellant carefully. I have also gone through the decisions relied upon by the authorised representative and the observations of the Assessing Officer in the assessment order. I have also perused the case records of the appellant. There is no dispute on the issue that out of the total exports of Rs. 6,01,49,288 the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80HHC at Rs. 1,81,50,397 (as against the appellant's claim of Rs. 1,83,46,195) against which the appellant had filed appeal before the Commissioner of Income-tax (Appeals). In the order giving effect to the Commissioner of Income-tax (Appeals)'s order dated April 19, 1999 (the Assessing Officer's order dated May 26, 2000) the Assessing Officer has allowed deduction under section 80HHC at Rs. 1,81,50,397. After having carefully considered the report of the auditors in Form No. 10CCAC, original assessment order under section 143(3) and subsequent orders of the Commissioner of Income-tax (Appeals) and order giving effect to the Commissioner of Income-tax (Appeals)'s order, I find that the deduction under section 80HHC was rightly allowed by the then Assessing Officer at Rs. 1,81,50,397 in the original assessment order and in the order giving effect to the Commissioner of Income-tax (Appeals)'s order ; and the Assessing Officer's subsequent action of restricting the deduction under section 80HHC to Rs. 1,34,51,904 is uncalled for and not in accordance with the provisions of law. The Assessing Officer is directed to allow the deduction under section 80HHC at Rs. 1,81,50,397 as computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 32,21,098 which are attributable to the export and regarding which the foreign exchange has been released. In place of this figure of Rs. 32,21,098 the Assessing Officer has taken full amount of Rs. 80,83,698. The Assessing Officer's action does not seems to be justified. According to clause (b) of section 80HHC(3), '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 cost and indirect costs attributable to such export'. Since in the instant case the figure of export sales is being taken at Rs. 3,18,68,248 the direct cost and the indirect cost will be taken with regard to these exports only. The words used in clause (b) of section 80HHC(3) are 'the direct cost and indirect costs to such export'. This means the direct and indirect costs are to be taken with regard to the export sales which are eligible for deduction under section 80HHC. Use of words 'such export' makes it very clear. From the perusal of case records, it is found that the then Assessing Officer, while passing original assessment order under section 143(3) dated March 23, 1999 had after con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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