9911796707
TMI Blog2011 (9) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... . Against the orders passed by the Assessing Officer, the assessee filed appeals before the Commissioner of Income Tax, who, by four separate orders dated 19.7.2000, allowed the appeal in part by holding that job receipts included would very much form part of the total turnover, however, directed the Assessing Officer not to exclude the value of job receipts of the Cigarette Division from the total turnover and to recompute the relief under Section 80HHC. So far as the other issues are concerned, the appellate authority confirmed the Assessment Order of the Assessing Officer. Against the aforesaid orders, so far as the portion relating to exclude the value of job receipts of the Cigarette Division, the Revenue preferred I.T.A.Nos.1576 and 1577 (Mds)/2000 and the Assessee preferred I.T.A.Nos.1580 to 1583 (Mds)/2000 before the Income Tax Appellate Tribunal (in short "the Tribunal"), which, by a common order dated 30.11.2005, dismissed the appeals preferred by the Revenue holding that when the job receipt is linked to the operational activity of the assessee, Explanation (baa) to Section 80HHC would not be applicable. So far as the appeals preferred by the assessees are concerned, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volve income by way of interest, rent, commission etc., the Legislature has provided a simple procedure under which 90 per cent of the receipts such as interest, rent, commission, brokerage, etc., shall be excluded as profits not attributable to exports. The intention is, therefore, clear that there should be no attempt to deduct any expenditure from the receipts, however, related, such expenditure may be to the receipts. It is in this view of the matter that the expression "receipt by way of" has been used in the section and not "income" of that nature. 11. In view of the above, we are of the view that 90 per cent of the interest that is deductible for the claim under section 80HHC of the Act is from the gross interest received by the assessee and that the amount of interest paid by the assessee should not be deducted therefrom and, hence, we answer the above question in favour of the Revenue and against the assessee and allow the tax case filed by the Revenue." 5. In view of the aforesaid decision, the substantial question of law raised in respect of net interest is answered against the assessee. 6. The only question left to be decided is whether the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of cigarette. In order to find out whether the assessee is entitled to claim deduction, one has to go through the relevant provision. The relevant provision of Section 88HHC is to the following effect :- "80-HHC. Deduction in respect of profits retained for export business. (1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction to the extent of profits, referred to in sub-section (1-B) derived by the assessee from the export of such goods or merchandise: Provided that if the assessee, being a holder of an Export House Certificate or a Trading House Certificate (hereafter in this section referred to as an export house or a trading house, as the case may be,) issues a certificate referred to in clause (b) of sub-section (4-A), that in respect of the amount of the export turnover specified therein, the deduction under this sub-section is to be allowed to a supporti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided 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 (iii-a) (not being profit on sale of a licence acquired from any other person), and clauses (iii-b) and (iii-c) of Section 28, the same proportion as the export turnover bears to the total turnover of business carried on by the assessee. (a) to (e) . . . . (f) trading goods means goods which are not manufactured or processed by the assessee. (3-A) For the purposes of sub-section (1-A), profits derived by a supporting manufacturer from the sale of goods or merchandise shall be, (a) in a case where the business carried on by the supporting manufacturer consists exclusively of sale of goods or merchandise to one or more export houses or trading houses, the profits of the business; (b) in a case where the business carried on by the supporting manufacturer does not consist exclusively of sale of goods or merchandise to one or more export houses or trading houses, the amount which bears to the profits of the business the same proportion as the turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods, cannot be ignored and it has to be taken into consideration while computing the profit for the purpose of deduction under Section 80HHC. The Apex Court has further proceeded to observe as follows :- "12. . . . Undoubtedly, Section 80-HHC has been incorporated with a view to providing incentive to export houses. Even though a liberal interpretation has to be given to such a provision, the interpretation has to be as per the wordings of this section. If the wordings of the section are clear then benefits, which are not available under the section, cannot be conferred by ignoring or misinterpreting words in the section. In this case we are concerned with the wordings of sub-section (3)(c) of Section 80-HHC. As noted earlier, sub-section (3)(a) deals with the case where the export is only of self-manufactured goods. Sub-section (3)(b) deals with the case where the export is only of trading goods. Thus when the legislature wanted to take exports from self-manufactured goods or trading goods separately, it has already so provided in sub-sections (3)(a) and (3)(b). It would not be denied that the word profit in Section 80-HHC(1) and Sections 80-HHC(3)(a) and 3(b) means ..... 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