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TMI Blog2014 (4) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... d interpretation of sub-section (3) of section 80HHC {80HHC(3)}of the Act. The question is, 'Whether the word 'business' used in Section 80HHC(3) of the Act means all businesses of an assessee or only that business, which is partly or fully doing export business.' THE FACTS 2. The Assessee has two separate units, one is solvent extraction plant and the other is flour mill. The solvent extraction plant (the SE-Unit) is doing export business as well as domestic business; whereas, the flour mill (the F-Unit) is totally doing domestic business only. 3. Section 80HHC of the Act provides some relief to the assessees carrying on export business and allows deductions as mentioned therein. The Assessee is entitled to deductions u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The Department filed an application under section 256(1) of the Act to refer the questions to the High Court. This application was allowed on 14.09.2001 and the following two questions have been referred to this court: (i) Whether on the facts and circumstances of the case, the Tribunal was justified in law in directing the AO to calculate relief under section 80HHC taking into consideration the 'profit of the business' and 'total turnover' of the business carried on by the assessee in respect of its solvent extraction unit alone and directing the AO to ignore the profits and turnover of the Flour Mill. (ii) Whether the use of the expression "profit of the business" and "total turnover of the business" carried on by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined 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 sum referred to in clauses (iiia), (iiib) and (iiic) of section 28.' 12. Section 80HHC(3) of the Act provides the formula for calculation of deductions. There is no dispute that this formula is, Profit of the business ´ Export turnover Total turnover of the business 13. There is also no dispute that the word 'business' has the same meaning as in the word 'profits of the business' as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andez case) has taken decision in favour of the Department. 16. Out of the three decisions of the Madras High Court, the Madras- Motors case is a detailed one and the Padmi-Technologies case of the Delhi High Court is based on the same. 17. The Madras-Motors case was in respect of the AYs 1989-90 and 1990-91. The law at that time was different than the law which is applicable to the case in hand. The Padmini-Technologies case of the Delhi High Court is of the AY 1997-1998 and related to the same provision, however, it has adopted the reasoning given by the Madras High Court in the Madras-Motors case. 18. The Karnataka High Court judgement in the Fernandez case is also of the AY 2003-04 where the law was slightly different, nonetheless, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the word 'business' means the all businesses carried on by the Assessee and it is not limited to the export oriented unit namely the SE-Unit. 24. We agree with the reasoning given by the Karnataka High Court in the Fernandez case and disagree with the reasoning given by the Madras High Court in the Madras-Motors and the two other cases of the Madras High Court as well as the Delhi High Court in Padmini-Technologies case. 25. In view of the above, both the questions are answered in negative in favour of the Department and against the Assessee. CHIEF JUSTICE JUDGE Appendix-1 Deduction in respect of profits retained for export business. 80HHC. (1) Where an assessee, being an Indian company or a person (other than a company) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; ... Explanation.-For the purposes of this section,- ... (b) "export turnover" means the sale proceeds, received in, or brought into India by the assessee in convertible foreign exchange in accordance with claue (a) of sub-section (2) of any goods or mechandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962); (ba) "total turnover" shall not include freight or insurance attributable to the transport of the goods o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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