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TMI Blog2005 (2) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... n law and on facts, in holding that deduction under section 80HHC(1)(b) is available at 5 per cent, on the increase in the turnover of two items separately though there is a decline in overall export turnover during the present assessment year as compared to the immediately preceding year?" The assessment year is 1983-84 and the relevant accounting period is the year ended on March 31, 1983. The assessee, a partnership firm, claimed deduction under section 80HHC of the Act at 1 per cent, of the export turnover of Rs. 1,83,50,024. The additional deduction under the said provision at 5 per cent, of export turnover was claimed in the light of the increase in turnover of garments and ossein goods. The Assessing Officer was of the view that though the export turnover had increased in relation to the aforementioned commodities over the export turnover of the preceding previous year, as there was a decline in the third commodity of export as compared to the export for the immediately previous year, the assessee was not entitled to deduction at the rate of 5 per cent. In other words, according to the Assessing Officer, the total export turnover of the year under consideration was lower t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover had gone down in the year under consideration, when compared with the total export turnover of the immediately preceding previous year, it would be doing violence to the provision and the object for which the provision was enacted. In support of his submissions, Mr. Parikh has placed reliance on the decision of the Calcutta High Court in the case of CIT v. Indian Products Ltd. [1994] 207 ITR 647. Section 80HHC of the Act, as applicable to the assessment year under consideration, was introduced with effect from 1st April, 1983 by the Finance Act, 1983 and reads as under: "80HHC. Deduction in respect of export turnover.-(1) Where the assessee, being an Indian company or a person (other than a company) who is resident in India, exports out of India during the previous year relevant to an assessment year 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, the following deductions, namely: (a) a deduction of an amount equal to one per cent, of the export turnover of such goods or merchandise during the previous year; and (b) a deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover" in the entire section and more particularly in clause (b). According to the Revenue, clause (b) of sub-section (1) can apply, only in a situation where, despite the fact that export turnover of certain commodities exceeds the export turnover of the immediately preceding previous year, regardless of the fact that the commodities may not be the same in the two years under comparison, the only requirement being that the total export turnover, on comparison, between the year under consideration and the immediately preceding previous year should increase. The said interpretation does not flow from a plain reading of the said clause. Firstly, the requirement of total export turnover does not appear from the provision and it is well-settled that a court is not empowered to import anything in the statute, unless and until without doing so the pro vision does not make sense. In the present case, that is not the situation. Without adding the term "total" before the phrase "export turnover", it is possible to make out the legislative intent. The underlying idea behind clause (b) of sub-section (1) of section 80HHC of the Act is to reward an exporter by way of additional deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. However, when one comes to clause (b) of sub-section (1), the phrase "such goods or merchandise" not only relates to qualifying goods, but also identifies the goods which were exported in the immediately preceding previous year. To put it differently, the goods have to be not only qualifying goods (that being the first pre-requisite), but the goods have also to be the same goods which were forming part of the export turnover of the immediately preceding previous year. Therefore, when the same phrase is used at two places in clause (b), it denotes the goods which are qualifying goods and which formed part of the export turnover in the immediately preceding previous year. This interpretation flows on a plain reading of the provisions and gets support when sub-section (3) of section 80HHC of the Act is read in the overall scheme of the provision. The interpretation as placed hereinbefore is in consonance with Circular No. 372, dated December 8, 1983, which gives the Explanatory notes on the provisions relating to direct taxes as incorporated in the Finance Act, 1983. In para. No. 42.2(iii), this is what is stated: "42.2(iii) The tax concession at (b) above will be available on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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