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TMI Blog2018 (2) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred in the export business would be of no consequence, since the formula as applied above, would take in the total turnover, the export turnover and the total business profit. Reliance placed on Parry Agro Industries Ltd. [2002 (3) TMI 9 - KERALA High Court] by the Tribunal, is perfectly in order and we answer the said question also in favour of the assessee and against the Revenue. - I.T.A. No. 55 of 2007 And I.T.A. No. 89 of 2008 - - - Dated:- 10-1-2018 - MR. K. VINOD CHANDRAN AND MR. ASHOK MENON, JJ. For The APPELLANT : Sri.P.K.R.Menon,Sr.Counsel,GOI(Taxes), Sri.George K. George, SC For IT And Sri. Jose Joseph, SC, Income Tax Dept. For The RESPONDENT : Sri. E. K. Nandakumar and sri. Anil D. Nair JUDGMENT Vinod Chandran, J. The appeals by the Department as against two independent assessees raise the following similar questions of law: 1. Whether, on the facts and in the circumstances of the case the assessee having incurred a loss in export business is eligible for a deduction under section 80HHC ? 2. Whether, on the facts and in the circumstances of the case and considering the facts and the question of law involved in 257 ITR 41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en termed by the Honourable Supreme Court, is the compelling argument raised. 4. The learned Counsel appearing for the respondentsassessees, Shri Gopinath Menon, would argue that the reliance placed on Parry Agro Industries Ltd. is perfectly in order. There were two types of businesses, which is contemplated under Section 80HHC, one an exclusive business in export and the other a business both in export and domestic market. The profits derived from the export has to be determined under the provision of subsection (3) of Section 80HHC, which mandates inclusion of the entire business profits of the assessee. The learned Counsel would also place reliance on K.Raveendranathan Nair to contend that the Honourable Supreme Court has specifically noticed that exclusion under business profits, as held by the Commissioner (Appeals) can only be of those enumerated in clause (baa) of Section 80HHC (4C). The income/profit derived from high sea sales, though not one derived from export business, has to be included in the total business profit to compute the exemption available under Section 80HHC. 5. Parry Agro Industries Ltd. was a case in which the assessee was engaged in both domestic an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he export business showed a loss; the business profits, declared was only by inclusion of the profits earned in domestic business, and the same being not derived out of export, there could be no claim raised under Section 80HHC. The specific ground raised by the learned Counsel is on the following extract, from A.M.Moosa v. CIT, [2007] 294 ITR 1: A plain reading of section 80HHC makes it clear that in arriving at the profits earned from export of both selfmanufactured goods and trading goods, the profits and losses in both the trades have to be taken into consideration. If after such adjustments there is a positive profit, the assessee would be entitled to deduction under section 80HHC(1). If there is a loss he will not be entitled to any deduction. We do not think that the Court, in the above extract intended that export alone should be considered, and if it is a loss, the benefit under Section 80HHC should be declined. If there was no business profit at all, there could be no exemption claimed. The dictum from the above extract is only to the extent that in calculating the total profits, the profits and losses of both the manufacturing and trading business should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (3) of Section 80HHC. 11. We extract here under the provisions under Section 80HHC(1) and that under sub-section (3): ( 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 (1B) derived by the assessee from the export of such goods or merchandise: xx xx ( 3) For the purpose of sub-section (1),- ( a) where the export out of India is of goods or merchandise manufactured or processed by the assessee, the profits derived from such export shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; ( b) 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 re ..... 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