RAJU BHOJWANI Vs. CHIEF COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The petitioner-Raju Bhojwani is the sole proprietor of Reshmica Exports. For the assessment year 2002-03, the petitioner filed his return on 4th October, 2002 declaring total taxable income of Rs. 6,76,660/- after claiming deduction of Rs.6,34,503/- under Section 80 HHC of the Income-Tax Act, 1961 (Act, for short).

(2.) Proceedings under Section 147 of the Act were initiated by issue of notice dated 5th July, 2004 as it was noticed that the petitioner had claimed excessive deduction under Section 80 HHC. The petitioner in fact had business loss in exports of Rs.7,16,189/- but this was ignored for computation of deduction under Section 80 HHC.

(3.) By this time, the Supreme Court had decided IPCA Laboratory Limited versus Deputy Commissioner of Income Tax, 2004 266 ITR 521 holding, inter alia, that on a plain reading of Section 80 HHC it is clear that in arriving at the profits earned from exports, profits and losses of both manufactured goods and trading goods have to be taken into consideration. If after such adjustment, there is positive profit, the assessee would be entitled to deduction under Section 80 HHC. If there is a loss, he will not be entitled to any deduction.