DY. COMMISSIONER OF INCOME TAX Vs. TRAB ENTERPRISES

JUDGEMENT

(1.) THESE two appeals by the revenue raise an identical ground. They are therefore, disposed of by a common order.

(2.) BOTH the appeals raise the following ground : "On facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) has erred in holding that section 80HHC(3) is amply clear to state that the benefit ought to be calculated as per that section, i.e., same ratio that the export turnover bears to the total turnover and the total turnover may include both export turnover as well as other trading activities not necessarily export. He further erred in his direction to assessing officer to calculate the benefit in the following manner: <FRM>JUDGEMENT_176_LAWS(BOM)7_2002.htm</FRM>

(3.) THE -assessee is a partnership firm. Upto the assessment year 1989 -90, its business comprised only of transportation of goods and material. For and from the assessment year 1990 -91, they started exporting oil -seeds and extractions. Thus, for both the years under appeal, the assessee had income from transportation business and from exports. The assessee claimed deduction under section 80HHC by treating the total receipts both from the exports and transportation service charges as total turnover and applied the proportion of export turnover/total turnover to the net profits. The assessing officer held that under sub -section (3) of section 80HHC as they applied to the relevant assessment years, the denominators in both the proportions, namely, (a) profits of business (b) total turnover of business, have to be restricted to profits and total turnover of the particular business to which the export activity related. On the other hand, the assessee took the entire business profits and the total turnover of all the businesses together to work out the proportion of export profit. The assessing officer, however, excluded from the total turnover, income received by the assessee from transportation by way of, service charges and commission. For the purpose of ascertaining total turnover, only the turnover of trading business was taken into account. On this basis, the assessing officer worked out deduction allowable to the assessee under section 80HHC for the assessment year 1990 -91 at Rs. 1,68,519 as against the assessee's claim of Rs. 5,89,783. For the assessment year 1991 -92, he found that if the profit and turnover of the transportation business are excluded from the computation and if the expenses are allotted to the two activities on the proportionate basis, the assessee earned no profit from export and in fact incurred a loss of more than Rs. 25 lakhs. The assessee's claim to deduction under section 80HHC was totally rejected for the assessment year 1991 -92.