Kerala High Court
Commissioner Of Income Tax vs Forbes, Ewart And Figgies (P) Ltd. on 2 June, 2004
Equivalent citations: (2004)190CTR(KER)163, [2004]269ITR94(KER)
Author: A.K. Basheer
Bench: A.K. Basheer
JUDGMENT S. Sankarasubban, J.
1. In IT Ref. No. 232 of 1997, the questions of law that arise are as follows :
"1. Whether, on the facts and in the circumstances of the case, the manner and method of computation of profits by the Tribunal for the purpose of deduction under Section 80HHC is valid and in accordance with law?
2. Whether, on the facts and in the circumstances of the case and in the light of the facts and figures given in the enclosure to the reference application, the claim of the assessee for deduction under Section 80HHC in a sum of Rs. 5,27,108 and the allowance of the same by the Tribunal, are in accordance with law?
3. Whether, on the facts and in the circumstances of the case and factually the amount being commission paid on export sales as could be seen from the assessment order and the same having been debited by the assessee as an expenditure in its P&L a/c, the Tribunal is right in law and fact in holding the amount as 'commission received' and in further holding that 'there is no warrant to exclude such commission' and are not the above findings and approach wrong and uncalled for?"
In IT Ref. No. 262 of 1997, the question of law that arises is as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee, who is having income from tea auctioning and export of goods, is eligible for deduction under Section 80HHG of the IT Act at Rs. 5,62,604 as claimed by the assessee and not Rs. 92,670 being the extent of the profit from export business, as held by the CIT(A)?"
In IT Ref. No. 276 of 1997, the question that arises is as follows :
"Whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction under Section 80HHC on the entire business profit taken as a proportion of the export turnover to the total turnover?"
2. When the matter came up for hearing, both sides said that the decision reported in IPCA Laboratory Ltd. v. Dy. CIT (2004) 266 ITR 521 (SC), applies. In the above case, the Supreme Court held as follows : "A plain reading of Section 80HHC makes it clear that in arriving at profits earned from export of both self manufactured goods and trading goods, the profits and losses in both 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, the assessee would not be entitled to deduction". It is further stated thus : "A plain reading of Sub-section (3)(c) shows that 'profits from such exports' have to be profits of exports of self-manufactured goods plus profits of exports of trading goods".
3. In the light of the decision of the Supreme Court, the questions of law are answered in favour of the Department and against the assessee. It was then submitted that for the purpose of computation, the matter has to go back to the CIT(A).
4. In the above view of the matter, we set aside the order passed by the Tribunal and direct the CIT(A) to compute the profits in accordance with law and as stated in IPCA Laboratory Ltd. v. Dy. CIT (supra). IT References are disposed of.