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There happened to be incremental export turnover in respect of three of the above items, viz., machine tools, tractors and lamps, whereas in respect of the other item, viz., watches, there was a decrease in the export turnover as compared to the immediately preceding year. In its computation of income, the assessee took into consideration only those 3 items which had shown incremental turnover for computing the deduction under the above-mentioned Sub-Clause (b) and the same was also accepted in the assessment. The CIT, in his impugned order Under Section 263, has however, directed that the increment in export turnover is required to be determined as a whole by taking into consideration the total export during this year and comparing the same with the total export for the immediately preceding year. This means that the amount of decrease in the export turnover in respect of watches will have to be deducted from the aggregate of the gross increment for the other 3 items. The learned Counsel for the assessee has firstly relied on the judgment of the Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commissioner of Commercial Taxes [1991] 83 STC 234 to argue that the Supreme Court has held therein that a liberal and strict construction of an exemption provision is required to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause, then, it being in the nature of exception is to be construed strictly and against the subject. But once ambiguity or doubt about the applicability is lifted and the subject falls in the notification, then full play should be given to it and it calls for a wider and liberal construction. It is thus argued by the learned Counsel for the assessee that once it is found that the assessee had actually exported goods or merchandise during the relevant year, a liberal construction or interpretation is required to be made of the provisions relating to allowing benefit to the assessee on account of such export. Further reliance has also been sought to be placed on another judgment of the Supreme Court in the case of CIT v. Canara Workshops (P.) Ltd. [1986] 161 ITR 320. It has been argued that although the issue in that case was application of the deduction provision of the then Section 80E of the Act, however, it was decided by the Supreme Court that whereas the assessee was carrying on 2 priority industries, loss in one industry could not be set off against profits from the other industry. On this particular analogy, the learned Counsel for the assessee claimed that in this case also, deduction at the rate of 5% of the incremental export turnover should be allowed only in respect of such items which actually showed such increment.