Income Tax Act, 1961:
s.80 HHC - Deductions under - Availability of - To supporting manufacturer - Whether at par with the actual direct exporter - Held: Supporting manufacturers stand on completely different footing from the exporters - The parameters and scheme for claiming deduction relatable to supporting manufacturers u/s. 80HHC(1A) r/w. (3A) is completely different from that of exporters u/s. 80HHC(1) r/w (3).
Disposing of the appeals, the Court
HELD: 1.1 Where the assessee has engaged in the business of export out of India of any goods or merchandise to which Section 80 HHC(1) of Income Tax Act applies, what shall be allowed in computing the total income of the assessee, is a deduction to the extent of profits, referred to in sub-section (1B), and derived by the assessee from the export of such goods or merchandise. So far as "supporting manufacturers" are concerned, under Section 80HHC(1A), where any Export House or Trading House has issued a certificate that the supporting manufacturer has, in fact, supplied such goods or merchandise for export, they shall also be allowed a deduction to the extent of profits referred to derived by the assessee from the sale of goods or merchandise to the Export House or Trading House. [Para 3] [614-D-E]
1.2 The manner of deduction, insofar as the exporter is concerned, is laid down in sub-section (3) which when read together with its provisos make it clear that profits that are derived from such export shall be further increased in the manner provided by the first proviso; and where export turnover does not exceed rupees ten crores, in the manner provided by the second proviso; and where the export turnover exceeds rupees ten crores, in the manner provided by the third proviso. What is conspicuous by their absence is any of the provisos in sub-section (3) insofar as sub-section (3A) is concerned, which makes it clear that the profits derived by a supporting manufacturer shall be strictly in accordance with the provisions contained in Section 80HHC (3A) read with the explanation to the Section, which then defines “Profits of the business” under explanation (baa). [Para 3] [614-F-H]
1.3 Given this statutory scheme, it is clear that the exporter stands on a completely different footing from the supporting manufacturer as the parameters and scheme for claiming deduction relatable to exporters under 80HHC(1) read with (3) is completely different from that of supporting manufacturers under Section 80HHC (1A) read with (3A) thereof. [Para 4] [615-C]
C.I.T. v. Satish Kumar Gupta (C.A. No. 6437/2012) decided on 12.09.2012 - overruled.
Commissioner of Income Tax, Thiruvananthapuram v. Baby Marine Exports, Kollam (2007) 4 SCC 555 : [2007] 4 SCR 628 - distinguished.
Commissioner of Income Tax, Karnal (Haryana) v. Carpet India, Panipat(Haryana) (2018) 6 SCC 620 : [2018] 7 SCR 1092 - referred to.
2. In Civil Appeal Nos. 4593, 4594, 4595, 4596, 4597, 4598 and 4599 of 2018, the impugned judgments are set aside. However, it will be open for the respondent in the above cases to show, by adducing the necessary facts, that they are direct exporters as well and can therefore avail of the deduction available under Section 80HHC (1) read with (3). For this purpose, these matters stand remanded to the Appellate Tribunal. [Paras 7, 8 ]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.