Law:

Section:

Section 80 HHC of the Income-tax Act, 1961 - Deductions - Exporters - Assessment years 1992-93 to 1994-95 - Whether Export House Premium received by assessee, a supporting manufacturer, is an integral part of sale price realized by it from export house and same is includible in ‘profits of business‘ of assessee while computing deduction under section 80HHC - Held, yes Words and phrases : ‘Supporting manufacturer‘ as occurring in section 80HHC of the Income-tax Act, 1961 FACTS The assessee was engaged in the business of selling marine products both in domestic market and also exporting it. The assessee was exporting directly to the buyers and also through export houses. The assessee had entered into contracts with the export houses, whereby, as and when the assessee would sell the goods or merchandise to an export house, as consideration for the sale, it would receive the entire F.O.B. value of the exports plus the export house premium of 2.25 per cent of the F.O.B. value. The assessee had been filing its income tax returns showing the export house premium as part of its total turnover and not commission or service charge and, thereby claiming deductions available to an exporter and/or a supporting manufacturer under section 80HHC(1A). The Assessing Officer rejected the said claim on the ground that the same was a commission or service charge for routing the exports through the export houses. On appeal, the Commissioner (Appeals) disallowed the assessee‘s claim. On further appeal, the Tribunal allowed the appeal of the assessee and upheld the stand of the assessee that the Export House Premium received by it was includible in its ‘profits of the business‘ while computing the deduction under section 80HHC. On revenue‘s appeal, the High Court dismissed the appeal of revenue. On appeal to the Supreme Court: HELD According to section 80HHC(1), the export house in computing its total income is entitled to deduction to the extent of the profit derived by the assessee from the export of the goods or merchandise. Whereas, according to section 80HHC(1A), the assessee being supporting manufacturer shall be entitled to a deduction of profit derived by the assessee from the…

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