Commissioner of Income Tax vs Rathore Brothers

R. Jayasimha Babu, J.—The question that is referred in this case is, whether, on the facts and in the circumstances of the case, the Appellate

Tribunal is right in law in holding that Clause (b) of Sub-section (3) of Section 80HHC of the Income Tax Act, 1961, cannot be invoked in this

case and the assessee is entitled to relief u/s 80HHC of the Act in respect of the entire export net profits ?

The Tribunal has held, and rightly, that the assessee had maintained separate accounts and that its trading receipts and profit and loss accounts had

also been maintained separately for export sales and domestic sales and, therefore, there was no warrant for disallowing any portion of the export

earning pro rata by invoking Sub-section (3)(b) of Section 80HHC of the Act.

The Tribunal was right in so allowing the deduction in its entirety.

The purpose of Sub-section (3)(b) of Section 80HHC of the Act is to disallow a part only when the entire deduction claimed cannot be regarded

as being relatable to exports. Here, there was sufficient material to show that the income claimed was entirely due to export and was supported by

all the necessary documents which were not disputed. We, therefore, answer the question referred to us in favour of the assessee and against the

Revenue.