The ITO, Ward-5(3), Ahmedabad V. Robinson Impex (I) Pvt.Ltd., Ahmedabad

ITA 1808/AHD/2004

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8683 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-03-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 26-05-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 143(3); 80HHC; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 24.03.10 DRAFTED ON: 24.03.10 ITA NO.1808/AHD/2004 ASSESSMENT YEAR : 1996-1997 ITO, WARD 5(3), AHMEDABAD VS. ROBINSON IMPEX (I) PVT. LTD., 403, SANJAY TOWERS, OPP. C.N.VIDHYALAYA, AMBAWADI, AHMEDABAD. PAN/GIR NO. : 31-128-CX-1532 (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ANILKUMAR CIT DR RESPONDENT BY: SHRI S.N. SOPARKAR WITH MS.URVASHI SHODHAN O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-XI, AHMEDABAD, DATED 19.03.2004. 2. GROUNDS OF THE APPEAL OF THE REVENUE READS AS UN DER:- 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSE SSING OFFICER TO ALLOW DEDUCTION U/S 80HHC OF RS. 1,81,50 ,397/- INSTEAD OF RS.1,34,51,904/- COMPUTED AND ALLOWED. 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS FURTHER ERRED IN LAW AND ON FACTS IN NOT APPREC IATING THAT COMPUTING PROFIT FROM EXPORT TRADING IS DIFFERENT F ROM ALLOWING THE DEDUCTION U/S 80HHC TO THE EXTENT OF A CTUAL REALIZATION OF EXPORT SALE PROCEEDS. - 2 - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX(A)-XI, AHMEDABAD OUGHT T O HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. COMMISSIONER OF INCOME-TAX (A) MAY BE SET ASIDE TO THE ABOVE EXTEND AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS DECIDED THIS ISSUE AS UNDER:- 3. THE FACTS OF THE CASE ARC THAT THE APPELLANT CO MPANY, DURING THE YEAR UNDER CONSIDERATION, WAS ENGAGED IN THE BUSINESS OF EXPORT OF TRADING. THE RETURN OF INCOME DECLARING INCOME OF RS. NIL WAS FILED BY THE APPELLANT COMPAN Y ON 22/10/1997. THE TOTAL INCOME OF THE APPELLANT WAS D ETERMINED AT RS.2,61,89,260/- VIDE ORDER U/S. 143(3) DATED 23 -3-99. THEREAFTER, CONSEQUENT UPON THE CIT(APPEAL)'S ORDER THE INCOME OF THE APPELLANT WAS COMPUTED AT RS.NIL. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S.147 B Y ISSUING NOTICE UNDER SECTION 148 OF THE 1 T. ACT DATED 21-1 1-2001. THE ASSESSMENT U/S.143(3) R.W.S. 147, WHICH IS PRESENTL Y IN APPEAL, WAS FINALISED ON 28-11-2002 DETERMINING THE APPELLA NT'S TOTAL INCOME AT RS.22,14,556/-. WHILE FINALISING THE ASSE SSMENT, THE ASSESSING OFFICER DISALLOWED EXCESS DEDUCTION U/S.8 0HHC CLAIMED BY THE APPELLANT AND ALLOWED THE ADMISSIBLE DEDUCTION AT RS. 1,34,51,904/-. AGGRIEVED BY THE SAID ORDER, THE APPELLANT IS IN APPEAL BEFORE DIE UNDERSIGNED. 3. THE ONLY GROUND IN THIS APPEAL IS DIRECTED AGAIN ST THE CALCULATION OF DEDUCTION U/S.80HHC OF THE I.T.ACT. IT IS SEEN THAT DURING THE YEAR CONSIDERATION THE APPELLANT HA S CLAIMED DEDUCTION U/S.80HHC AMOUNTING TO RS.1,83,46,195/- R ESTRICTED TO THE TOTAL INCOME. ACCORDING TO THE ASSESSING OFF ICER THE TOTAL EXPORT TURNOVER OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION WAS OF RS. 6,01,49,288/-AND THE TOTAL COST OF THE GOODS EXPORTED WAS OF RS. 1,77,16,803/- WHICH INCLU DED PURCHASES OF GOODS DURING THE YEAR OF RS. 80,83,698 /-. IT WAS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMEN T ORDER THAT - 3 - IN COMPUTATION OF DIRECT COST FOR DEDUCTION U/S.80H HC THE APPELLANT HAS TAKEN COST OF GOODS EXPORTED AT RS.1, 28,58,163/-. ACCORDING TO THE A. O. THIS WAS BECAUSE THE APPELLA NT HAS TAKEN PURCHASES MADE DURING THE YEAR OF RS.32,21,09 8/- FOR COMPUTATION INSTEAD OF RS.80,83,698/-. THEREFORE, D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS ASKED TO SHOW-CASE AS TO WHY EXCESS DEDUCTION CLAIMED U/S.80 HHC OF THE ACT DUE TO TAKING PURCHASES AT RS.32,21.098/- U NDER DIRECT COST FOR COMPUTATION OF THE SAME INSTEAD OF RS.80,8 3,698/- DEDUCTED IN PROFIT & LOSS ACCOUNT. IN THIS REGARD T HE APPELLANT FILED ITS SUBMISSIONS VIDE ITS LETTER DATED 04-03-2 002 WHICH WAS REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER. THE CONTENTION OF THE APPELLANT WAS NOT CONSIDERED BY THE ASSESSING OFFICER TO BE SATISFACTORY. THEREFORE, AF TER DISCUSSING THE ISSUE AT LENGTH IN THE ASSESSMENT ORDER, THE AS SESSING OFFICER WORKED OUT THE ADMISSIBLE DEDUCTION U/S.80H HC AND ALLOWED THE SAME AT RS. 1,34,51,904/- AS AGAINST RS.1,83,46,196/- COMPUTED BY THE APPELLANT AND THER EBY DISALLOWED EXCESS DEDUCTION U/S.80HHC OF RS.. 48,94 ,291/-. AGGRIEVED BY THE SAID ORDER, THE APPELLANT IS IN AP PEAL BEFORE THE UNDERSIGNED. 3.1 DURING THE COURSE OF APPELLATE PROCEEDINGS , THE A. R. OF THE APPELLANT FILED WRITTEN SUBMISSIONS. IT WAS S UBMITTED BY THE A. R. THAT THE ASSESSING OFFICER HAS WRONGLY CO MPUTED FEE DEDUCTION U/S.80HHC AT RS.1,34 , 51,904/- AS AGAINST RS.1,83,46,195/- COMPUTED BY THE APPELLANT AND ADDE D ALLEGED EXCESS DEDUCTION U/S.80HHC OF RS.48,94,291/-. IT WA S SUBMITTED BY THE A. R. THAT THE APPELLANT HAD MADE EXPORT OF RS. 6,01,49,288/- AS AGAINST THE REMITTANCE RECEIVE D WITHIN THE TIME WAS ONLY RS.3,18,68,248/-. ACCORDING TO THE A. R. THIS AMOUNT OF REMITTANCE RECEIVED BY THE APPELLANT WAS WITHIN THE TIME TREATED AS EXPORT TURNOVER AS DEFINED UNDER TH E ACT. IT WAS FURTHER SUBMITTED BY THE A. R. THAT THE ASSESSING O FFICER HAS NOT CONSIDERED THE FACTUAL POSITION THAT ME AMOUNT OF D IRECT COST I.E. COST OF GOODS PURCHASED TO BE CONSIDERED ONLY THE C OST RELATED TO THE GOODS WHICH WAS ELIGIBLE FOR THE EXPORT TURNOVE R AS DEFINED UNDER FEE ACT. HOWEVER, FEE APPELLANT HAS TAKEN I NTO ACCOUNT OF TOTAL DIRECT COST OF GOODS WHICH WAS EXPORT IRRESPE CTIVE OF THE FEET AND THE APPELLANT HAS NOT RECEIVED THE REMITTANCE I N FULL AND THIS AMOUNT WAS NOT TREATED AS EXPORT TURNOVER. IN SUPPO RT OF THE APPELLANT & CLAIM THE A. R. HAS FILED BEFORE ME THE STATEMENT OF - 4 - THE PURCHASES AND EXPORT SALES MADE BY THE APPELLAN T AND SUBMITTED THAT ONLY SUCH PURCHASES HAVE BEEN TREATE D AS 'DIRECT COST' WHICH HAVE BEEN EXPORTED OUTSIDE INDIA AND SH E REMITTANCE HAS BEEN RECEIVED WITH THE PRESCRIBED TIME FRAMED. THE REMAINING PURCHASES HAVE NOT BEEN CONSIDERED AS 'DI RECT COST' FOR FEE PURPOSE OF CALCULATION OF DEDUCTION U/S. 80 HHC OF THE ACT ACCORDING TO THE A. R. THE CONSIDERATION RECEIVED F ROM THE SALE OF GOODS MUST BE AVAILABLE WITH THE APPELLANT FOR BEIN G TURN OVER, OR IN OTHER WORDS, IT MUST HAVE COME TO THE APPELLANT AS THE MONEY BELONGING TO HIM. IN SUPPORT OF THIS CLAIM, THE A. R. HAS RELIED UPON THE DECISION OF HON'BLE KERALA HIGH COURT IN T HE CASE OF SOUTH INDIA PRODUCT CO. (130 TAXMAN 1). FURTHER, AC CORDING TO THE A. R. THE WHOLE SECTION 80HHC APPLIES ONLY TO T HE GOODS WHICH ARE NOT ONLY EXPORTED OUT OF INDIA BUT THE SA LE PROCEEDS OF & WHICH ARE RECEIVABLE IN CONVERTIBLE FOREIGN EXCHA NGE. IN SUPPORT OF THIS CLAIM THE A. R. HAS RELIED UPON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF MADRAS MOTORS LTD (122 TAXMAN 516) IT WAS FARTHER SUBMITTED BY THE A.R. TH AT TO FIND OUT THE PROFIT ELIGIBLE FOR THE DEDUCTION U/S.80HHC IS ONLY PERTAINING THE TURNOVER ON WHICH THE SECTION IS APP LIED. HENCE THE COST OF GOODS WHICH IS INTIMATELY ATTRIBUTABLE TO THE EXPORT TURNOVER SHOULD BE CONSIDERED AT THE TIME OF CALCUL ATION OF DEDUCTION U/S.80HHC. IT WAS SUBMITTED BY THE A. R. THAT IN THE INSTANT CASE, AS PER SECTIONS 80HHC (1), 80HHC(2)(A ) AND 80HHC(3) THE APPELLANT HAS RIGHTLY CALCULATED THE D EDUCTION ON THE EXPORT TURNOVER ON WHICH THE SECTION APPLIES . IT WAS SUBMITTED BY THE A.R. THAT THE DISALLOWANCE OF THE APPELLANT'S CLAIM OF DEDUCTION 80HHC MADE BY THE ASSESSING OFFI CER WAS NOT CORRECT ON FACTS AND ALSO IN LAW AS THE DISALLO WANCE WAS NOT IN THE PREVIEW OF THIS SECTION. IN VIEW OF THE ABOVE FACTS, IT WAS CLAIMED THAT CONSIDERING THE FACTUAL POSITION O F THE CASE, THE DEDUCTION U/S. 80HHC AS CLAIMED BY THE APPELLAN T SHOULD BE ALLOWED IN FULL. 3.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY. I HAVE ALSO GO NE THROUGH THE DECISIONS RELIED UPON BY ME A. R. AND THE OBSER VATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HA VE ALSO PERUSED THE CASE RECORDS OF THE APPELLANT. THERE IS NO DISPUTE ON THE ISSUE THAT OUT OF THE TOTAL EXPORTS OF RS.6, 01,49,288/- THE APPELLANT IS ENTITLED FOR DEDUCTION U/S.80HHC ONLY ON RS. 3,18,68,248/- AS THE AMOUNT BROUGHT TO INDIA IN FOR EIGN EXCHANGE WITHIN THE TIME LIMIT WAS RS. 3,18,68 , 248/-, SECTION - 5 - 80HHC(2)(A) CLEARLY PROVIDES THAT THE SECTION 80HHC APPLIES TO ALL GOODS OR MERCHANDISE OTHER THAN THOSE SPECIF IED IN CLAUSE (B), IF THE SALE PROCEEDS SUCH GOODS OR MERC HANDISE EXPORTED OUT OF INDIA ARE RECEIVED IN OR BROUGHT IN TO INDIA BY THE ASSESSEE (OTHER THAN SUPPORTING MANUFACTURER) I N CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SI X MONTHS FROM THE END OF THE PREVIOUS YEAR OR WITHIN SUCH FU RTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW ON THIS BEHALF . SINCE FOREIGN EXCHANGE REALIZED IS LIMITED TO RS.3,18,68, 248/- THE APPELLANT IS ENTITLED FOR DEDUCTION ON THAT AMOUNT ONLY. THE TOTAL COST OF GOODS EXPORTED IS RS.1,77,16,803 (INC LUDING PURCHASES MADE DURING THE YEAR OF RS.80,83,698/-) A GAINST THE TOTAL EXPORTS OF RS.6,01,49,288/-, IN THE COMPUTATI ON OF DIRECT COST FOR DEDUCTION U/S.80HHC, THE APPELLANT HAS TAK EN COST OF GOODS EXPORTED AT RS.1,28,58,163/- BECAUSE THE APPE LLANT HAS TAKEN PURCHASES MADE DURING THE YEAR AT RS.32,21,09 8/- WHICH ARE ATTRIBUTABLE TO THE EXPORT AND REGARDING WHICH THE FOREIGN EXCHANGE HAS BEEN RELEASED. IN PLACE OF THIS FIGURE OF RS.32,21,098/- THE A.O. HAS TAKEN FULL AMOUNT OF RS .80,83,698/- . THE A.O'S ACTION DOES NOT SEEMS TO BE JUSTIFIED. ACCORDING TO CLAUSE (B) OF SECTION 80HHC(3), 'WHERE THE EXPORT O UT OF INDIA IS OF TRADING GOODS, THE PROFITS DERIVES FROM SUCH EXPORT SHALL BE THE EXPORT TURNOVER IN RESPECT OF SUCH TRADING G OODS AS REDUCED BY THE DIRECT COST AND INDIRECT COSTS ATTRI BUTABLE TO SUCH EXPORT'. SINCE IN THE INSTANT CASE THE FIGURE OF EXPORT SALES IS BEING TAKEN RS.3,18,68,248/- THE DIRECT COST AND THE INDIRECT COST WILL BE TAKEN WITH REGARD TO THESE EXPORTS ONL Y. THE WORDS USED IN CAUSE (B) OF SECTION 80HHC(3) ARC 'THE DIRE CT COST AND INDIRECT COSTS TO SUCH EXPORT'. THIS MEANS THE DIRE CT AND INDIRECT COSTS ARC TO BE TAKEN WITH REGARD TO THE EXPORT SALES WHICH ARE ELIGIBLE FOR DEDUCTION U/S.80HHC, USE OF WORDS 'SUCH EXPORT' MAKES IT VERY CLEAR. FROM THE PERUSAL OF CASE RECORDS, IT IS FOUND THAT THE THEN ASSESSING OFFICE R, WHILE PASSING ORIGINAL ASSESSMENT ORDER UNDER SECTION 143 (3) DATED 23-3-1999 HAD AFTER CONSIDERING THE APPELLANT'S C LAIM RESTRICTED DEDUCTION U/S,80HHC AT RS.1,81,50,3 97/- (AS AGAINST APPELLANT'S CLAIM OF RS. 1,83,46,195/-) AGA INST WHICH THE APPELLANT HAD FILED APPEAL BEFORE THE CIT(APPEA LS). IN THE ORDER GIVING EFFECT TO THE CIT(A)'S ORDER DATED 19- 04-1999 (AO'S ORDER DATED 26-05-2000) THE ASSESSING OFFICER HAS ALLOWED DEDUCTION U/S.80HHC AT RS. 1,81,50,397/-. A FTER HAVING CAREFULLY CONSIDERED THE REPORT OF THE AUDIT ORS IN FORM - 6 - NO.10CCAC, ORIGINAL ASSESSMENT ORDER U/S. 143(3) AN D SUBSEQUENT ORDERS OF THE CIT(A) AND ORDER GIVING EF FECT TO CIT(A)'S ORDER, I FIND THAT THE DEDUCTION U/S.80HHC WAS RIGHTLY ALLOWED BY THE THEN A.O. AT RS.1,81,50,397/ - IN THE ORIGINAL ASSESSMENT ORDER AND IN THE ORDER GIVING E FFECT TO THE CIT(A)'S ORDER ; AND THE A.O'S SUBSEQUENT ACTION OF RESTRICTING THE DEDUCTION U/S.80HHC TO RS.1,34,51,904/- IS UNCA LLED FOR AND NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. T HE A.O. IS DIRECTED TO ALLOW THE DEDUCTION U/S.80HHC AT RS.1,8 1,50,397/- AS COMPUTED BY HIM IN THE ORIGINAL ASSESSMENT ORDER AND IN THE ORDER GIVING EFFECT TO THE CIT(A)'S ORDER. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDER OF THE LEARNED ASSESSING OFFICER WHEREAS THE LEARNE D AUTHORISED REPRESENTATIVE OF THE ASSESSEE RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80HHC AT RS.1,81,50,397/- WHICH WAS ALLOWED BY THE LEARNED A SSESSING OFFICER AT RS.1,34,51,904/- ON THE GROUND THAT THE ASSESSEE HAS SHOWN EXCESS EXPORT PROFIT BY SHOWING LESSER PURCHASES. O N APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ABOVE DISALLOWANCE BY OBSERVING AS UNDER:- 3.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY. I HAVE ALSO GO NE THROUGH THE DECISIONS RELIED UPON BY ME A. R. AND THE OBSER VATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HA VE ALSO PERUSED THE CASE RECORDS OF THE APPELLANT. THERE IS NO DISPUTE ON THE ISSUE THAT OUT OF THE TOTAL EXPORTS OF RS.6, 01,49,288/- THE APPELLANT IS ENTITLED FOR DEDUCTION U/S.80HHC ONLY ON RS. 3,18,68,248/- AS THE AMOUNT BROUGHT TO INDIA IN FOR EIGN EXCHANGE WITHIN THE TIME LIMIT WAS RS. 3,18,68 , 248/-, SECTION - 7 - 80HHC(2)(A) CLEARLY PROVIDES THAT THE SECTION 80HHC APPLIES TO ALL GOODS OR MERCHANDISE OTHER THAN THOSE SPECIF IED IN CLAUSE (B), IF THE SALE PROCEEDS SUCH GOODS OR MERC HANDISE EXPORTED OUT OF INDIA ARE RECEIVED IN OR BROUGHT IN TO INDIA BY THE ASSESSEE (OTHER THAN SUPPORTING MANUFACTURER) I N CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SI X MONTHS FROM THE END OF THE PREVIOUS YEAR OR WITHIN SUCH FU RTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW ON THIS BEHALF . SINCE FOREIGN EXCHANGE REALIZED IS LIMITED TO RS.3,18,68, 248/- THE APPELLANT IS ENTITLED FOR DEDUCTION ON THAT AMOUNT ONLY. THE TOTAL COST OF GOODS EXPORTED IS RS.1,77,16,803 (INC LUDING PURCHASES MADE DURING THE YEAR OF RS.80,83,698/-) A GAINST THE TOTAL EXPORTS OF RS.6,01,49,288/-, IN THE COMPUTATI ON OF DIRECT COST FOR DEDUCTION U/S.80HHC, THE APPELLANT HAS TAK EN COST OF GOODS EXPORTED AT RS.1,28,58,163/- BECAUSE THE APPE LLANT HAS TAKEN PURCHASES MADE DURING THE YEAR AT RS.32,21,09 8/- WHICH ARE ATTRIBUTABLE TO THE EXPORT AND REGARDING WHICH THE FOREIGN EXCHANGE HAS BEEN RELEASED. IN PLACE OF THIS FIGURE OF RS.32,21,098/- THE A.O. HAS TAKEN FULL AMOUNT OF RS .80,83,698/- . THE A.O'S ACTION DOES NOT SEEMS TO BE JUSTIFIED. ACCORDING TO CLAUSE (B) OF SECTION 80HHC(3), 'WHERE THE EXPORT O UT OF INDIA IS OF TRADING GOODS, THE PROFITS DERIVES FROM SUCH EXPORT SHALL BE THE EXPORT TURNOVER IN RESPECT OF SUCH TRADING G OODS AS REDUCED BY THE DIRECT COST AND INDIRECT COSTS ATTRI BUTABLE TO SUCH EXPORT'. SINCE IN THE INSTANT CASE THE FIGURE OF EXPORT SALES IS BEING TAKEN RS.3,18,68,248/- THE DIRECT COST AND THE INDIRECT COST WILL BE TAKEN WITH REGARD TO THESE EXPORTS ONL Y. THE WORDS USED IN CAUSE (B) OF SECTION 80HHC(3) ARC 'THE DIRE CT COST AND INDIRECT COSTS TO SUCH EXPORT'. THIS MEANS THE DIRE CT AND INDIRECT COSTS ARC TO BE TAKEN WITH REGARD TO THE EXPORT SALES WHICH ARE ELIGIBLE FOR DEDUCTION U/S.80HHC, USE OF WORDS 'SUCH EXPORT' MAKES IT VERY CLEAR. FROM THE PERUSAL OF CASE RECORDS, IT IS FOUND THAT THE THEN ASSESSING OFFICE R, WHILE PASSING ORIGINAL ASSESSMENT ORDER UNDER SECTION 143 (3) DATED 23-3-1999 HAD AFTER CONSIDERING THE APPELLANT'S C LAIM RESTRICTED DEDUCTION U/S,80HHC AT RS.1,81,50,3 97/- (AS AGAINST APPELLANT'S CLAIM OF RS. 1,83,46,195/-) AGA INST WHICH THE APPELLANT HAD FILED APPEAL BEFORE THE CIT(APPEA LS). IN THE ORDER GIVING EFFECT TO THE CIT(A)'S ORDER DATED 19- 04-1999 (AO'S ORDER DATED 26-05-2000) THE ASSESSING OFFICER HAS ALLOWED DEDUCTION U/S.80HHC AT RS. 1,81,50,397/-. A FTER HAVING CAREFULLY CONSIDERED THE REPORT OF THE AUDIT ORS IN FORM - 8 - NO.10CCAC, ORIGINAL ASSESSMENT ORDER U/S. 143(3) AN D SUBSEQUENT ORDERS OF THE CIT(A) AND ORDER GIVING EF FECT TO CIT(A)'S ORDER, I FIND THAT THE DEDUCTION U/S.80HHC WAS RIGHTLY ALLOWED BY THE THEN A.O. AT RS.1,81,50,397/ - IN THE ORIGINAL ASSESSMENT ORDER AND IN THE ORDER GIVING E FFECT TO THE CIT(A)'S ORDER ; AND THE A.O'S SUBSEQUENT ACTION OF RESTRICTING THE DEDUCTION U/S.80HHC TO RS.1,34,51,904/- IS UNCA LLED FOR AND NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. T HE A.O. IS DIRECTED TO ALLOW THE DEDUCTION U/S.80HHC AT RS.1,8 1,50,397/- AS COMPUTED BY HIM IN THE ORIGINAL ASSESSMENT ORDER AND IN THE ORDER GIVING EFFECT TO THE CIT(A)'S ORDER. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS). WE ARE IN AGREEMENT WITH THE V IEW EXPRESSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TO THE EFFECT THAT WHILE COMPUTING PROFIT UNDER SECTION 80HHC ONL Y THOSE DIRECT COSTS WHICH ARE ATTRIBUTABLE TO ELIGIBLE EXPORT TUR NOVER ARE TO BE DEDUCTED FROM THE ELIGIBLE EXPORT TURNOVER FOR DETE RMINING THE PROFIT WHICH IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. THUS, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHICH IS HEREBY CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 26/03/2010. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED 26/03 /2010 PREPARED AND COMPARED BY : PARAS - 9 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD