J K Industries Ltd. V. The Joint Commissioner of Income Tax Special Range, Mysore

ITA/1360/2006

AI Insights

The case involves M/S J K Industries Ltd., which appealed against the order of the Income Tax Appellate Tribunal, Bangalore, concerning the computation of deductions under Section 80HHC of the Income Tax Act, 1961, for the assessment year 1998-99. The primary legal issues revolved around the interpretation and application of Section 80HHC, particularly regarding the deduction of unabsorbed depreciation and the inclusion of certain export-related incentives in the computation of taxable income. The High Court of Karnataka examined whether the Tribunal was justified in its computation method and whether the assessee was entitled to claim benefits under Section 80HHC on a notional basis.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 673167 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-02-2013
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX vs MADRAS MOTORS (P) LTD, COMMISSIONER OF INCOME TAX vs MILLIPORE INDIA PVT LTD, TOPMAN EXPORTS vs COMMISSIONER OF INCOME TAX, ASST COMMISSIONER OF INCOME TAX vs PRATIBHA SYNTEX LTD, SYNCO INDUSTRIES LIMITED v. ASSESSING OFFICER OF INCOME TAX AND OTHERS
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: E R INDRAKUMAR; E I SANMATHI
• Assessee Lawyers: A SHANKAR; M LAVA
• Keywords: Deduction; Export incentive; Income Tax; Unabsorbed depreciation; Notional Duty Benefit
• Section: 80HHC; 260A; 80A; 72(2); 80B(5)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BANGALORE Dated this the 26th day of February, 2013 PRESENT THE HON’BLE MR JUSTICE D V SHYLENDRA KUMAR AND THE HON’BLE MR JUSTICE B SREENIVASE GOWDA Income Tax Appeal No. 1360 of 2006 BETWEEN: M/S J K INDUSTRIES LTD., REP. BY ITS ASST. VICE PRESIDENT (COMMERCIAL) SRI NARESH KUMAR MAHESHWARI KRS ROAD METAGALLI MYSORE – 560 016 … APPELLANT [By M/s A Shankar & M Lava, Advs.] AND: THE JOINT COMMISSIONER OF INCOME TAX SPECIAL RANGE SHILPASHREE BUILDING MYSORE … RESPONDENT [By Sri E R Indrakumar, Sr. Counsel for Sri E I Sanmathi, Adv.] THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 16.06.2006 PASSED IN ITA NO. 700/BANG/2003, FOR THE ASSESSMENT YEAR 1998-99, PRAYING TO SET ASIDE THE SAID ORDER OF THE TRIBUNAL AND ETC., THIS APPEAL COMING ON FOR HEARING, THIS DAY, SHYLENDRA KUMAR J., DELIVERED THE FOLLOWING: 2 J U D G M E N T Appeal by an assessee under Section 260A of the Income Tax Act, 1961 [for short, the Act], relevant for the assessment year 1998-99, directed against the order 16-6- 2006 passed in ITA No 700/Bang/2003, passed by the income tax appellate tribunal, Bangalore Bench ‘B’. 2. This court admitted the appeal to examine the following substantial questions of law: 1) Whether on the facts of the case the Tribunal was justified in law in holding that the benefit of deduction under section 80HHC of the Act can be availed by the assessee only on the total income as computed after setting off the unabsorbed depreciation of the earlier years? 2) Whether the method of computation of deduction under section 80HHC as approved by the Tribunal is valid in law on the facts of the present case? 3) Whether on the facts and circumstances of the case benefit of section 80HHC can be claimed on the total income after deduction of unabsorbed losses and unabsorbed depreciation or otherwise? 3 4) Whether the Tribunal is justified in law in not giving its finding on specific ground raised before it on the facts and circumstances of the case? 5) Whether, in facts and circumstances of the case, the I.T.A.T. was justified in not holding that notional duty benefit derived by the assessee amounts to cash assistance under section 28(iiib) of the I.T. Act? 3. All these questions arise in the context of the computation of the amount the assessee can claim by way of deduction as per the provisions of Section 80HHC of the Act, which provides for an export incentive to an exporter and allows the amount computed as per this section to be deducted from out of the gross total income of the assessee, so that the taxable total income will be the figure after arriving at subsequent to the deduction. 4. We have heard Sri A Shankar, learned counsel for the appellant-assessee and Sri E R Indra Kumar, learned senior counsel appearing for the respondent-revenue. 5. Sri Shankar submits that question Nos 1 and 3 are now covered by the decision of this court rendered in an 4 appeal filed by the very assessee relating to the assessment year 1997-98 answering the questions posed for our answer against the assessee in ITA No 1105 of 2006, decided on 19-2-2013. These two questions are answered accordingly. 6. In so far as the question relating to computation of deduction under Section 80HHC of the Act i.e. the second question, is concerned, Sri Shankar has contended that though the question of allowing depreciation of earlier years’ against the profits of the assessee for the year before computing the profits for the purpose of Section 80HHC has also been answered against the assessee, there is a flaw in the computation of the actual profits of the assessee attributable to export turnover. In support of his submission, Sri Shankar has placed reliance on the decisions in 1) COMMISSIONER OF INCOME TAX vs MADRAS MOTORS (P) LTD [(1984) 150 ITR 150] and 2) COMMISSIONER OF INCOME TAX vs MILLIPORE INDIA PVT LTD [(2012) 341 ITR 219]. 5 7. Specific submission, placing reliance on these two decisions, is that the figure which is the amount attributable to profits of the business for the purpose of Section 80HHC of the Act, which is to be multiplied by the fraction of export turnover divided by total turnover for arriving at the computation of the amount qualifying for deduction under Section 80HHC should be in the context of the provisions of Section 80HHC; that it cannot be the figure which is otherwise contemplated under the provisions of the Act in general, particularly for the purpose of allowing the deduction of unabsorbed depreciation of earlier years; that taking the figure of profits of the business for the purpose of Section 80HHC by deducting the unabsorbed depreciation of earlier years and in this case brought from the assessment year 1995- 96, which was in a total sum of Rs 1,99,46,629/- is a mistake, as this deduction had already been factored before arriving at the gross total income by giving deduction and deducting the same amount again from the 6 amount for the purpose of Section 80HHC of the Act is not contemplated and submission is that it amounts to duplicate deduction from the profits for the purpose of Section 80HHC of the Act. 8. In this background, Sri Shankar has submitted that the computation of profits of business as per the explanation (baa) to Section 80HHC of the Act cannot be the same, as otherwise, it is generally computed as per the provisions of the Act; that the language of explanation (baa) to Section 80HHC of the Act, reading as under: 80HHC. Deduction in respect of profits retained for export business. xxx Explanation :- For the purposes of this section xxx (baa) “profits of the business” means the profits of the business as computed under the head “Profits and gains of business or profession” as reduced by – (1) ninety per cent of any sum referred to in clauses (iiia), (iiib), (iiic), (iiid) and (iiie) of section 28 or of any 7 receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India; makes it very clear that it has reference to the method of computation of profits and gains of business, as it occurs in Chapter IV of the Act and indicated in Section 29 of the Act and that this should be arrived at with reference to the working out the provisions of Section 29 of the Act. Section 29 of the Act reads as under: 29. Income from profits and gains of business or profession, how computed. The income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 43D. 9. What is pointed out is that the computation is as per the provisions of Sections 30 to 43D of the Act also figuring in Chapter IV, whereas the deduction of unabsorbed depreciation of earlier years is to be found 8 only in Section 72(2) of the Act, figuring in Chapter VI and therefore a deduction as per Section 72 is not contemplated while computing the profits and gains of business in terms of Chapter IV of the Act. 10. On this aspect, Sri E R Indra Kumar, learned senior counsel appearing for the respondent-revenue, has brought to our attention the provisions of Section 80A of the Act, figuring in Chapter VI, and has submitted that in the wake of the deduction permitted under Chapter VIA, deduction permitted under Section 80C to 80U are to be allowed from the gross total income of an assessee and that the deduction so permitted cannot exceed the gross total income of the assessee. 11. It is also brought to our notice the distinction of gross total income in terms of Section 80B(5) of the Act, indicating that it is nothing but the very total income computed in accordance with the provisions of this Act, but before making deductions under Chapter VIA. 9 Submission is that for the purpose of benefit to be given under Chapter VIA, the gross total income concept which has been introduced is also the total income and total income of the assessee under the head of profit or gain from profession or business being with reference to that profit of the assessee as computed in Chapter-IV, which becomes a total income taxable and this is computed as per the provisions of the Act inclusive of the deductions as contemplated under Section 72 of the Act, which is carried forward losses and unabsorbed depreciation of the earlier years and by setting off these amounts, if any, before arriving at the total income of the assessee. 12. The other point canvassed by Sri Shankar is relating to the amount which qualifies as the export incentives under sub-section (1) of Section 80HHC and for the purpose of computing the same as per the formula in sub- section (3) of Section 80HHC. Here, particular attention is drawn to the first proviso to sub-section (3) of this section, reading as under: 10 80HHC. Deduction in respect of profits retained for export business. xxx (3) For the purpose of sub-section (1) - xxx Provided that the profits computed under clause (a) or clause (b) or clause (c) of this sub- section shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiia) (not being profits on sale of a licence acquired from any other person), and clauses (iiib) and (iiic) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee: 13. Submission is that though the assessee had claimed the addition of the amount which qualified not only under clause (iiia) of Section 28 of the Act but also amounts within the scope of clauses (iiib) and (iiic) of section 28 of the Act, not factoring these amounts for computing the amount of export incentives provided to export of products and what is submitted is that because of not allowing all incentive type deductions claimed, an error has crept in; that the appellate commissioner while simply rejected the claim of the assessee in appeal by 11 holding that they were all notional and the tribunal has not at all dealt with this aspect, though such a specific ground was raised, it became a question of law which has to be looked into, as either matter has to be remanded or the question has to be answered here. 14. The figures claimed by the assessee though did not find as part of the record originally, a copy of such claim through a chartered accountant is independently produced and the figures claimed are as under: Export incentive for the year ending 31-03-1998 Rs. Premium on sale Exim Scrips 49,30,679 Excise duty on finished goods exported 29,23,37,736 Duty on duty free imports 5,28,93,279 Concessional rate of interest on export credit 27,35,947 Central Sales tax on finished goods exported 2,94,48,195 38,23,45,836 Sri Shankar submits that this is being referred to at page 27 of the paper book filed in this appeal, which is part of the assessment year, the same has not been taken for examination. 12 15. On this aspect, Sri Shankar has placed reliance on the decisions in 1) TOPMAN EXPORTS vs COMMISSIONER OF INCOME TAX [(2012) 247 CTR 353] and 2) ASST COMMISSIONER OF INCOME TAX vs PRATIBHA SYNTEX LTD [(1999) 63 TTJ 409]. The reasons given by the tribunal in the latter case is adopted as submissions. 16. Per contra, Sri Indra Kumar, learned senior counsel appearing for the revenue, has submitted that the question as such does not arise for examination from the order of the tribunal and cannot be permitted to be raised here. It is also submitted that when the amounts were disallowed as notional and not real, for the purpose of computation under Section 80HHC of the Act, the tribunal not having taken a contrary view, it is to be deemed as rejected. 17. Be that as it may, what we find is that in respect of the first item of incentive viz., premium sale exim scrips amount as claimed has been allowed by the assessing 13 officer. It is only in respect of the other amounts that are in dispute. 18. Sri Shankar has placed reliance on the decisions referred to above to submit that the amount as referred to in clause (iiia), (iiib) and (iiic) of Section 28 are the amounts which are to be taken into account for the purpose of adding the same to the profits computed under clauses (a) to (c) of sub-section (3) of Section 80HHC and with reference to the provisions of Section 28(iiia) to (iiic) it is submitted that the amount received or receivable in terms of these clauses are also to be taken as part of the business profits, in the sense, an income assessable. 19. Submission of Sri Shankar is that the amount should be received or ‘receivable’, but the word ‘receivable’ cannot be construed as equivalent to notional income, in the sense that the entitlement will be only when the actual condition is fulfilled and when it is made part of the profit and part of taxable income in Section 28, it is in the sense 14 of either received or receivable and not when the actual event has not occurred viz., that when the assessee has not either received or has not become entitled to receive a cash incentive in terms of clauses (iiib) and (iiic) to section 28 of the Act and when the assessee has not actually got a refund or is entitled for a refund as a drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules 1971. Conclusion is that for the purpose of Section 80HHC also, there cannot be a notional computation of these amounts, but it should be actual and either received or receivable, but not otherwise. 20. Sri Shankar has drawn out attention to the very judgment of the Madras high court in the case of MADRAS MOTORS PVT LTD [supra], to which Sri Shankar has drawn our attention, there is a distinction made relating to deductions permitted in Chapter VIA and it is indicated therein that the total income has to be computed in accordance with the provisions of the Act before giving deductions under Chapter VIA and the deductions even 15 contemplated under Section 72 of the Act is also dealt with and it is very clearly spelt out therein that Section 72 has to be applied before the total income of an assessee is determined before permitting deduction under Chapter VIA and this is so because of Section 80B(5) of the Act. 21. In support of the first contention urged, Sri. A. Shankar, learned counsel for the appellant has also placed reliance on the Judgment of the Bombay High Court in the case of ‘SYNCO INDUSTRIES LIMITED v. ASSESSING OFFICER OF INCOME TAX AND OTHERS’ reported in [2002] 254 ITR 608. 22. Submission is that though the Bombay High Court was examining the question arising out of the understanding and interpretation of the provisions of section 80-I of the Act, it has been very clearly pointed out that for computing the benefit under this section and section 80-I[1] provides that it shall be 20% of the profits and gains attributable to the nature of income referred to 16 in section 80-I[1] of the Act when such income is part of the gross total income of the assessee in terms of section 80-I[6] of the Act and such computation of the eligible deduction under section 80-I[1] of the Act is to be made as though such activity was only the source of income of the assessee and seeks to draw parallel between section 80- I[1] and section 80HHC[1] of the Act to submit that for the purpose of computing the eligible amount qualifying under section 80HHC[1] of the Act, the carried forward unabsorbed depreciation as in the case of the present assessee cannot be factored for the purpose of computation under section 80HHC[3] of the Act in view of explanation [baa] to section 80HHC of the Act and therefore submits that while employing the formula, the profits of the business should be before the adjustments or absorption of unabsorbed depreciation of earlier years. 23. On the other hand, Mr. Indra Kumar, learned senior counsel appearing for the respondent – revenue has submitted that section 80-I[1] of the Act while makes a 17 specific reference to gross total income, it is not so in the case of section 80HHC[1] of the Act. 24. It is in this background, we have to examine the contentions urged by the learned counsel. In so far as the first contention urged by Sri Shankar is concerned, we do not find the question raised in the specific manner as is submitted before us, but more as a general question and as being part of a method of computation of deduction under Section 80HHC of the Act is concerned. Nevertheless, we proceed to examine the contention. We find that the contention is totally untenable for the following reasons. 25. While, it is no doubt true that the claim towards deduction as permitted/allowed under sub-section (3) of Section 80HHC of the Act and for arriving at the figure for the purpose of Section 80HHC, the three components are: profits of the business, which is to be multiplied by the quotient of export turnover by total turnover and the 18 argument is only related to the profits of the business and the profits of the business no doubt is also defined under clause (baa) in explanation to Section 80HHC of the Act. It again relegates for working out the profits of the business towards the provisions of the Act themselves computed under the head profits and gain of the business and the further indication as indicated in the two situations to be made out of this amount. That means, even for the purpose of Section 80HHC of the Act, while profits of the business is as computed otherwise under the Act, further deduction as contemplated therein are to be made. That means, while the profits of business as computed in general including the factoring the adjustment towards unabsorbed depreciation of earlier years, has to be made, for the purpose of Section 80HHC from out of this figure further deduction as indicated in the two situations of explanation clause (baa) is to be applied. We do not find either any duplication in the deduction in the brought forward unabsorbed depreciation 19 of the earlier years, as contended by Sri Shankar. On the other hand, as pointed out by Sri Indra Kumar, learned senior counsel appearing for the revenue, discussion on this aspect by the Madras High Court in the case of MADRAS MOTORS PVT LTD [supra] viz., that in arriving at the total income deduction or incentives under Chapter VIA can be claimed only from out of the gross total income, computation of which is computation of the profits of the business under the head profits and gains of business or profession, which is a computation in terms of the Act and not necessarily only under Chapter IV of the Act. It is to be followed and therefore the argument fails. 26. We find the decision of our court in the case of MILLIPORE INDIA PVT LTD [supra] not Exactly on this issue and as is urged by the learned counsel for the assessee and the discussion was more in the context of deduction under Section 80-IA of the Act and exclusion of deduction claimed under Section 80-IA being not contemplated within the scheme of Section 80HHC of the 20 Act. What was specifically ruled in this decision is that the deduction as contemplated under Section 80-IA of the Act cannot be reduced or denied by holding that there can be duplication of the incentive, as the deduction/incentive as provided for under Section 80HHC is already availed of, it cannot be again claimed as part of deduction permitted under Section 80-IA of the Act. It is observed in the said decision that the limiting factor is only the ceiling or cap as indicated in sub-section (2) of Section 80-A of the Act and not with reference to duplication or other views taken by the authorities under the Act. It is, therefore, the first contention urged by Sri Shankar fails. 27. On a perusal of the Judgment of the Bombay High Court, it indicates that the question arose in the context of arriving at gross total income of the assessee and while doing so, the Bombay High Court ruled that even losses incurred by the assessee from one priority unit has to be necessarily set off against another priority unit and if the resulting gross total income is ‘nil’ then the assessee will 21 not be entitled for claiming any deduction under chapter VI-A in view of the provisions of sections 80A[2] and 80B[5] of the Act. 28. The Bombay High Court taking this view of the matter had answered the question referred for examination in the affirmative, in favour of the revenue and against the assessee and assessee’s appeal came to be dismissed. 29. While we find parallel drawn by learned counsel for the appellant is not very apt and as pointed out by Sri. Indra Kumar, learned senior counsel, there is considerable difference between the language of section 80HHC[1] and section 80-I[1] of the Act though it is pointed out by Sri. Shankar, learned counsel for the appellant that in both cases, it is in computation of total income, deduction is contemplated, the controversy was even before arriving at that total income before making deduction under chapter VI-A which is otherwise indicated therein as gross total 22 income, the carried forward losses incurred by the assessee’s another priority unit should be set off which only means that there is reduction in the profits of the assessee and the amount available for claiming deduction under chapter VI-A necessarily gets reduced in view of the ceiling. 30. But, the argument of Sri. Shankar, learned counsel for the appellant that for the purpose of applying the formula i.e., for computation under section 80HHC[3] of the Act, the phrases as defined in the explanations and particularly in this case, explanation [baa] to section 80HHC of the Act has to be kept in mind and it is here we notice that in the wake of the language of explanation [baa] to section 80HHC of the Act, certain further deductions are contemplated from out of the profits of the business as otherwise computed under the head ‘profits and gains of business or profession’. 31. The first deduction contemplated is 90% of any sum referred to clauses [iiia], [iiib], [iiic], [iiid] and [iiie] of 23 section 28 of the Act. That means even for the purpose of section 80HHC[3] of the Act, when one applies the provisions of explanation [baa] to section 80HHC of the Act and in a situation where the assessee is claiming the benefit for the purpose of first proviso to section 80HHC[3] of the Act, that has to be factored for reduction in terms of explanation [baa] to section 80HHC of the Act. 32. It is therefore very obvious that even in terms of explanation [baa] to section 80HHC of the Act which is the basis for submission of Mr. Shankar, learned counsel for the appellant on the first aspect, the profits of business is to be arrived in the normal course and then reduction if is applicable should be applied as in the situations referred to in explanation [baa] to section 80HHC of the Act. 33. We are afraid, submission on behalf of the assessee fails for two reasons. Firstly, there is no duplication of deduction as contended by Sri. Shankar, learned counsel for the appellant as it is so provided in terms of 24 explanation [baa] to section 80HHC of the Act. In fact, it is a fallacy to contend that there is duplication of deduction as the set off of unabsorbed carried forward losses is an exercise that has to be undertaken even while arriving at the gross total income. When once that is achieved, it is because explanation [baa] to section 80HHC of the Act further indicates as to what is the profits of the business for the purpose of section 80HHC of the Act, that again necessarily has to be factored. It is not a situation where the unabsorbed carried forward depreciation is again set off or adjusted, but it has already been done earlier in arriving at the gross total income. 34. We reject the contention that computation of business profits for the purpose of section 80HHC(3) of the Act can only be in terms of chapter-IV and as set off or carried forward losses occurring in section 72 is in Chapter-VI of the Act, cannot be factored, for the reason that computation should be in the first instance as per the provisions of the Act and secondly though section 72 of 25 the Act does occur in chapter-VI, it qualifies for computation in a situation where there is carried forward unabsorbed depreciation allowance not absorbed for earlier years in terms of section 72[2] of the Act and such is the present situation. This exercise is not because of any provisions of chapter VI-A, but by the operation of the provisions of the Act itself. Section 72[2] of the Act also contemplates that allowance which are brought forward shall be first given effect to i.e., whatever brought forward unabsorbed depreciation allowance was there, that should be first given effect to. 35. The argument of Sri Shankar cannot also be accepted for another reason, namely, even as the Supreme Court has ruled the deductions or benefit permitted under chapter VI-A of the Act can be availed only against positive profits and positive profit of an assessee is that profit which the assessee can really claim to have made a profit after factoring the unabsorbed depreciation allowance and carried forward losses of the earlier years. This aspect we 26 have already discussed in the context of while answering the other question which we have said is covered by the earlier decision and there is no need to repeat the same. 36. One another reason why this argument cannot be accepted is that there can be situation where the amount which qualifies for deduction under section 80HHC of the Act may be more than the available profits of the assessee and in view of section 80A[2] of the Act that has to be limited to the available profits, but if the method suggested by Sri. Shankar, learned counsel for the appellant, is to be employed, even in such situation if the depreciation is excluded and as was sought to be done, deduction under section 80HHC of the Act is first done, amount left over may not be sufficient to give a set off against unabsorbed depreciation of earlier years, in which event, it only amounts that the assessee is being given a benefit much more than the ceiling contemplated under section 80A of the Act. If that is so, it is an indirect way of defeating the purpose and object of section 80A[2] of the 27 Act and therefore also we cannot accept the argument as the argument if accepted, it runs contrary to section 80A[2] of the Act and can defeat the very purpose of section 80A[2] of the Act. For all these reasons, we reject the first contention. 37. In so far as the second contention is concerned, i.e. one relating to the computation of incentive-type of deduction as contemplated in the first proviso to sub- section (3) of Section 80HHC, in the sense that 90% of the amount referable inclauses (iiia) to (iiic) of Section 28 of the Act is concerned, though the method of arriving at the qualified amount is the same as in respect of profits of qualification of this amount in sub-section (1) based on the actual export of goods or mercantile and employing the formula under sub-section 3 and that is not in dispute, submission is that not all amounts claimed by the assessee is not allowed by the assessee. What we find here is that the only amount received by the assessee attributable to sale or export licence and as claimed by the 28 assessee, has been allowed in full by the assessing officer. It is only in respect of other amounts such as amount attributable to claim based on the excess duty on finished goods exported, the duty on duty free imports, interest and credit export and central sales tax on finished goods exported. 38. In the last item of the claim, we find straightaway it is not one to be allowed, as it is not contemplated even under Section 28 of the Act itself. In so far as the other three items referred to above, submission of Sri Shankar, learned counsel for the appellant-assessee is that it can be brought within either clause (iiib) or (iiic) of Section 28 and the argument on this aspect is that because of the expression used in clause (iiib) and (iiic) viz., received or receivable by any person against exports under the scheme of government of India and any duty of customs or excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971 and therefore even without 29 showing the actual amount received, claim can be put forth on the basis of the receivable or repayable amount as the case may be. 39. We notice that for such amounts to qualify for computation under Section 80HHC(3) of the Act, it should be factually so and not on a notional basis. They should be actually received or receivable and not on a notional basis. So also repaid or repayable as drawback. While the first proviso to sub-section (3) of Section 80HHC of the Act does provide for adding this amount i.e. as is provided in the proviso, the profit of business as defined in explanation (baa) to Section 80HHC of the Act expressly provides for reducing the very amounts from the profits of business, as otherwise computed under the Act for the purpose Section 80HHC of the Act. We find this is the only distinction that follows due to a specific definition provided for in explanation (baa) to Section 80HHC of the Act and not as contended and as submitted by Sri Shankar, learned counsel for the appellant-assessee. 30 40. Further, we also find that the judgment of the Supreme Court in the case of TOPMAN EXPORTS [SUPRA] was not on this aspect, but was more in the context of the computation under Section 80HHC with reference to clause (baa) being an actual amount and the entitlement for the benefit under sub-section (1) of Section 80HHC of the Act. This judgment is valid to hold that DEPB given by the government of India to an exporter is part of cash assistance and therefore qualifies for addition on the first proviso to Section 80HHC(3) of the Act. Here again, it was under actual basis and not on notional basis, as is the finding in the present case by the authorities below. In fact, the view taken by the authorities below gets support from the fact that the amount claimed by the assessee under other heads referable to Section 28(iiia) to (iiic) having not been factored in computing the business profits in terms of explanation (baa) of Section 80HHC and therefore it has to be necessarily inferred that the assessee itself had not made good the claim, as is claimed and as 31 contended by its learned counsel for the purpose of Section 80HHC of the Act. 41. In the absence of the assessee making good the claim in terms of the amount being either received or receivable or refund being paid or payable, the question of addition of this amount as per the first proviso to sub- section (3) of Section 80HHC of the Act does not arise. Therefore, the second contention is also rejected. 42. Insofar as the second contention is concerned which we have discussed above, we also find that there is a connection between the first proviso to section 80HHC[3] of the Act and explanation [baa] to section 80HHC of the Act. In both these provisions, there is reference to clauses [iiia], [iiib], [iiic], [iiid] and [iiie] of section 28 of the Act. While for the purpose of computation under section 80HHC[3] of the Act, in view of the first proviso, the amount attributable to these activities has the effect of boosting the amount qualifying for deduction under section 80HHC[1] of the Act, at the same time, in view of 32 explanation [baa] to section 80HHC of the Act, these amounts have to be factored for reduction from out of the profits of the business of the assessee as otherwise computed in terms of the provisions of the Act. The assessee not having factored computation in terms of explanation [baa] to section 80HHC of the Act itself which can only indicate that there are no amounts attributable to deduction, we also find no foundation laid for the amount mentioned and we cannot on hypothetical basis accept the submissions either on facts or in law. 43. While it may be possible to describe sum of the amount sought to be claimed as in the nature of cash assistance, the same cannot be extended for assuming that because the assessee claims that deductions claimed for such purpose is in the nature of cash assistance, it has actually been made good by the assessee. 44. We are satisfied that the authorities below were justified in denying the additional benefits attributable to 33 the situations of clauses [iiib] and [iiic] of section 28 of the Act, as these claims are not made good by the assessee on an actual basis, but on the other hand claim being sought to be justified on a notional basis even as per the question No.5 sought for answer in this appeal, we do not find any occasion to interfere with the orders passed by the authorities below for answering the questions in favour of the assessee and therefore the second argument relating to such aspects fail. 45. In the result, all questions are answered against the assessee, in favour of the revenue and the appeal is dismissed. Sd/- JUDGE Sd/- JUDGE *pjk "