Export profit : Deduction u/s. 80HHC of I. T. Act, 1961 : Export turnover and total turnover : Export sale price to be modified as per the approval by the RBI for including in the export turnover.

[CIT vs. M/s. Polycot Corporation (Bom); ITA No. 1241 of 2008: Dated 23.01.2009.]

In the appeal filed by the Revenue against the order of the Tribunal, the Department had raised the following question :

“Whether on the facts and in the circumstances of the case and law, is the Hon’ble ITAT right in directing the A.O. to compute the deduction u/s. 80HHC of the Act after the books of account having been closed/made up with the total export turnover ascertained, holding that the reduction in the invoice amount having been approved by the RBI, the original sales price stands modified to this extent and such modified price only should be included as part of export turnover ?”

The Bombay High Court held as under :

“i) To avail of the benefit of Section 80HHC the proceeds have to be brought into India within the time prescribed i.e., six months or such extended period as may be allowed. In the instant case the RBI granted time up to 30th June, 2001. The proceeds were brought into India on 30 June, 2001.

ii) Here we may set out the areas of disagreement between the Revenue and the assessee. It is the contention of the assessee that while working out total turnover what will have to be considered is the revenue which has been brought in during the course of that financial year and if any moneys in respect of export proceeds have come subsequent to the order of assessment, they will have to be considered in the said financial year.

iii) The other factual aspect of the matter is that the buyer proposed deduction in the export price, the respondents agreed to the same after taking approval of the RBI to the extent of 30%. The respondents are a totally export oriented unit. Moneys, therefore, in terms of the approval granted by the RBI were brought in during the period as extended.

iv) The Tribunal in its order observed that once the RBI has agreed to deduction in the invoice amount, the original sales price stands modified and such modified price only should be taken as actual export value. It is further observed that such adjusted export value should only be included in the export turnover and the total turnover.

v) The contention of the Revenue was that, that should be excluded from the export turnover.

vi) In our opinion, considering the facts and the provisions of Section 80HHC, we cannot find fault with the conclusion arrived at by the learned Tribunal.”