By K. B. Bhujle Advocate
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80HHCCIT vs. Shamanur Kallappa & Sons; 373 ITR 373 (Karn)
The assessee exported rice to Cambodia through State Trading Corporation of India as a supporting manufacturer and claimed deduction u/s. 80HHC of the Income-tax Act, 1961. The Assessing Officer disallowed the claim on the ground that the State Trading Corporation had declared loss. The Tribunal allowed the asessee’s claim.
On appeal by the Revenue, the Karnataka High Court upheld the decision of the Tribunal and held as under:
“i) In order to attract the provisions of section 80HHC(1A), the supporting manufacturer sells the goods or merchandise to the export house or trading house. The export house or trading house has to issue a certificate under the proviso to subsection (1) of section 80HHC of the Act. If these two conditions are fulfilled, the supporting manufacturer is entitled to the deduction as contemplated u/s. 80HHC of the Act to the extent as mentioned in section 80HHC(1A) of the Act. It is immaterial whether in the process, the export house or trading house sells the goods to any foreign country or earns profit or realises any foreign exchange.
ii) In order to attract section 80HHC(1A) of the Act, after purchase of goods or merchandise from the supporting manufacturer, the goods have to be exported out of India. Once such export is established, a certificate under the proviso to subsection (1) is issued by the export house or trading house and when they do not claim the benefit u/s. 80HHC, the assessee would be entitled to the benefit of deduction as prescribed u/s. 80HHC(1A).
iii) The assessee was entitled to deduction u/s. 80HHC. The Tribunal was justified in granting the relief to the assessee upon the certificate produced in the course of the proceedings.”
