Samtex Fashions Ltd. v. Commissioner of Income Tax: Export quota premium receipts do not earn foreign exchange and administrative CBDT circulars cannot override statutory provisions.

10. Samtex Fashions Ltd. Vs. Commissioner of Income Tax, New Delhi

Civil Appeal Nos. 11063 of 2017 and 12449 of 2017 decided on 18.09.2026

Export – Special deduction – Section 80HHC - Revenue from the sale of a quota generates horizontal revenue for the Assessee but does not earn foreign exchange - The requisite for any of the revenues covered by Section 28(iiia) to (iiic) of the Act, 1961 is not present in the sale of the quota

CBDT Circulars – Binding nature – Circulars merely represent the Executive's understanding of a statutory provision and are never binding on the High Courts or the Supreme Court – Circulars contrary to statutory provisions have no existence in law and cannot prevail over judicial interpretation in pending matters before courts

On 21.10.2001, the Assessee filed the Return for AY 2001-02. The Assessee declared ₹90,43,061/- towards proceeds from the sale of export quota and ₹16,72,286/- towards interest earned on the margin money deposit. The Assessee claimed a deduction under Section 80HHC of the Act, 1961. On 24.03.2004, the Assessing Officer acting under Section 143(3) of the Act, 1961, rejected the claim under Section 80HHC of the Act, 1961, and assessed the total taxable income of the Assesse