Assessee entitled for Income Tax Deduction where Separate Books of Account are maintained on Export: Madras HC [Read Judgment]

deduction - books of account - export - Madras High Court - Taxscan

The Madras High Court ruled that the assessee is entitled for deduction under section 80HHC of the Income Tax Act where separate books of account are maintained with respect to export.

The assessee, M/s.Ayshwarya Sea Food Pvt. Ltd. is engaged in the business of processing seafood and trading in shrimp food. The assessee claimed deduction under Section 80HHC and the claim was negatived by the Assessing Officer on the ground that the assessee had ignored the losses made by it in its trading division and started its computation with the figure of profits made by the manufacturing division. Thus, the Assessing Officer held that, in terms of Section 80HHC(1), the deduction is to be given in computing the total income of the assessee, and in doing so, the total income of the assessee, both profits as well as losses, will have to be taken into consideration. The other issue which arose for consideration was whether the payments made by the assessee in cash to the account of M/s.C.P.Aquaculture (India) Pvt. Ltd. should be hit by the provisions of Section 40A(3) of the Act. An explanation was offered by the assessee, which did not find favour with the Assessing Officer. Accordingly, assessment was completed by rejecting the claim of deduction under Section 80HHC of the Act and disallowance of 20% was made with regard to the cash payments.

The revenue has raised the issue whether the Tribunal was right in holding that the assessee is entitled for deduction under Section 80 HHC where separate books of account are maintained with respect to export and other units.

The division bench of Justice T.S.Sivagnanam and Justice Sathi Kumar Sukumara Kurup considered the decision of the division bench in the case of the decision in the case of Chamundi Textiles (Silk Mills) Ltd. wherein it was held that the income earned from the export goods from the Bangalore unit merited to be considered for 100 per cent. relief, as one falling under section 80HHC(3)(a) of the Act.”

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