Whether deduction u/s 80HHC can be allowed from domestic business if exports business has suffered a loss?

Last updated: 13 April 2015

Court :
Supreme Court of India

Brief :
The appellant company is engaged in the business of export of Marine products and also financial consultancy and trading in equity shares. Its total business does not consist purely of exports but includes business within the country. AO held that the deduction was not allowable on the ground that there is no relationship between the Assessee Company and the Processors. The appellant carried the said order in appeal. The appeal against the assessment order was dismissed by the CIT (Appeals). The appellant appealed before the ITAT. ITAT held that the appellant was entitled to full relief under Section 80HHC and directed the Assessing Officer to grant relief to the assessee. On remand, while giving the effect to order of ITAT, the AO found that the appellant had not earned any profits from the export of Marine products and from the said export business, it had suffered a loss. Therefore,according to AO, as per Section 80AB, the deduction under Section 80HHC could not exceed the amount of income included in the total income.Held that it is a pre-requisite that there must be profits from the export business to claim deduction u/s 80HHC.

Citation :
Jeyur Consultant &InvestmentPvt. Ltd – Appellant – Versus – CIT – Respondent