Selvam Exports Pvt. Limited vs The Assistant Commissioner of Income Tax

Chitra Venkataraman, J.—The Assessee is on appeal as against the order of the Tribunal. The Assessee contended that irrespective of

whether it is loss making or profit making unit the benefit of Section 80HHC of the Income Tax 2 Act, 1961, should be granted to the Assessee. It

was further pointed out that the Assessee claimed deduction of 90% of the export incentives earned during the relevant period. In spite of the fact

there was loss in export business the Tribunal rejected the Assessee''s claim on the ground that where the results are negative the question of

considering the benefit of Section 80HHC of the Act, does not arise.

The question as to whether the Assessee would be entitled to the relief u/s 80HHC of the Act, even in a case of a loss, in respect of a case was

considered by the Apex Court, in the decision reported in IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax, Mumbai, , wherein,

the Apex Court pointed out that only where there is a positive profit that Assessee would be entitled for deduction u/s 80HHC of the Act, and if

there is a loss the Assessee would not be entitled to deduction.

The Apex Court had further held that the word ""profit"" in Sub-sections (1) and 3(1) and (b) of Section 80HHC of the Act refers to positive

profit. Thus, where there is a loss, No. deduction would be available u/s (1) or Sub-section (3)(a) or Sub-section (3)(b) of Section 80HHC of the

Act. Thus, deduction u/s 80HHC can be permitted u/s 80HHC(1) only if there is a positive profit in exports and if the net figure is negative, the

Assessee could not sustain its claim u/s 80HHC of the Act.

Following the said decision, we have No. hesitation in confirming the view of the Tribunal. The Tax Case Appeal stands dismissed. No. costs.