DEEPAK VERMA,J. - (1.) HEARD Sri M.V. Seshachala, learned Counsel for the appellants and Sri S. Parthasarathi, learned Counsel for the respondent.
(2.) THIS appeal is at the instance of the Revenue under Section 260A of the Income Tax Act, 1961, against the order passed by the Income Tax Appellate Tribunal on March 21, 2003, in I.T.A. No. 226/Bang/1998. The following substantial question of law has been formulated in this appeal. Whether the Tribunal was correct in "holding that the negative export profits should be ignored when aggregating the total turnover including other export by not taking into consideration the specific definition adduced in Section 80HHC read with Section 80AB of the Act for the purpose of computing deduction under Section 80HHC of the Act? The question that has been formulated in the said appeal stands answered by two judgments of the Supreme Court in the cases of IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax, Mumbai, (2004) 266 ITR 521 SC and in the case of A.M. Moosa Vs. Commissioner of Income Tax, Trivandrum, (2007) 294 ITR 1 SC .
(3.) THE Supreme Court in the case of A.M. Moosa v. CIT [2007] 294 ITR 1, while considering the meaning of the word "profit", has made the following observations (headnote): The word 'profit' in Section 80HHC(1) and (3) of the Income Tax Act, 1961, means a positive profit. A plain reading of Sub -section (3)(c) shows that 'profits from such exports' has to be profits from exports of self -manufactured goods plus profits from exports of trading goods. The profit is to be calculated in the manner laid down in Sub -section (3)(c)(i) and (ii). The opening words 'profits derived from such exports' together with the word 'and' clearly indicate that the profit have to be calculated by counting both the exports. Deduction can be permitted only if there is a positive profit in the exports of both. self -manufactured goods as well as trading goods. If there is a loss in either of the two, then the loss has to be taken into account for the purposes of computing the profits. Section 80AB has been given an overriding effect over all other Sections in Chapter VI -A. Section 80HHC does not provide that its provisions are to prevail over Section 80AB or over any other provision of the Act. Section 80HHC would thus be governed by Section 80AB. Undoubtedly, Section 80HHC has been incorporated with a view to provide incentive to export houses. Even though a liberal interpretation has to be given to such a provision, the interpretation has to be as per the wording of the section. If the wording of the Section is clear, then the benefits which are not available under the Section cannot be conferred by ignoring or misinterpreting words in the section.;