RAJIVE BHALLA, J. - (1.) THIS order shall dispose of ten income -tax appeals; seven, filed by the Revenue, namely, ITA Nos. 544, 603, 604, 619, 620, 621 and 622 of 2007, and three filed by the assessees, namely, ITA Nos. 576 and 628 of 2007 and 21 of 2008, as they involved a common question of law which, in essence, is whether a supporting manufacturer can claim deduction under s. 80HHC of the IT Act at par with a direct exporter.
(2.) THE assessees, who are supporting manufacturers, are receiving export incentives as duty drawback and claimed deduction of this amount, under s. 80HHC of the IT Act, 1961 (for short hereinafter referred to as "the Act"). The assessees are deriving income from manufacturing and sale of textile goods as supporting manufacturers. In the returns of income, the assessees are claiming deduction under s. 80HHC of the Act, claiming themselves at par with the direct exporter on the basis of the judgment of the Tribunal, Delhi Bench "A", in Eastern Leather Products (P) Ltd. vs. Dy. CIT (1999) 65 TTJ (Del) 603 : (1999) 68 ITD 358 (Del).
(3.) IN ITA. Nos. 544, 603, 604, 619, 620, 621 and 622 of 2007, the AO did not accept the assessees' prayer and held that the assessees could not be treated at par with the supporting manufacturer. In appeals filed by the assessees before the CIT(A), the assessees' contention was accepted and it was held that the assessees were entitled to deduction under s. 80HHC of the Act in the same manner as in the case of a direct exporter. Reliance was placed upon Eastern Leather Products (P.) Ltd. vs. Dy. CIT (supra) and Sharda Exports vs. ITO in ITA No. 254 of 2001. Aggrieved by the aforementioned orders of the CIT(A), the Revenue filed appeals before the Tribunal, where the claim of the assessees was accepted. The appeals filed by the Revenue, as aforesaid, against the order of the CIT(A) were dismissed, by placing reliance upon the judgment of the Kerala High Court in Baby Marine (Eastern) Exports vs. Asstt. CIT (2003) 184 CTR (Ker) 151 : (2003) 262 ITR 88 (Ker). Hence, the Revenue has filed seven appeals, namely, ITA. Nos. 544, 603, 604, 619, 620, 621 and 622 of 2007, challenging the order of the Tribunal, granting benefit to the assessees, under s. 80HHC of the Act, by raising the following question of law : "Whether, on the facts and in the circumstances of the case, the learned Tribunal was right in law in upholding the order of the CIT(A) directing the AO to allow deduction under s. 80HHC to the assessee who is a supporting manufacturer in the same manner, as in the case of a direct exporter, treating the supporting manufacturer at par with the direct exporter and ignoring the provisions of s. 80HHC(1A) r/w s. 80HHC(3A) r/w cl. (baa) of Explanation to s. 80HHC of the Act.";