LexA.M. MOOSA versus COMMISSIONER OF INCOME TAX, TRIVANDRUM
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j ' A.M. MOOSA A v. COMMISSIONER OF INCOME TAX, TRIVANDRUM SEPTEMBER 10, 2007 (DR. ARIJIT PASAY AT AND D.K. JAIN, JJ.) B Income Tax Act, 1961: s.80 HHC (3)(c)-Deduction under-Held: Allowable only if there is positive profit in export of both self manufac.tured goods as well as trading goods-If there is loss in either of two then that has C to be taken into account for-computing profits. Interpretation of statutes: Taxing statutes-Held: Interpretation to be as per wordings of the provision. Words and Phrases: 'profit' and 'positive profit'-Connotation of in the D context of s.80HHC(3) and s.80AB of Income Tax Act, 1961. The Assessec-appellant claimed deduction under s.80-HHC of Income Tax Act, 1961. The Assessing Officer disallowed the claim on the ground that the 'profits of the business' computed under s.80-HHC indicated a negative figure. The assessee unsuccessfully appealed before appellate authority, E Tribunal and High Court. In appeal to this Court, assessee contended that where the assessee exported goods manufactured by him as well as trading goods then the profits from export of goods manufactured by the assessee and the profits from export of trading goods were to be considered separately; that the profits only in F respect of one type of exports could not be negatived or set off against the loss from the other export; that the word 'and' ins. 80-HHC (3)(c) has to be liberally construed and cannot be taken to mean that both the profits have to be clubbed together; that the word "profit" in s.80-HHC would have the same meaning in the entire section, and as the word profit in s.80-HHC(l) means only positive profit, it will have the same meaning in s.80-HHC(3)(c). G Dismissing the appeal, the Court HELD: 1. Undoubtedly, s.80-HHC of the Income Tax Act, 1961 has been 831 H 832 SUPREME COURT REPORTS [2007) 9 S.C.R. A 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 wordings of this section. If the wordings of the section are clear, then benefits, which are not available under the section, cannot be conferred by ignoring or misinterpreting words in the section. This case is concerned with the wordings of sub-s.(3)(c) of s.80-HHC. Sub-s.(3)(a) deals B with the case where the export is only of self-manufactured goods. Sub-s.(3)(b) deals with the case where the export is only of trading goods. Thus, when the legislature wanted to take exports from self manufactured goods or trading goods separately, it has already so provided in sub-ss.(3)(a) and (3)(b). It would not be denied that the word "profit" in s.80-HHC (1) and ss.80-HHC(3)(a) or C (3)(b) means a positive profit. In arriving at the figure of positive profit, both .the profits and the losses will have to be considered. If the net figure is a positive profit, then the assessee will be entitled to a deduction. If the net figure is a loss then the assessee will not be entitled to a deduction. Sub-s.(3)(c) deals with cases where the export is of both self-manufactured goods as well as trading goods. The opening part ofsub-s.(3)(c) states "profits derived from D such export shall". Then follow clauses (i) and (ii). Between clauses (i) and (ii) the word "and" appears. A plain reading ofsub-s.(3)(c) shows that "profits from such exports" has to be profits from exports of self-'!1anufactured goods plus profits from exports of trading goods. It is clear from a reading of sub- s.(i) ofs.80-llllC(3) that a deduction can be permitted only ifthere is a positive E 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 that loss has to be taken into account for the purposes of computing profits. (Para 7( (838-F-H; 839-A-D] 2. S.80-AB is also in Chapter VI-A. It starts with the words "where any deduction is required to be made or allowed under any section included in F this Chapter". This would include s.80-HHC. S.80-AB further provides that "notwithstanding anything contained in that section". Thus s.80-AB has been given an overriding effect over all other sections in Chapter VI-A. S.80-HHC does not provide that its provisions are to prevail over s.80-AB or over any other provision of the Act. S.80-HHC would thus be governed by s.80-AB. S.80- AB makes it clear that the computation of income has to be in accorda
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