COMMISSIONER OF INCOME TAX, KARNAL (HARYANA) versus M/S CARPET INDIA, PANIPAT (HARYANA)

Citation: [2019] 12 S.C.R. 607 · Decided: 27-08-2019 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Disposed off
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Judgment (excerpt)

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607
COMMISSIONER OF INCOME TAX, KARNAL (HARYANA)
v.
M/S CARPET INDIA, PANIPAT (HARYANA)
(Civil Appeal No. 4590 of 2018)
AUGUST 27, 2019
[R. F. NARIMAN, R. SUBHASH REDDY
AND SURYA KANT, JJ.]
Income Tax Act, 1961:
s.80 HHC - Deductions under -  Availability of -  To
supporting manufacturer -  Whether at par with the actual direct
exporter -  Held: Supporting manufacturers stand on completely
different footing from the exporters - The parameters and scheme
for claiming deduction relatable to supporting manufacturers u/s.
80HHC(1A) r/w. (3A) is completely different from that of exporters
u/s. 80HHC(1) r/w (3).
Disposing of the appeals, the Court
HELD: 1.1 Where the assessee has engaged in the
business of export out of India of any goods or merchandise to
which Section 80 HHC(1) of Income Tax Act applies, what shall
be allowed in computing the total income of the assessee, is a
deduction to the extent of profits, referred to in sub-section
(1B), and derived by the assessee from the export of such goods
or merchandise. So far as "supporting manufacturers" are
concerned, under Section 80HHC(1A), where any Export House
or Trading House has issued a certificate that the supporting
manufacturer has, in fact, supplied such goods or merchandise
for export, they shall also be allowed a deduction to the extent
of profits referred to derived by the assessee from the sale of
goods or merchandise to the Export House or Trading House.
[Para 3] [614-D-E]
1.2 The manner of deduction, insofar as the exporter is
concerned, is laid down in sub-section (3) which when read
together with its provisos make it clear that profits that are
derived from such export shall be further increased in the
manner provided by the first proviso; and where export turnover
   [2019] 12 S.C.R. 607
607
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608
SUPREME COURT REPORTS
[2019] 12 S.C.R.
does not exceed rupees ten crores, in the manner provided by
the second proviso; and where the export turnover exceeds
rupees ten crores, in the manner provided by the third proviso.
What is conspicuous by their absence is any of the provisos in
sub-section (3) insofar as sub-section (3A) is concerned, which
makes it clear that the profits derived by a supporting
manufacturer shall be strictly in accordance with the provisions
contained in Section 80HHC (3A) read with the explanation to
the Section, which then defines  “Profits of the business” under
explanation (baa). [Para 3] [614-F-H]
1.3 Given this statutory scheme, it is clear that the
exporter stands on a completely different footing from the
supporting manufacturer as the parameters and scheme for
claiming deduction relatable to exporters under 80HHC(1) read
with (3) is completely different from that of supporting
manufacturers under Section 80HHC (1A) read with (3A) thereof.
[Para 4] [615-C]
C.I.T. v. Satish Kumar Gupta (C.A. No. 6437/2012)
decided on 12.09.2012 - overruled.
Commissioner of Income Tax, Thiruvananthapuram v.
Baby Marine Exports, Kollam (2007) 4 SCC 555 :
[2007] 4 SCR 628 - distinguished.
Commissioner of Income Tax, Karnal (Haryana) v.
Carpet India, Panipat(Haryana) (2018) 6 SCC 620 :
[2018] 7 SCR 1092 - referred to.
2. In Civil Appeal Nos. 4593, 4594, 4595, 4596, 4597, 4598
and 4599 of 2018, the impugned judgments are set aside.
However, it will be open for the respondent in the above cases
to show, by adducing the necessary facts, that they are direct
exporters as well and can therefore avail of the deduction
available under Section 80HHC (1) read with (3).  For this
purpose, these matters stand remanded to the Appellate
Tribunal. [Paras 7, 8 ]
Case Law Reference
[2007] 4 SCR 628
distinguished
Para 1
[2018] 7 SCR 1092
referred to
Para 5
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609
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4590
of 2018.
From the Judgment and Order dated  13.05.2008 of the High
Court of Punjab and Haryana at Chandigarh in I.T.A. No. 544 of 2007.
With
Civil Appeal Nos. 4591, 4599, 4592, 4593, 4594, 4603, 4596, 4595,
4597, 4598 of 2018.
K. Radhakrishnan, Sr. Adv., Rupesh Kumar, M. P. Gupta, Umesh
Kumar Saw, Mrs. Anil Katiyar, Advs. for the Appellant.
Dr. Rakesh Gupta, Ambhoj Kumar Sinha, Ms. Monika Ghai,
Rohit, Anunav Kumar, Jagdish Kumar Chawla, T. Mahipal, /s Lex-peritia
And Co., Advs. for the Respondent.
The Judgment of the Court was delivered by
R. F. NARIMAN, J.
Civil Appeal Nos. 4590, 4591, 4592 and 4603 of 2018:
1. This batch of appeals arises from a judgment passed by the
High Court of Punjab and Haryana at Chand
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