JEYAR CONSULTANT & INVESTMENT PVT. LTD. versus COMMISSIONER OF INCOME TAX, MADRAS

Citation: [2015] 6 S.C.R. 979 · Decided: 01-04-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed

Judgment (excerpt)

[2015) 6 S.C.R. 979 
JEYAR CONSULTANT & INVESTMENT PVT. LTD. 
A 
v. 
COMMISSIONER OF INCOME TAX, MADRAS 
(Civil Appeal No. 8912 of 2003) 
APRIL 01, 2015. 
[A.K. SIKRI AND R. F. NARIMAN, JJ.] 
B 
Income Tax Act, 1961- s.BOHHC (1) and (3) (b) -
Deduction in respect of profits from export business -
c 
Computation of-Assessee having turnover and income from 
business in India as well as from export business - Denial 
of deduction by the Revenue and confirmed by courts below 
on the ground that assessee having not earned profit from 
the export, deduction would be nil- On appeal, held: In order D 
to provide deduction, the pre-requisite is to ascertain that 
there are profits from the export business - If there are losses 
in the export business, but profits in domestic business is 
more than the export losses, benefit of s. BOHHC would not 
be available - The appellant-assessee since incurred losses E 
in export business, not entitled to benefit u/s. BOHHC - The 
domestic income of the assessee from dividend, interest, 
profit or sale of shares and fees cannot be covered by 
expression 'total turnover' for the purpose of computation of 
the deduction as provided uls BOHHC 3(b) and the Circular F 
No. 564 dated 5. 7. 1990 issued by the Central Board of Direct 
Taxes. 
Dismissing the appeal, the Court 
G 
HELD: 1. From the scheme of Section 80HHC of 
Income Tax Act, it is clear that deduction is to be provided 
under sub-section (1) thereof which is "in respect of 
profits retained for export business". Therefore, in the 
first instance, it has to be satisfied that there ~re profits H 
979 
980 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A from the export business. That is the pre-requisite. Sub-
section (3) comes into picture only for the purpose of 
computation of deduction. For such an eventuality, while 
computing the "total turnover", one may apply the 
formula stated in clause (b) of sub-section (3) of 
B Section 80HHC. However, that would not mean that even 
if there are losses in the export business but the profits 
in respect of business carried out within India are more 
than the export losses, benefit under Section 80HHC 
would still be available. In the present case, since there 
C are losses in the export business, question of providing 
deduction under Section 80HHC does not arise and as a 
consequence, there is no question of computation of 
any such deduction in the manner provided under sub-
D section (3). [para 19] [998-E-H; 999-A] 
E 
/pea Laboratory Ltd. v. Deputy Commissioner of Income 
Tax Mumbai (2004) 12 SCC 742: 2004 (2) SCR 1075; 
A.M. Moosa v. Commissioner of Income Tax, 
Trivandrum (2007) 9 SCR 831- relied on. 
2. In the present case, the domestic income in 
respect of which benefit is sought is from dividend 
income, interest income, profit or sale of shares and 
fees received from arranging finance for the assessee's 
F clients. These are income simplicitor and cannot be 
covered by the expression "total turnover". Even 
otherwise, the formula as sought to be applied by the 
appellant does not become applicable on the facts of 
the present case. [para 21, 22 and 23] [999-C, H; 1001-
G 8-C] 
Case Law Reference 
2004 (2) SCR 1075 
H (2007) 9 SCR 831 
relied on 
relied on 
Para 9 and 18 
Para 9 and 18 
JEYAR CONSULTANT & INVESTMENT PVT. LTD. v. 
981 
COMMNR. OF INCOME TAX, MADRAS 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
A 
8912 of 2003. 
From the Judgment and Order dated 20.08.2002 of 
the High Court of Judicature at Madras in T.C. No. 660 of 
1~4. 
B 
Nikhil Nayyar, Gautam Narayan, Asmita Singh for the 
Appellant. . 
N. K. Kaul, ASG, Jaideep Gupta, Nitesh Daryanani, 
Sadhana Sandhu, Parvesh Thakur, Anil Katiyar for the C 
Respondent. 
The Judgment of the Court was delivered by 
A. K. SIKRI, J. 1. What is the correct method of D 
computation of deductions under Section 80HHC(3) of the 
Income Tax Act, 1961, in the given facts and circumstances, 
is the question which needs an answer in the present appeal. 
2. The given facts and circumstances, as they appear E 
on record, are stated in the summary form herein below: 
Finance Act of 1983 introduced.Section BOHHC of the 
Income Tax Act, providing incentives to exporters and 
deductions for persons involved in the export business. 
F 
Section 80HHC(3)(b) provided the formula for the 
computation of deduction for persons who do net have 
business exclusively of export out of India, that is to say, in 
cases where the assessee is having turnove

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