Asvini Cold Storage (P) Itd. Vs. Assistant Commissioner of Income Tax - Court Judgment

Excerpt:
counsels: n.d. raghavan, j.m. & p.s. kalsian, a.m. r. vilayaraghavan, for the appellant: k chandrahas, for the respondent - orderp.s. kawl4n, am.these appeals by the assessee relate to asst. yr. 1992-93 and arise out of the separate orders of the cit(a)-v1, madras dt. 14th nov., 1995. for the sake of convenience the appeals are heard together and are being disposed of by a common consolidated -order.2. ita no. 1929/mad/1996 is filed by the assessee with a delay of 233 days. after considering the affidavit filed by the assessee dt. 23rd sept., 1996, the delay is condoned and the appeal is admitted.3. the assessee is a domestic company in which the public are not substantially interested. it is carrying on the business of processing and exporting marine products.ita no. 1721mad119964. first and second grounds of appeal are to the effect that the cit(a) erred in confirming the method adopted by the ao in computing the profits and gains from business for working out the profits under s. 80hhc by setting off the unabsorbed depreciation and unabsorbed investment allowance carried forward from earlier years. we find that this issue was not agitated by the assessee before the ao but it was taken by the assessee's counsel before the cit(a). the cit(a) did not agree with the views of the assessee's counsel and found that in the case of cit vs. loonk & tools (i) itd. (1995) 127 ctr (raj) 77, the rajasthan high court held that the depreciation and investment allowance are to be deducted before giving the special deductions as provided under chapter vi-a. the cit(a) accordingly confirmed the order of the ao and held that the ao was justified in setting off the unabsorbed depreciation and unabsorbed investment allowance for computing the assessee's net income. the assessee is in further appeal before the tribunal.5. it is argued by the learned counsel- for the assessee that s. 80hhc is a separate and independent section and while computing deduction under that section only the profit for the asst. yr. 1982-83 should be considered and unabsorbed depreciation/investment allowance for earlier years cannot be deducted out of the profits of asst. yr. 1982-83. the profit under s. 80hhc is not to be computed in normal manner because under that section the relief is intended to be given on export profit and on the logical conclusion the earlier years' unabsorbed depreciation/investment allowance should be not considered. the learned counsel referred to the decision of the supreme court in the case of bajaj tempo itd vs. cit (1992) 104 ctr (sc) 116: (1992) 196 1tr 188 (sc) and the order of the indore bench of the tribunal in the case of ito vs. hindustan electro graphites itd (1992) 41 itd 223 (ind). the learned departmental representative, on the other hand, supported the orders of the authorities below.6. we have carefully considered the rival submissions, facts of the case and the relevant material including the paper-book furnished by the assessee's counsel. chapter vi-a starts from s. 80a to 80u. sec. 80hhc is also a part of chapter vi-a. sec. 80a provides that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the said chapter, the deductions specified in ss. 80c to 80u. 'gross total income' is defined in s. 80b(5), meaning the total income computed in accordance with the provisions of the act, before making any deduction under chapter vi-a. similarly, s. 80ab provides that, where any deduction is required to be made or allowed under any section (except s. 80m) included in chapter vi-a under the heading 'c.-deductions in respect of certain income' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of the it act (before making any deduction under chapter vi-a) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.7. it is clear from the above provisions that deduction under s. 80hhc is admissible out of gross total income and 'gross total income' is the total income computed in accordance with the provisions of the act, before making any deduction under chapter vi-a. therefore, while computing the gross total income all the deductions which are allowable under the head 'income from profits and gains of business' have to be considered for the purpose of determining the total income. sec. 29 of the it act provides that 'income' referred to in s. 28 shall be computed in accordance with the provisions contained in ss. 30 to 43d. the unabsorbed depreciation and unabsorbed investment allowance are allowable deduction under ss. 32 and 32a of the act and these deductions have to be considered in view of the provisions of s. 29 for the purpose of determining the assessee's total income from business.under s. 80hi1cm deduction is admissible to the assessee in respect of profits derived by him from the export of goods or merchandise, 'profits of the business' has been defined under expln. (baa) to sub-s. 4(a) to sub-s. 80hhc. under this explanation, 'profit of the business' means profit of the business, as computed under the head 'profits and gains of business or profession' as reduced by ........8. sec. 29, as mentioned in the preceding para, is to the effect that profits and gains of business have to be computed in accordance with the provisions contained in ss. 30 to 43d. therefore, for the purpose of determining the profits and gains of business the provisions of s. 32 and 32a regarding carry forward and deduction of unabsorbed depreciation and unabsorbed investment allowance cannot be ignored, in view of the specific provision of s. 29. the cit(a) has already followed a decision of the rajasthan high court in the case of loonkar tools (i) itd. (supra). in view of this decision of the rajasthan high court, the decision of the tribunal in (1992) 41 itd 223 (ind) (supra) relied upon by the learned counsel for the assessee is not applicable to the facts of the present case especially when the tribunal's decision was in respect of deduction under s. 80hh available to industrial undertaking. in view of the legal position explained above, unabsorbed investment allowance and unabsorbed depreciation are to be deducted from the profits and gains of business of the assessee for the purpose of determining the income out of (sicfor) special deduction, as provided under chapter vi-a there is thus, no infirmity in the order of the cit(a) on this issue. these grounds raised by the assessee' are, therefore, rejected.9. the third, fourth and fifth grounds raised by the assessee are to the effect that the cit(a) erred in confirming that the sum of rs. 16,25,821 shown under commission representing the additional sale margin on the exports made through the export houses, is to be treated as 'other income' for purposes of deducting 90 per cent thereof from the profits of business for purposes of expln (baa) of s. 80hhq4a). the ao observed that the amount of service charges w * as claimed by the assessee by issue of debit notes after the completion of sales. the ao further found from the agreement entered into between the assessee and mls tata exports itd., one of the companies through which the assessee has exported their produce, that the exporter company would pay to the assessee service charges at 5 per cent on the fob value of the exports on presentation of debit notes by the assessee, after the shipment and negotiation and after all documents had duly been forwarded to the exporting company. the ao came to the conclusion that the service charges are receivable by the assessee after the produce was exported out of india and, therefore, it could not form part of the sales. it was also found that none of the exporting companies in their certificates issued any form no. 1occab under r. 18bba(21) of the it rules has included the commission payments as part of the sales. therefore, the ao negatived the assessee's claim. in first appeal, the cit(a) confirmed the action of the ao. hence, the present appeal by the assessee.10. it is argued by the learned counsel for the assessee that the assessee company had exported marine and frozen products both directly and also through recognised export houses. in respect of export sales effected through the medium of export houses, the assessee charged an additional consideration on the basis of an agreed percentage of the fob value of each export invoice and the consideration so received had been credited as 'commission receipts' in the p&l; a/c. the said receipt even though credited as 'other income' in the p&l; a/c, nevertheless partakes the character of sales turnover since the same was realised from the export houses, which is in addition to the sale value. the said additional realisation has not been received in foreign currency to justify for treating the same as export turnover. however, since it is an additional sales realisation over and above the export value, the same shall have to be included in the total turnover. it is argued by the assessee's counsel that the additional consideration was realised in pursuance of debit notes raised on the export houses and the fact that it was credited to 'commission receipts' in the books of accounts does not prejudice the claim of the assessee for inclusion of the same in its total turnover nor does it alter the relationship of that of a seller and a buyer existing between the assessee- company and the export houses. it is contended that the commission is nothing but additional realisation being quantified at an agreed percentage of the fob value of each export invoice and it is rightly to be included as part of total turnover. as per the agreement between the assessee and the export houses, the assessee is only to sell goods and there are no additional services involved and hence the entire consideration received under the agreement is only for the transfer of goods. the learned counsel submitted that the sum bf rs. 16,25,821 was only additional realisation directly related to the export turnover and as such should be characterised only as part of the total turnover of the assessee and that the said sum does not represent any receipt extraneous to the manufacturing and export sales activities of the assessee to warrant the addition under s. 80h11q4x of the act.11. the learned departmental representative, on the other hand, supported the orders of the authorities below. it was urged that the billing for the goods is done directly by the assessee but the goods are exported through the export houses, and the value of goods cannot be more than the value thereof shown in the bills. the export houses had given incentive to the assessee in the form of commission and all that the assessee receives in addition to sale price is not on account of sale of goods. service charges are covered under the contract and they are not part of the sale proceeds. the assessee-company has already raised bills for fob value and it cannot alter the sale price. according to the learned departmental representative the payment of service charges are part of compensation paid by the export houses and the latter also treated the same as commission and deducted tax at source, and if it was part of sale price there was no question of deducting tax at source by the export houses. the assessee itself has treated the commission as not part of the sale proceeds while filing the return and it has deducted commission/service charges from sale proceeds and, therefore, service charges are not part of sale and do not form part of total turnover. it is pointed out by the learned departmental representative that even the assessee's chartered accountant has reduced 90 per cent of the sale commission and now the assessee cannot say that the commission was something else.12. we have carefully considered the facts of the case, paper-book filed by the assessee and the rival submissions. the assessee filed a copy of the agreement dt. 25th march, 1992, entered into with mls tata exports itd. this agreement provides certain obligations on the part of the assessee. for instance cl. 3 of the agreement provides that all expenses upto placing the cargo on board will be paid by the processor i.e., the assessee- company. under cl. 4 of the said agreement the assessee win hand over to tata exports itd. ('tel' for short) the clean bills of lading and all relative documents after completing all the formalities, in respect of the export within seven days from the date of the respective bills of lading. clause 8 of the agreement is to the effect that all documents shall be as per appendix i and it will be the assessee's responsibility to arrange for and prepare all the relevant documents. clause 9 provides that all the expenses including bank charges, interest, stamp duty shall be to the account of the assessee. similarly, cl. 7 of the said agreement provides that tel shall pay to the processor, i.e., the assessee- company, service charges at 5 per cent on the fob value of the exports on presentation of debit notes by the assessee after the shipment and negotiation and after all documents have duly been forwarded to tel. there are 21 types of documents which are sent by the assessee- company to tel in pursuance of the agreement for shipment of marine products. it is, therefore, clear from the above agreement that the service charges at 5 per cent by tel to the assessee company are not part of sale consideration but the service charges are paid by tel to the assessee- company to compensate for the expenses incurred by the assessee upto placing the cargo on board and preparation of relevant documents which are 21 in number. the service charges received by the assessee- company are, therefore, not part of sale consideration at an. they are only in the nature of compensation of expenses incurred for preparation of documents, bank charges, interest, stamp duty, etc. by the assessee upto placing the cargo on board. we, therefore, confirm the order of the cit(a) on this issue also and reject the grounds raised by the assessee.13. the last two grounds raised in this appeal by the assessee are to the effect that the cit(a) erred in not interfering with the order of assessment, in not allowing the deduction under the proviso to s. 80h11q3) on the entire export turnover including the exports made by the assessee through the export houses. it is argued by the learned counsel for the assessee that as the export houses disclaimed the entire relief in favour of the supporting manufacturer, the relief cannot amount to duplication. it is contended that the legislature has deemed the profits earned from sale of goods to the export houses, as export profits of the supporting manufacturer. it is claimed that for the purpose of s. 80hhc when an export house issues a disclaimer certificate, the goods purchased from the manufacturer is treated as the export of the said manufacturer. it is only a logical corollary to treat the sale to the export house as export turnover of the supporting manufacturer, as otherwise it will lead to anomalous results. on the other hand, the learned departmental representative pointed out that this issue does not arise out of the order of the cit(a).14. we have considered the matter. since the issue does not arise out of the order of the first appellate authority, the assessee cannot raise this ground of appeal. it is also clear that proviso to s. 80hhc applies to profit computed under sub-s. (3) cls. (a), (b) and (c) of the said section. sub-s. (3) applies to assessees who export goods or merchandise and not to the case like the present assessee which is a supporting manufacturer and the provisions of s. 80hhq1) are applicable to the assessee- company. therefore, even the proviso to s. 80h11q3) is not prima facie applicable to the case of the assessee, and since the issue does not arise out of the order of the cit(a), we dismiss these two grounds raised by the assessee, as not arising out of the order of the first appellate authority.15. in the result, the assessee's appeal is dismissed. ita no. 19291mad/199616. this appeal by the assessee is against the order of the cit(a)-vi, madras, dt. 14th nov., 1995, for the asst. yr. 1992-93, which was passed against an order of the ao passed under s. 154 rectifying the intimation under s. 143(1)(a) dt. 24th june, 1993, for the assessment year under consideration. at the time of hearing, it is fairly conceded by the learned counsel for the assessee that the assessee has no case because in the return filed it has not made such a claim which is now raised before the tribunal. after considering the arguments of both the parties and the facts of the case, we feel that there is no substance in the assessee's appeal against the impugned order of the cit(a) which was against the order of under s. 154 passed by the ao. the assessee's appeal is accordingly dismissed.17. in the result, both the appeals are dismissed.

Judgment:
ORDER

P.S. KAWL4N, AM.

These appeals by the assessee relate to asst. yr. 1992-93 and arise out of the separate orders of the CIT(A)-V1, Madras dt. 14th Nov., 1995. For the sake of convenience the appeals are heard together and are being disposed of by a common consolidated -order.

2. ITA No. 1929/Mad/1996 is filed by the assessee with a delay of 233 days. After considering the affidavit filed by the assessee dt. 23rd Sept., 1996, the delay is condoned and the appeal is admitted.

3. The assessee is a domestic company in which the public are not substantially interested. It is carrying on the business of processing and exporting marine products.

ITA No. 1721Mad11996

4. First and second grounds of appeal are to the effect that the CIT(A) erred in confirming the method adopted by the AO in computing the profits and gains from business for working out the profits under s. 80HHC by setting off the unabsorbed depreciation and unabsorbed investment allowance carried forward from earlier years. We find that this issue was not agitated by the assessee before the AO but it was taken by the assessee's counsel before the CIT(A). The CIT(A) did not agree with the views of the assessee's counsel and found that in the case of CIT vs. Loonk & Tools (I) ITD. (1995) 127 CTR (Raj) 77, the Rajasthan High Court held that the depreciation and investment allowance are to be deducted before giving the special deductions as provided under Chapter VI-A. The CIT(A) accordingly confirmed the order of the AO and held that the AO was justified in setting off the unabsorbed depreciation and unabsorbed investment allowance for computing the assessee's net income. The assessee is in further appeal before the Tribunal.

5. It is argued by the learned counsel- for the assessee that s. 80HHC is a separate and independent section and while computing deduction under that section only the profit for the asst. yr. 1982-83 should be considered and unabsorbed depreciation/investment allowance for earlier years cannot be deducted out of the profits of asst. yr. 1982-83. The profit under s. 80HHC is not to be computed in normal manner because under that section the relief is intended to be given on export profit and on the logical conclusion the earlier years' unabsorbed depreciation/investment allowance should be not considered. The learned counsel referred to the decision of the Supreme Court in the case of Bajaj Tempo ITD vs. CIT (1992) 104 CTR (SC) 116: (1992) 196 1TR 188 (SC) and the order of the Indore Bench of the Tribunal in the case of ITO vs. Hindustan Electro Graphites ITD (1992) 41 ITD 223 (Ind). The learned Departmental Representative, on the other hand, supported the orders of the authorities below.

6. We have carefully considered the rival submissions, facts of the case and the relevant material including the paper-book furnished by the assessee's counsel. Chapter VI-A starts from s. 80A to 80U. Sec. 80HHC is also a part of Chapter VI-A. Sec. 80A provides that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the said Chapter, the deductions specified in ss. 80C to 80U. 'Gross total income' is defined in s. 80B(5), meaning the total income computed in accordance with the provisions of the Act, before making any deduction under Chapter VI-A. Similarly, s. 80AB provides that, where any deduction is required to be made or allowed under any section (except s. 80M) included in Chapter VI-A under the heading 'C.-Deductions in respect of certain income' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of the IT Act (before making any deduction under Chapter VI-A) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.

7. It is clear from the above provisions that deduction under s. 80HHC is admissible out of gross total income and 'gross total income' is the total income computed in accordance with the provisions of the Act, before making any deduction under Chapter VI-A. Therefore, while computing the gross total income all the deductions which are allowable under the head 'income from profits and gains of business' have to be considered for the purpose of determining the total income. Sec. 29 of the IT Act provides that 'income' referred to in s. 28 shall be computed in accordance with the provisions contained in ss. 30 to 43D. The unabsorbed depreciation and unabsorbed investment allowance are allowable deduction under ss. 32 and 32A of the Act and these deductions have to be considered in view of the provisions of s. 29 for the purpose of determining the assessee's total income from business.

Under s. 80HI1CM deduction is admissible to the assessee in respect of profits derived by him from the export of goods or merchandise, 'profits of the business' has been defined under Expln. (baa) to sub-s. 4(A) to sub-s. 80HHC. Under this Explanation, 'profit of the business' means profit of the business, as computed under the head 'profits and gains of business or profession' as reduced by ........

8. Sec. 29, as mentioned in the preceding para, is to the effect that profits and gains of business have to be computed in accordance with the provisions contained in ss. 30 to 43D. Therefore, for the purpose of determining the profits and gains of business the provisions of s. 32 and 32A regarding carry forward and deduction of unabsorbed depreciation and unabsorbed investment allowance cannot be ignored, in view of the specific provision of s. 29. The CIT(A) has already followed a decision of the Rajasthan High Court in the case of Loonkar Tools (I) ITD. (supra). In view of this decision of the Rajasthan High Court, the decision of the Tribunal in (1992) 41 ITD 223 (Ind) (supra) relied upon by the learned counsel for the assessee is not applicable to the facts of the present case especially when the Tribunal's decision was in respect of deduction under s. 80HH available to industrial undertaking. In view of the legal position explained above, unabsorbed investment allowance and unabsorbed depreciation are to be deducted from the profits and gains of business of the assessee for the purpose of determining the income out of (sicfor) special deduction, as provided under Chapter VI-A There is thus, no infirmity in the order of the CIT(A) on this issue. These grounds raised by the assessee' are, therefore, rejected.

9. The third, fourth and fifth grounds raised by the assessee are to the effect that the CIT(A) erred in confirming that the sum of Rs. 16,25,821 shown under commission representing the additional sale margin on the exports made through the export houses, is to be treated as 'other income' for purposes of deducting 90 per cent thereof from the profits of business for purposes of Expln (baa) of s. 80HHQ4A). The AO observed that the amount of service charges w * as claimed by the assessee by issue of debit notes after the completion of sales. The AO further found from the agreement entered into between the assessee and Mls Tata Exports ITD., one of the companies through which the assessee has exported their produce, that the exporter company would pay to the assessee service charges at 5 per cent on the FOB value of the exports on presentation of debit notes by the assessee, after the shipment and negotiation and after all documents had duly been forwarded to the exporting company. The AO came to the conclusion that the service charges are receivable by the assessee after the produce was exported out of India and, therefore, it could not form part of the sales. It was also found that none of the exporting companies in their certificates issued any Form No. 1OCCAB under r. 18BBA(21) of the IT Rules has included the commission payments as part of the sales. Therefore, the AO negatived the assessee's claim. In first appeal, the CIT(A) confirmed the action of the AO. Hence, the present appeal by the assessee.

10. It is argued by the learned counsel for the assessee that the assessee company had exported marine and frozen products both directly and also through recognised export houses. In respect of export sales effected through the medium of export houses, the assessee charged an additional consideration on the basis of an agreed percentage of the FOB value of each export invoice and the consideration so received had been credited as 'commission receipts' in the P&L; a/c. The said receipt even though credited as 'other income' in the P&L; a/c, nevertheless partakes the character of sales turnover since the same was realised from the export houses, which is in addition to the sale value. The said additional realisation has not been received in foreign currency to justify for treating the same as export turnover. However, since it is an additional sales realisation over and above the export value, the same shall have to be included in the total turnover. It is argued by the assessee's counsel that the additional consideration was realised in pursuance of debit notes raised on the export houses and the fact that it was credited to 'commission receipts' in the books of accounts does not prejudice the claim of the assessee for inclusion of the same in its total turnover nor does it alter the relationship of that of a seller and a buyer existing between the assessee- company and the export houses. It is contended that the commission is nothing but additional realisation being quantified at an agreed percentage of the FOB value of each export invoice and it is rightly to be included as part of total turnover. As per the agreement between the assessee and the export houses, the assessee is only to sell goods and there are no additional services involved and hence the entire consideration received under the agreement is only for the transfer of goods. The learned counsel submitted that the sum bf Rs. 16,25,821 was only additional realisation directly related to the export turnover and as such should be characterised only as part of the total turnover of the assessee and that the said sum does not represent any receipt extraneous to the manufacturing and export sales activities of the assessee to warrant the addition under S. 80H11Q4X of the Act.

11. The learned Departmental Representative, on the other hand, supported the orders of the authorities below. It was urged that the billing for the goods is done directly by the assessee but the goods are exported through the export houses, and the value of goods cannot be more than the value thereof shown in the bills. The export houses had given incentive to the assessee in the form of commission and all that the assessee receives in addition to sale price is not on account of sale of goods. Service charges are covered under the contract and they are not part of the sale proceeds. The assessee-company has already raised bills for FOB value and it cannot alter the sale price. According to the learned Departmental Representative the payment of service charges are part of compensation paid by the export houses and the latter also treated the same as commission and deducted tax at source, and if it was part of sale price there was no question of deducting tax at source by the export houses. The assessee itself has treated the commission as not part of the sale proceeds while filing the return and it has deducted commission/service charges from sale proceeds and, therefore, service charges are not part of sale and do not form part of total turnover. It is pointed out by the learned Departmental Representative that even the assessee's Chartered Accountant has reduced 90 per cent of the sale commission and now the assessee cannot say that the commission was something else.

12. We have carefully considered the facts of the case, paper-book filed by the assessee and the rival submissions. The assessee filed a copy of the agreement dt. 25th March, 1992, entered into with Mls Tata Exports ITD. This agreement provides certain obligations on the part of the assessee. For instance cl. 3 of the agreement provides that all expenses upto placing the cargo on board will be paid by the processor i.e., the assessee- company. Under cl. 4 of the said agreement the assessee win hand over to Tata Exports ITD. ('TEL' for short) the clean bills of lading and all relative documents after completing all the formalities, in respect of the export within seven days from the date of the respective bills of lading. Clause 8 of the agreement is to the effect that all documents shall be as per Appendix I and it will be the assessee's responsibility to arrange for and prepare all the relevant documents. Clause 9 provides that all the expenses including bank charges, interest, stamp duty shall be to the account of the assessee. Similarly, cl. 7 of the said agreement provides that TEL shall pay to the processor, i.e., the assessee- company, service charges at 5 per cent on the FOB value of the exports on presentation of debit notes by the assessee after the shipment and negotiation and after all documents have duly been forwarded to TEL. There are 21 types of documents which are sent by the assessee- company to TEL in pursuance of the agreement for shipment of marine products. It is, therefore, clear from the above agreement that the service charges at 5 per cent by TEL to the assessee company are not part of sale consideration but the service charges are paid by TEL to the assessee- company to compensate for the expenses incurred by the assessee upto placing the cargo on board and preparation of relevant documents which are 21 in number. The service charges received by the assessee- company are, therefore, not part of sale consideration at an. They are only in the nature of compensation of expenses incurred for preparation of documents, bank charges, interest, stamp duty, etc. by the assessee upto placing the cargo on board. We, therefore, confirm the order of the CIT(A) on this issue also and reject the grounds raised by the assessee.

13. The last two grounds raised in this appeal by the assessee are to the effect that the CIT(A) erred in not interfering with the order of assessment, in not allowing the deduction under the proviso to s. 80H11Q3) on the entire export turnover including the exports made by the assessee through the export houses. It is argued by the learned counsel for the assessee that as the export houses disclaimed the entire relief in favour of the supporting manufacturer, the relief cannot amount to duplication. It is contended that the legislature has deemed the profits earned from sale of goods to the export houses, as export profits of the supporting manufacturer. It is claimed that for the purpose of s. 80HHC when an export house issues a disclaimer certificate, the goods purchased from the manufacturer is treated as the export of the said manufacturer. It is only a logical corollary to treat the sale to the export house as export turnover of the supporting manufacturer, as otherwise it will lead to anomalous results. On the other hand, the learned Departmental Representative pointed out that this issue does not arise out of the order of the CIT(A).

14. We have considered the matter. Since the issue does not arise out of the order of the first appellate authority, the assessee cannot raise this ground of appeal. It is also clear that proviso to s. 80HHC applies to profit computed under sub-s. (3) cls. (a), (b) and (c) of the said section. Sub-s. (3) applies to assessees who export goods or merchandise and not to the case like the present assessee which is a supporting manufacturer and the provisions of s. 80HHQ1) are applicable to the assessee- company. Therefore, even the proviso to s. 80H11Q3) is not prima facie applicable to the case of the assessee, and since the issue does not arise out of the order of the CIT(A), we dismiss these two grounds raised by the assessee, as not arising out of the order of the first Appellate Authority.

15. In the result, the assessee's appeal is dismissed. ITA No. 19291Mad/1996

16. This appeal by the assessee is against the order of the CIT(A)-VI, Madras, dt. 14th Nov., 1995, for the asst. yr. 1992-93, which was passed against an order of the AO passed under s. 154 rectifying the intimation under s. 143(1)(a) dt. 24th June, 1993, for the assessment year under consideration. At the time of hearing, it is fairly conceded by the learned counsel for the assessee that the assessee has no case because in the return filed it has not made such a claim which is now raised before the Tribunal. After considering the arguments of both the parties and the facts of the case, we feel that there is no substance in the assessee's appeal against the impugned order of the CIT(A) which was against the order of under s. 154 passed by the AO. The assessee's appeal is accordingly dismissed.

17. In the result, both the appeals are dismissed.