In Brief
Supporting manufacturers, who supply goods to export houses rather than directly exporting, sought tax deductions under Section 80HHC of the Income Tax Act 1961 at par with direct exporters. The assessee claimed deductions on export incentives including duty drawback and duty entitlement schemes. A two-judge Bench of the Supreme Court found that earlier case law (Baby Marine Exports) did not adequately address whether export incentives received by supporting manufacturers should be reduced by 90% under Explanation (baa) when computing statutory deductions. Due to the issue's broad monetary implications and its distinction from prior decisions, the Court referred the batch of appeals to a larger Bench for reconsideration of the substantive question.
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