In Brief
A batch of appeals concerns how supporting manufacturers—firms that supply goods to export houses rather than exporting directly—should calculate tax deductions under Section 80HHC of the Income Tax Act. The assessee, Carpet India, claimed deductions on par with direct exporters based on export incentives received (duty drawback, etc.). While lower courts sided with the assessee, citing earlier Supreme Court precedent (Baby Marine Exports), this Court doubted those decisions. The Court held that Explanation (baa) requires a 90% reduction of export incentive income, which prior decisions may not have fully applied. The Court referred the matter to a larger Bench due to its legal complexity and substantial monetary implications.
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