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(1) Deduction u/s 80-HHF (1) is available in respect of the ‘profits of the business’ which means the entire business profits and not only the profits derived from the export activity. Accordingly, deduction is allowable even if the export activity has resulted in a loss provided there is an overall business profit;
(2) Income arising from an activity involving turnover cannot be excluded from profits of business in terms of Expl. (baa) to s. 80HHC/Expl. (f) to s. 80HHF;
(3) K. Ravindranathan Nair 295 ITR 228 (SC) is not an authority for the proposition that in the case of an independent activity involving element of turnover, 90% of the receipts should be excluded from the profits of business. The decision merely lays down that in such case the receipt would form part of total turnover;
(4) Bangalore Clothing 260 ITR 371 (Bom) is an authority for the proposition that where a business activity results in operational income, the receipts therefrom form part of total turnover and no part of it can be excluded from the profits of the business.
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