Judgment

Ruma Pal, J.—The appellant exports granite. According to the appellant the granite is cut and polished before export. The appellant claims deduction under Sec. 80-HHC of the Income tax Act 1961 (hereinafter referred as ‘the Act’) in respect of profits from its export business.

2. The assessment year in question is 1987-1988. Sec. 80-HHC as it then stood read as follows :

80HHC. Deduction in respect of profits retained for export business.—(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which the section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from the export of such goods or merchandise.

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2(a) This section applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds of such goods or merchandise exported out of India are receivable by the assessee in convertible foreign exchange.

(b) This section does not apply to the fol