JUDGMENT:

KAPADIA, J.-- Leave granted in S.L.P. (C) No.2275 of 2007.

2. The intricate question which arises for determination in this batch of civil appeals is at what stage Section 80HHC Deduction is to be allowed i.e. before the 60 : 40 apportionment under Rule 8(1) or from 40% profits on sales taxable as Business Income.

3. Rule 8(1) of the said Rule provides that 40% of the composite income from sale of tea, grown and manufactured, arrived at on making of the apportionment shall be deemed to be income liable to tax .

4. Assessees exported tea in the accounting year. They were entitled to deduction under Section 80HHC of Income-tax Act, 1961 (for short, 1961 Act ) in respect of the export. They were in the business of growing and manufacturing tea. Since they earned Composite Income, their case stood covered by Rule 8(1) of Income-tax Rules, 1962 ( 1962 Rule for short).

5. For the sake of convenience we state the facts occurring in Civil Appeal No.3803-3808 of 2005- Commissioner of Income Tax v. Willamson Financial Services & ors. In the returns, the assessee claimed Section 80HHC Deduction against the entire