JUDGMENT

ANIL R. DAVE, J. –

1. Being aggrieved by the judgment delivered in ITA No. 520 of 2006 dated 19th January, 2007, by the High Court of Delhi, this Appeal has been filed by the Commissioner of Income Tax.

2. The facts giving rise to the present appeal, in a nutshell, are as under:

So as to encourage export for the purpose of earning foreign exchange, Section 80 HHC has been enacted in the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). By virtue of the provisions of the said section, subject to certain conditions, the exporter gets certain deduction from the income, which is derived from the profits from export of goods, while computing taxable income.

3. For the purpose of calculating the deduction, according to the provisions of Section 80HHC of the Act, one has to take into account the profits from the business of the assessee, export turnover and total turnover. The deduction, subject to several other conditions, incorporated in the Section, is determined as under:

Profits of the Business X Export Turnover Total Turnover

4. Thus, to determine the amount of deduction, the assessee and the Revenue must be aware of the following three ingredients:

i) Profits of the bus