ITA Nos. 140/Luck/2004 & 31/Luck/2005: In these appeals, Revenue has questioned first appellate order on common grounds involving issue as to whether learned CIT(A) was justified in directing AO to allow deduction under s. 80HHC of IT Act, 1961 to assessee. We have heard and considered arguments advanced by parties in view of orders of lower authorities and decisions relied upon by them. facts in brief are that assessee is trading in chemicals. During years under consideration, assessee had also exported granite blocks, etc. It claimed deduction under s. 80HHC which was denied by AO on basis t h t both manufacturer and assessee could not have claimed deduction/exemption for export of same goods. In view of AO, assessee was only facilitator to export while actual exporter was manufacturer. explanation of assessee in this regard remained that assessee company was registered merchant exporter and procures orders from its foreign buyers directly. To comply with export obligations, it makes purchases from various manufacturers/suppliers within country, some of which also include EOUs. For years under consideration, assessee had procured orders directly from its foreign buyers. It thereupon exported goods by procuring them from various manufacturers including 2 EOUs i.e. STI Granite India Ltd. and Coromandal Stamping & Stones Ltd. These two EOUs were entitled for deduction under s. 10B and were also entitled to export benefits such as REP license, special import license, etc. assessee upon receiving export orders from its foreign buyers places order on its suppliers including EOUs with condition to effect that they would supply goods directly from its supply to inland container depot on behalf of assessee ex-factory in packed conditions for purposes of export. assessee explained further that in terms of prescribed procedure for purposes of claiming export benefits under scheme of third party export provided in EXIM Policy, 1997-2002, said manufacturers raised their invoices on assessee specifying name of importer i.e. foreign buyer, discussing name of assessee company as third party exporter. Accordingly, abovenamed manufacturers sent goods to port of shipment along with their invoice wherein place of consignee, name of importer was endorsed and name of assessee company was mentioned in column of third party exporter. assessee company had also given disclaimer certificate under provisions of EXIM Policy to effect that they shall not be claiming any export benefit, namely, export performance certificate, export/trading/star license, special import license, duty drawback under customs and excise, etc. available to EOUs and they have surrendered all such benefits in favour of EOUs. Ministry of Commerce has issued circular on third party export vide F. No. 305/56/92 F-7T, dt. 28th April, 1992. In this circular, concept of third party has also been explained. In fact, third party export has been explained as export made by exporter or manufacturer on behalf of third party. In such cases rules prescribing procedure provide that shipping bills shall indicate names of both exporter/manufacturer and third party. learned Authorised Representative accordingly claimed that assessee was following system which is prescribed in EXIM Policy of India and disclaimer certificate in favour of EOU was only to extent that benefits under Central Excise Act and license, etc. are passed on to EOU. It was submitted further that there is no provision or system for transferring income- tax deduction or exemption from one assessee to another except in case of s. 80HHC(4A). Under that provision export house or trading house can issue certificate in prescribed form stating that it had not claimed any deduction under s. 80HHC. In such case supporting manufacturer can claim deduction under s. 80HHC. In present case, assessee is not export house and therefore, disclaimer certificate issued by assessee is not same as has been envisaged in s. 80HHC(4A)(B) of Act. learned Authorised Representative submitted further that assessee had not only purchased from EOUs but it had also purchased from non-EOUs for export. learned Authorised Representative submitted that facts in case of Sea Pearl Industries vs. CIT (2001) 165 CTR (SC) 395: (2001) 247 ITR 578 (SC), relied on by AO, have different facts, hence not applicable in present case. In that case, foreign exchange realization was done by export house and both export house and supporting manufacturer had claimed deduction under s. 80HHC. In present case, however deduction under s. 80HHC has been claimed only assessee. manufacturer had claimed exemption under s. 10B and that should not come in way of assessee getting deduction under s. 80HHC. learned CIT(A) being convinced and satisfied with submissions made on behalf of assessee came to conclusion that deduction under s. 80HHC should be given to assessee even on sales for which purchases were made from EOUs. This relief given by learned CIT(A) to assessee has been questioned by Revenue before us. learned Departmental Representative has placed reliance on assessment order whereas first appellate order has been justified by learned Authorised Representative. After having gone through orders of lower authorities in view of aforesaid submissions of parties, we find that there is no dispute on facts of case. only dispute is about entitlement of deduction under s. 80HHC of Act to assessee on export of goods which assessee had purchased from two manufacturers, happened to be EOUs. Regarding these goods assessee had made arrangement with manufacturers (2 EOUs) that EOUs would send goods to port of shipment along with their invoice wherein place of consignee, name of importer would be endorsed and name of assessee would be mentioned in column of third party exporter. assessee company had also given disclaimer certificate under provisions of EXIM Policy to effect that they shall not be claiming any export benefit, namely, export performance certificate, export/trading/special import license, duty drawback under customs and excise etc. available to EOUs and they had surrendered all such benefits in favour of EOUs. There is no dispute that in terms of prescribed procedure for purposes of claiming export benefits under scheme of third party export provided in EXIM Policy, 1997-2002, no such arrangement as discussed above could have been made by assessee with EOUs to allow manufacturers EOUs by assessee under disclaimer certificate to claim deduction under s. 10B and other entitlements of export benefits such as REP license, special import license etc. only dispute remained that assessee cannot claim deduction under s. 80HHC on same goods. AO alleged that entire show has been managed by assessee to claim deduction that entire show has been managed by assessee to claim deduction under IT Act on same exports twice. AO was of view that once assessee had surrendered its right in favour of manufacturer EOUs and allowed them to be treated as exports in hands of manufacturers, what right does assessee has in law to claim 100 per cent deduction under s. 80HHC of Act. Clearly, it is marriage of convenience between manufacturers, EOUs and assessee. Further, in case sales from manufacturers to assessee are to be treated as Indian sales, manufacturers are liable for sales-tax on same which have not been shown. assessee at best is co-ordinator, facilitator or commission agent working for export oriented undertaking. AO was of view that whatever income assessee is earning being difference of realization of sale proceeds less purchase price paid to export oriented undertakings is basically its income in nature of commission and expenses are incurred by it to earn this income, which are duly allowable to it but assessee is not entitled to claim deduction under s. 80HHC on same. AO did not find substance in contention of assessee that EOUs are not getting payment in convertible foreign exchange and orders from foreign buyers were procured by assessee and amounts in consideration against goods so exported were sent and realized in convertible foreign exchange in accounts of assessee. It is relevant to mention over here that in respect of units established in asst. yr. 2000-01 or prior to it, it was not mandatory that realization should be made in convertible foreign exchange for claiming exemption under s. 10B of IT Act, 1961. Considering all these aspects of matter, we fully agree with view of AO that exemption/deduction cannot be allowed twice on export of same goods i.e. 100 per cent deduction under s. 10B of Act to manufacturer EOUs and 100 per cent deduction under s. 80HHC of Act to assessee on export of same goods. But at same time, in our view, EOUs can claim exemption under s. 10B and other export benefits on profits they earned on goods exported. Similarly, assessee is entitled to claim deduction under s. 80HHC on income it earned on goods exported. There is no dispute that orders for export of goods were procured by assessee and proceeds against those goods are realized in convertible foreign exchange in account of assessee only, which are two important requirements for claiming deduction under s. 80HHC. There is also no dispute that goods purchased from manufacturers were exported. whole confusion has arisen since claim of assessee regarding deduction under s. 80HHC and that of manufacturer EOUs regarding deduction under s. 10B and other benefits are being seen in terms of same goods which were exported. AO has denied claimed deduction by assessee mainly on this basis only that exemption cannot be allowed twice on same export of goods. Unfortunately, it is not case because manufacturer EOUs had claimed deduction under s. 10B and other export benefits on income they earned while selling goods to assessee meant for export procured by assessee, whereas assessee had claimed deduction under s. 80HHC on income it had earned on export of same goods. Thus, income of assessee would be calculated as amount realised in consideration against selling of goods in export minus cost in purchasing of goods from manufacturer and other miscellaneous expenses involved in its transportation, etc. income in hands of manufacturers on said goods would be price, it received minus cost incurred on manufacturing of goods. Thus, for these two concerns, there may be same goods which were exported but incomes earned on transactions of those goods by two said concerns are not same as AO while denying claim of deduction under s. 80HHC to assessee has failed to appreciate. theory of AO that for manufacturers goods were sold to assessee in India hence sales-tax was required to be paid on this transaction does not matter more because admittedly goods were to be destined for export purposes. only difference in provisions of law in s. 10B during asst. yrs. 2000-01 and 2001-02 remained that in respect of units established in asst. yr. 2000-01 or prior to it, it was not mandatory that realization should be made in convertible foreign exchange for claiming exemption under s. 10B of IT Act, 1961. Thus, grievances, if any, in this regard would be of manufacturers only and not of assessee. In conclusion we are of view that assessee was very much entitled for deduction under s. 80HHC on income it had earned on export of goods. We order accordingly. first appellate order is thus upheld. issue raised in grounds of appeals is decided in favour of assessee. grounds as well as appeals are thus dismissed. ITA No. 845/Luck/2004: assessee has questioned first appellate order on grounds that learned CIT(A) has erred in confirming disallowance of deduction under s. 80HHC of Act in respect of export turnover of goods purchased from overseas market transshipped directly from third country to buyer against which convertible foreign exchange was received in India and all conditions of s. 80HHC were satisfied by assessee. We have heard and considered arguments advanced by parties in view of orders of lower authorities and decisions relied upon by them. assessee had made overseas purchases amounting to Rs. 11,49,880 and made sales of these goods to third country without bringing these goods to India. AO denied claim on basis that these goods were not exported out of India. Before learned CIT(A), which arguments have also been reiterated before us, learned Authorised Representative submitted that there is no such condition that goods purchased for purpose of export out o f India should be physically brought to India. learned Authorised Representative tried to make distinction between word "out of India" and "from India". learned CIT(A) did not agree with these submissions of assessee and in this regard he referred definition of s. 2(18) of Customs Act, 1962, as per which export means taking out of India to place outside India. Thus, there does not seem to be any difference between "from India" and "out of India" in view of Customs Act. learned CIT(A) also tried to distinguish decisions relied upon by learned Authorised Representative. Those decisions are A.S. Mani vs. Union of India & Ors. (2003) 184 CTR (Kar) 511: (2003) 264 ITR 5 (Kar), Sea Pearl Industries vs. CIT (2001) 165 CTR (SC) 395: (2001) 247 ITR 578 (SC) and Bajaj Tempo Ltd. vs. CIT (1992) 104 CTR (SC) 116: (1992) 196 ITR 138 (SC). learned CIT(A), ultimately following decision of Mumbai Bench of Tribunal in case of Hindustan Lever Ltd. vs. IAC (1996) 56 TTJ (Mumbai) 598: (1996) 58 ITD 555 (Mumbai) on identical issue, has decided matter in favour of Revenue upholding assessment order. Before Tribunal, learned Authorised Representative also placed reliance on recent decision of Bombay Bench of Tribunal in case of S.M. Energy Teknik & Electronics Ltd. vs. Dy. CIT, ITA No. 141/Mum/2000 [reported at (2007) 109 TTJ (Mumbai) 34 Ed.], on identical issue, copy of which has been supplied by learned Authorised Representative. In this decision Tribunal after having gone through decisions of Hon ble Supreme Court and High Courts in cases of Ram Babu & Sons & Anr. vs. Union of India (1997) 141 CTR (All) 310: (1996) 222 ITR 606 (All), CIT vs. Silver & Arts Palace (2003) 180 CTR (SC) 309: (2003) 259 ITR 684 (SC), CIT vs. Gimpex (P) Ltd. (2002) 176 CTR (Mad) 112: (2004) 268 ITR 377 (Mad), Asif Taherbhai, ITA No. 101/Mum/2002 and Hindustan Lever Ltd. vs. IAC (supra), has come to conclusion that literary meaning of term "export" means sending goods to another country, it did not mean only sending goods out of one own country to another, Tribunal remained of view that reliance placed by Revenue on decision of Mumbai Tribunal in case of Hindustan Lever Ltd. was misplaced, as said decision did not, have occasion to consider Bombay High Court decision in case of Bombay Burmah Trading Corporation vs. CIT (1991) 188 ITR 122 (Bom). learned Departmental Representative, on other hand, placed reliance on decision of Hon ble Gujarat High Court in case of Dhall Enterprises & Engineers (P) Ltd. vs. CIT (2007) 207 CTR (Guj) 729, holding that export out of India means export should be from India and not from any other country. He thus justified first appellate order. learned Authorised Representative submitted, in rejoinder that in decision in case of Dhall Enterprises & Engineers (P) Ltd. vs. CIT (supra), Hon ble Gujarat High Court does not have benefit of decision of Hon ble Supreme Court in case of CIT vs. Bombay Burmah Trading Corporation (2000) 159 CTR (SC) 110: (2000) 242 ITR 298, 301 (SC) as also provisions of ss. 80HHC, 10A and 10B of IT Act, 1961. This issue has been discussed in detail in decision before Mumbai Bench of Tribunal in t h e case of S.M. Energy Teknik & Electronics Ltd. vs. Dy. CIT (supra). In alternative, learned Authorised Representative submitted that when there are two decisions on issue, decision favourable to assessee is required to be followed and placed reliance on decision of Hon ble Supreme Court in case of CIT vs. Vegetable Products 1973 CTR (SC) 177: (1973) 88 ITR 192 (SC) in this regard. After having gone through decision of Mumbai Bench of Tribunal in case of S.M. Energy Teknik & Electronics Ltd. vs. Dy. CIT (supra) on identical issue, we fully agree therewith that literary meaning of term "export", means sending goods to another country, it did not mean only sending goods out of one s country to another. Admittedly, in present case, export orders were received by Indian resident/concern, performance of its part of contract for supply of goods was there on assessee and undisputedly realization of proceeds in convertible foreign exchange was there in account of assessee in India. Thus, export of goods was made from Indian concern under its control and amount in consideration was received in its account in India. It does not matter as to how and from where assessee managed and sent goods in compliance of export order. aim and object of legislature behind granting deduction under s. 80HHC is to encourage export so that foreign currency can be earned, which has been fully fulfilled by assessee in present case. In fact, Expln. (aa) to s. 80HHC which defines export out of India does not provide that export should be from India. As against this, s. 80HHE, which deals with export of computer software, specifically provides in Expln. (b) that export should be from India to place outside India. Similar Explanations are there in ss. 10A and 10B of Act. Thus, when in other sections language is specific that export should be from India to place outside India, these words cannot be imported in s. 80HHC to mean that export should be from India. Hon ble Supreme Court in case of Bombay Burmah Trading Corporation (supra) with reference to s. 35B of Act has been also pleased to hold that for claiming deduction in that section export need not be ex-India. Bombay Bench of Tribunal in case of S.M. Energy Teknik & Electronics Ltd. vs. Dy. CIT (supra) has dealt with identical issue in details. In that case assessee had claimed deduction under s. 80HHC on goods purchased by assessee company from Germany and sold it directly to customers in Bangladesh. deduction was denied by lower authorities leading to issue as to whether above sale constitutes export or not. Tribunal after discussing matter in details and relying upon decisions of Hon ble Courts in case of Bombay Burmah Trading Corporation (supra), J.K. Boda & Co. (P) Ltd. vs. CBDT (1997) 137 CTR (SC) 287: (1997) 223 ITR 271 (SC), Bajaj Tempo Ltd. (supra), Coca Cola Export Corporation vs. ITO & Anr. (1998) 146 CTR (SC) 250: (1998) 231 ITR 200 (SC), Ram Babu & Sons vs. Union of India (1997) 141 CTR (All) 310: (1996) 222 ITR 606 (All), CIT vs. Gimpex (P) Ltd. (supra), etc., and discussing relevant provisions of law on issue, CBDT Circular No. 621, dt. 19th Dec., 1991 [(1992) 101 CTR (St.) 1] as well as various provisions of Government of India rules and regulations like Import and Export Policy and Procedures 1992 to 1997 and RBI Manual, etc. has decided issue in favour of assessee. Even otherwise, as per decision of Hon ble Supreme Court in case of CIT vs. Vegetable Products (supra) relied upon by learned Authorised Representative in case of different decisions on issue, decision favourable to assessee is to be followed. We thus while setting aside orders of lower authorities direct AO to allow claimed deduction under s. 80HHC in question. ground is thus allowed. In result, appeal is allowed in favour of assessee. We summarize result as both Departmental appeals are dismissed, whereas assessee s appeal is allowed. *** ADDITIONAL COMMISSIONER OF INCOME TAX v. SWAN INDUSTRIES LTD.