FIEO for extension of Sec 80HHC sops

The Federation of Indian Export Organisation (FIEO) has asked for extension of benefits under Section 80HHC of the Income-Tax Act beyond March '04 in the forthcoming budget.

Tax deduction available under Section 80HHC has being phased out from April 1 2004, thereby all profits derived from the business of exports shall be liable to tax.

Ganesh Kumar Gupta, chairman, FIEO (western region) said, "The exporting community is driven against the wall owing to the sharp decline of the dollar over the last two years, rising international competition (especially from China) and the phasing out of the deduction under Section 80HHC from 100 per cent in 1999-2000, with effect from April 1, 2004.

With the Union budget around the corner, FIEO has been rallying around in the western region to garner support from exporters' for seeking the extension of benefits under Section 80HHC of the Income-Tax Act beyond March 2004.

Meanwhile, FIEO has requested the income-tax department to evaluate the shortcomings of this section and is consulting exporters before submitting its recommendations to the finance ministry to bring about a suitable amendment that will settle current disputes.

"The spate of recent income tax assessments and judicial pronouncements, particularly in the western region, have left the exporting community totally bewildered with generation of huge demands/litigation/re-opening of cases prior to assessment year 2001-02," he added.

The major area of dispute include non-inclusion of duty drawback entitlement pass book (DEPB) as business income under Section 28, non-inclusion of tax incentives in the computation under Section 80HHC (3) in the case of negative profits and difficulties experienced with regard to netting of interest

Also, application of law by different assessing and appellate authorities in more than one-way in the case of different assesses on the same issues.

FIEO has demanded inclusion of DEPB/DFRC/any other similar incentive by whatever name called, under the head of Business Income as detailed under Section 28 of the Income Tax Act, 1961.

Once these words have been expressively included in this section, whether through an amendment by the finance ministry or a classificatory circular issued by the CBDT, there would be no confusion in this regard, Ganesh added.