1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.168 OF 2007 The Commissioner of Income Tax, City – 21, Mumbai ..Appellant. Versus M/s. Kanak Exports, Mumbai ..Respondent. Mr.N.A. Kazi for the appellant. None for the respondent. CORAM : V.C. DAGA & J.P. DEVADHAR, JJ. DATE : 4TH SEPTEMBER 2009 P.C. : 1. The Appeal was admitted by order dated 29-7-2008 on the following substantial questions of law: a) Whether on the facts and in the circumstances of the case, the ITAT was justified in directing to consider 10% of the `Export Incentives’ as indirect cost incurred for earning the income by the assessee. The Income Tax Act has provided to allow 90% of the `Export Incentives’ to be added to the export profit for computation under section 80 HHC of Income Tax Act, 1961 ? b) Whether on the facts and circumstances of the case and in law the ITAT was right in basing its decision on the decision of Surendra Engineering Corporation V/s. ACIT, Circle – 17(1) 78 TTJ 347, wherein Mumbai Tribunal has held that an assessee’s claim that 10% of the export incentives has to be treated as indirect cost incurred for earning the same and to that extent the indirect cost should be reduced for computing the deduction u/s 80 HHC (3)(b) was sustainable having regard to the fact that the legislature has impliedly 2 recognized in Explanation (baa) below section 80 HHC that 10% of the export incentives would be incurred by the assessee as expenses to earn this income ? c) Whether on the facts and circumstances of the case and in law the assessee is entitled to the deduction under section 80HHC of a sum of Rs.1,36,92,266/- as computed by the assessee against the amount allowed by the Assessing Officer in the assessment order ? 2. The issues sought to be raised in this appeal is covered by the judgment of the Supreme Court in the case of Hero Exports V/s. C.I.T. reported in (2007) 295 ITR 454 (SC). 3. In the light of that, there is no merit in this appeal. The question is accordingly answered in favour of the assessee and against the revenue. The appeal is thus dismissed with no order as to costs. (J.P. Devadhar, J.) (V.C. Daga, J.)