COMMISSIONER OF INCOME TAX Vs. POOPPALLY FOODS

JUDGEMENT

(1.) THE assessee, M/s. Pooppally Foods, Alleppey, is a registered firm, carrying on the business of export of canned and processed shrimps. For the assessment year 1972-73, the assessee has claimed weighted deduction of Rs. 11,832 under Section 35B of the Income-tax Act, 1961 ("the Act"), it being one-third of Rs. 35,495 paid by way of commission to a foreign agent for the promotion of business. THE Income-tax Officer rejected the claim holding that the payment was to the buyer, not to an agent ; and that it partook of the character of trade discount, not of commission. THE Appellate Assistant Commissioner granted relief holding that the Income-tax Officer's approach was not correct inasmuch as the payment was by way of commission to an agent, not trade discount to the buyer. THE Appellate Assistant Commissioner also stated that earlier in similar matters the same view had been taken. A second appeal filed by the Revenue having been dismissed by the Appellate Tribunal, this court had at the instance of the Revenue in O.P. No. 3510 of 1977A directed the Appellate Tribunal to draw up a case and refer the questions of law arising out of the Tribunal's order to this court. THE questions of law referred to us read as follows :

(2.) ANNEXURE A is the copy of the assessment order of the Income-tax Officer dated December 23, 1974. ANNEXUREs B and C are, respectively, the order and the decision of the Appellate Assistant Commissioner and the order of the Tribunal. ANNEXUREs D1 and D2, respectively, are copies of contracts dated April 6, 1970, and September 7, 1970, and annexure. E1 and E2, respectively, are the invoices dated November 12, 1970, and December 1, 1970. In fact, question No. 2 is comprehensive enough to render the first question redundant. We would, however, answer both the questions for the sake of completeness.

(3.) STRONG reliance was placed by the counsel for the Revenue on the decision of this court in CIT v. Cochin Co. P. Ltd. [1979] 119 ITR 157. It is true that in that case, this court had declined to answer the questions referred and had sent back the reference to the Tribunal for being dealt with in accordance with law and in the light of the observations contained in the judgment. In the last paragraph of the judgment in that case, the facts and circumstances leading to the remand of the matter to the Tribunal, without the questions being answered, are stated as follows (at pp. 160 and 161) :