CIT Vs. SARAF TRADING CORPORATION

JUDGEMENT

(1.) This is a reference at the instance of the Commissioner of Income Tax, Kerala, by the Income Tax Appellate Tribunal, Madras Bench, under S.256(1) of the Income Tax Act, 1961. The assessment year concerned is 1963-64; and the accounting period the Samvat year 2018. The question referred is:

(2.) S.2(5)(i) of the Finance Act, 1963, provides that an assessee (other than a company) "whose total income includes any profits and gains derived from the export of any goods or merchandise out of India, shall be entitled to a deduction, from the amount of income tax and supertax with which he is chargeable of an amount equal to the income tax and supertax calculated respectively at one tenth of the average rate of income tax and of the average rate of supertax on the amount of such profits and gains included in the total income" During the Samvat year 2018 the assessee received a sum of Rs. 53,446/- by way of commission. That sum included a sum of Rs. 22,776/- which the assessee earned for his services in pursuance of Annexure A dated the 14th May 1959.

(3.) The assessee is not a company and the sole question for determination is whether the sum of Rs. 22,776/- earned by the assessee in pursuance of Annexure A can be considered as "profits and gains derived from the export of any goods or merchandise out of India" Annexure A is entitled an AGENCY AGREEMENT. The clauses from that Agreement extracted in the order of the Appellate Tribunal and in the Statement of the Case read as follows:-