GANGADHARAN NAIR G Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Income-tax Appellate Tribunal referred the following questions under Section 256(1) of the Income-tax Act, 1961 (briefly, "the Act"), for the opinion of this court :

(2.) THE assessee is the proprietor of Lakshmi Marine Products, dealing in marine products. For the assessment year 1982-83, he filed a return of income declaring a total income of Rs. 3,100. THE assessee claimed a deduction of Rs. 12,27,463 under Section 80HHC of the Act. Though return was filed under Section 143(1A) (sic), the assessing authority to verify the correctness of the claim for deduction by the assessee, issued notice under Section 143(2). On verification of accounts, the assessing authority noticed that the assessee had received a total sum of Rs. 5,93,072 from various export houses. THEse receipts are credited in his trading account under the head "Export earnings premium". THE assessee entered into agreements with various export houses. Under the agreements the export houses agreed to pay a percentage of the f. o. b. value of exports to the assessee. Such amount is described in different agreements as incentive/premium, etc. THE assessing authority concluded as follows :

(3.) THE assessing authority found that the premium/incentive received by the assessee--admittedly, falling under Sub-section (1A)--under various agreements, amounts to "charges", occurring under Clause (baa), which he received for rendering a variety of services. This is how the Assessing Officer held that the profits of the assessee from the export deserve to be reduced by 90 per cent. for the purpose of deduction under Section 80HHC.