COMMISSIONER OF INCOME TAX Vs. ORIENT CHARTERERS

JUDGEMENT

(1.) THE two questions of law referred to this Court at the instance of the Department are:

(2.) THE assessee, a firm, carries on business as freight brokers and shipping agents. The proceedings relate to the asst. yrs. 1970 71 and 1971 72. During the relevant previous years, the assessee undertook to charter foreign ships for the import of foodgrains, etc., for the Government of India and received commission from the concerned shipping companies. In respect of the services rendered and facilities granted by it in the sphere of its activities, the assessee incurred certain expenditure and claimed deduction under S. 35B in respect thereof. The particulars of expenditure for the respective years are :

(3.) DR . Balasubramanian, learned counsel for the Department, reiterated that the assessee was not an exporter of goods, services and/or facilities. Its business was only that of a broker. It was collecting information about the availability of ships and the parties who desire to import goods. The information so collected enabled the assessee to strike a deal between the two. The exporter of the goods was also entitled to deduction under S. 35B for the same activity. Two persons cannot be entitled to deduction under S. 35B in respect of one and the same transaction. In any event, there was retrospective amendment by insertion of Explanation 2 which prohibited deduction in respect of expenditure of the nature covered by sub cls. (iii) and (viii) of S. 35B(1)(b). The expenditure involved herein was of the nature covered by the abovesaid two clauses.