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TMI Blog1970 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... plication under section 154 of the Act claiming rebate on the turnover of Rs. 10,71,382 pertaining to exports to foreign countries and the commission transactions to the tune of Rs. 25.96 lakhs handled by it on commission basis. The Income-tax Officer granted rebate only on the export turnover of Rs. 7,99,640 out of Rs. 10,71,382. The rebate was refused in respect of the balance turnover of Rs. 2,71,742 on the ground that it relates to a sale to U.P.C.C. Ltd., Calcutta, an intermediary. The commission sales were held to be not eligible for rebate as the assessee was not the owner of goods ultimately exported out of India. The appeal by the assessee to the Appellate Assistant Commissioner was without success. The Appellate Tribunal, on a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the department is resisted by Sri Venkataramana Reddy, appearing for the assessee, contending, inter alia, that the source for the commission earned by his client being the export of tobacco, the Tribunal has rightly granted the rebate. In order to appreciate the rival contentions, it is profitable to read section 2(5)(i) of the Finance (No. 2) Act, 1962 : " An assessee being an Indian company or any other company which has made the prescribed arrangements for the declaration and payment of dividends within India or 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 sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the export of any goods or merchandise outside India does not earn any rebate under section 2(5). The answer to the question turns upon the interpretation of the words "whose total income includes any profits and gains derived from the export of any goods or merchandise out of India " used in section 2(5)(i) of the Finance (No. 2) Act, 1962. The crucial words are "derived from the export of any goods or merchandise out of India". We shall first proceed to examine the meaning of the expression "from the export of goods or merchandise out of India" and thereafter "derived". The meaning of the word "from" as given in Corpus Juris Secutndum, volume 37, page 1383, is as follows : " The word has no certain literal or legal meaning that can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from what it is. As section 2(5) with which we are concerned provides for rebate which is a kind of concession relating to the taxability of the profits derived by an assessee or a company from export of goods or merchandise out of India, we have to construe the provision strictly so as to take in only such profits and gains derived by an assessee or a company from the export of goods out of India. All other persons who have either directly or indirectly helped or earned profits in respect of goods which ultimately were exported out of India, are not persons who are entitled for the rebate under this provision. Therefore, we are of the view that the words "profits and gains derived from the export of any goods or merchandise out of India " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them from the export of these goods. The Tribunal is not justified in law in thinking that the profits earned by the assessee on commission sales in respect of goods worth Rs. 25.96 lakhs are similar to the gains made by it in exporting the tobacco worth Rs. 2,71,742 through U.P.C.C. Ltd., the intermediary. The nature of the two transactions in both is not one and the same. In one case, the assessee was in substance the dealer who really exported the tobacco through the intermediary as it was, in fact, the assessee who controlled the export to France and was responsible for the quality, and the intermediary acted only as a conduit pipe through which the transactions were routed. In the case of commission sales, it cannot be said that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission sales which have no concern or connection with the export. We may also approach the problem from another angle. The assessee who is only a commission agent is not concerned with the profit or loss of the exporter in respect of the goods supplied by him on commission. The assessee is certainly entitled to his commission irrespective of the fact whether the exporter earns profit or incurs a loss by exporting the goods supplied by the supplier outside India. It is the exporter that will ultimately reap the result or consequences of the export of the goods out of India but not the commission agent. The exporter may directly purchase the goods for export and export the same in which case the commission agent will be nowhere in the pic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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