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TMI Blog2002 (4) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... es or collection of any amount of similar nature. – question answered against the Revenue and in favour of the assessee. - - - - - Dated:- 4-4-2002 - Judge(s) : V. P. MOHAN KUMAR., K. K. DENESAN. JUDGMENT The judgment of the court was delivered by V.P. MOHANKUMAR J.-These four appeals raise similar questions. Of them two appeals are preferred by the assessee whereas the other two by the Revenue. Conflicting views have been expressed by the Tribunal on identical sets of facts necessitating both the Department and the assessee to invoke the jurisdiction of this court. While I.T.A. No. 4 of 1999 and I.T.A. No. 5 of 1999 have been preferred by the assessee, I.T.A. No. 97 of 2000 and I.T.A. No. 98 of 2000 have been preferred by the Department. We shall deal with the set of facts separately. I.T.A. Nos. 4 and 5 of 1999: These are the appeals preferred by the assessee. They relate to different assessment years but the facts herein are identical. We will summarise the facts after omitting those which are not material, as under: The assessee is the appellant in the above appeals. The assessee is engaged in processing and export of marine products. During the previous year re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first of the decisions relied on by the Tribunal, was set aside by this court and remanded back to the Tribunal for reconsideration. It is contended by the assessee that the decision of the court in CIT v. V.T. Joseph [1997] 225 ITR 731 (Ker) is not applicable to the assessee's case. Aggrieved, the assessee has preferred the above appeals under section 260A of the Income-tax Act contending that the following substantial questions of law arise for decision by this court, namely:-- "(a) Whether, on the facts and in the circumstances of the case, the Tribunal had jurisdiction to go into any issue other than the do deductibility of 90 per cent. of the receipts from the export houses? (b) If the answer to the first question is in the negative then whether, on the facts and in the circumstances of the case, when the issue of the applicability of section 80AB was not before it, was the Tribunal justified in going into this issue and holding against the assessee? (c) Assuming that the Tribunal had such jurisdiction having regard to the definition of the term 'profits from business' under clause (baa) of the Explanation was the Tribunal justified in invoking the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the assessee was not entitled to the deduction envisaged under section 80HHC. He disallowed the assessee's claim for deduction under section 80HHC. In doing so he followed the decision of the Income-tax Appellate Tribunal, Cochin Bench, in the case of A.M. Moosa, Chandiroor, in I.T.A. No. 498/Cochin of 1995, dated September 14, 1995. The assessee being aggrieved preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. Aggrieved, the assessee preferred appeal before the Tribunal. In the instant case, the Income-tax Appellate Tribunal for the reasons given in its order, held that 90 per cent. of the export house premium cannot be deducted while computing the deduction under section 80HHC(4A) read with the Explanation (baa) to section 80HHC as they are directly related to exports though a local receipt. Aggrieved by the above order of the Tribunal, the Department has filed the appeals urging the following substantial questions of law: "1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that 90 per cent. of the export hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s plus 3.40 per cent. of f.o.b. value of such exports. The exporter shall ask the bankers nominated by the processors/shippers to credit the entire proceeds of the bills of export to the account of the processors/shippers as soon as the documents are negotiated." As far as I.T.A. Nos. 97 of 2000 and 98 of 2000 are concerned the wording occurring in the relevant clause is as under: "The exporters shall pay to the processor, service charges at 7.50 per cent. on the f.o.b. value of the exports on presentation of debit notes by the processor after the shipment and negotiation and after all documents have duly been forwarded to the exporter along with monthly statement. The exporters have advanced a sum of Rs. 1,90,000 (rupees one lakh ninety thousand only) towards the service charges. The receipt of the said advance is hereby acknowledged. This advance will be adjusted on pro-rata basis from each debit note." It is not in dispute that this payment represents the excess amount received by the assessee-vendor from the export house to whom the sale is effected in the high seas after crossing the customs barrier over and above the f.o.b. value of the merchandise. The claim of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time, that certainly does not mean that every transaction entered into by a bona fide trader be viewed with a magnifying glass to rope in all deals within the financial legislation. It is not the form that matters but the substance. With this in mind we will examine the rival contentions. Bruton's Legal Theasaurus defines "premium" as a noun as under: "Amount over par, bonus, bounty, charge, beyond normal, charge to excess, excessive charge, extra, incentive, increased value, overcharge, prize. "Collins Cobuild English Language Dictionary more graphically defines "premium" to mean as under: "A premium is a sum of money that is added to something, for example to someone's earnings or to the price of goods, in order to encourage people to work hard or to produce the goods." Likewise, we may advert to other dictionaries as well. As for instance in Black's Law Dictionary 'premium" is defined as: "A reward for an act done. Brown v. Board of Police Commissioner's of City of Los Angeles (58 Cal. App. 2d 473, 136 p.2d 617, 619). See also Bonus. A bounty or bonus; a consideration given to invite a loan or a bargain, as the consideration paid to the assignor by the assign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer is the seller and the export because is an intermediary. The intermediary using his own skill and labour locates a foreign buyer and after expending his expertise and labour, settles the sale. He thus incurs overhead charges. Normally, his seller should absorb the overheads and give credit to the expenses incurred by that intermediary. But, the intermediary in the instant case as per the term of the agreement, the f.o.b. price fetched at the sale by the intermediary is made over to the seller by him without providing for his overheads he suffered and referred to above. Besides over and above the f.o.b. price realised by him, he pays something more which is described as premium/service charges. What does this payment represent to the buyer in his trade practice? From the intermediary's point of view, this is nothing but the price paid by him for having chosen him as the trader to deal with. May be in a given case higher share of such payment could have been demanded by the seller for settling the transaction. Can we treat the said question in the abstract and treat it as the commission earned? Buyer trades in the wares purchased by him as business deal. But where does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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