In the High Court of Judicature at Madras Dated : 09.07.2008 Coram :- The Honourable Mr.Justice K.RAVIRAJA PANDIAN and The Honourable Mr.Justice P.P.S.JANARTHANA RAJA Tax Case (Appeal) Nos.890 and 891 of 2008 Commissioner of Income Tax Chennai. .. Appellant in both T.Cs Vs. M/s.Aswini Fisheries Limited (Formerly Century Cold Storage) 136 & 139, Old Mahabalipuram Road, Karapakkam Chennai – 600 096. .. Respondent in both TCs TAX CASE (APPEAL) filed under Section 260A of the Income Tax Act 1961 against the order of the Income Tax Appellate Tribunal Madras 'A' Bench dated 5.8.2005 in I.T.A.Nos.1321 and 1322/Mds/2000 for the assessment years 1994-95 and 1997-98 respectively against the order of the Commissioner of Income-Tx (A) IV-Chennai is ITA No.176/38/2000-01, date of order 31.5.2000 for the assessment year 1994-95 and 1997-1998 and against the order of the Deputy Commissioner of Income-Tax Company Circle -IV (1) Chennai -6000 006 is PAN/GIR-226-A date of order 27.3.2000 for the assessment year 1997-98 and against the order of the Deputy Commissioner of Income -Tax Company Circle-IV (1) Chennai -600 006 is PAN/GIR-226-A Date of order 27.3.2000 for the assessment year 1994-1995. For Appellant : Mrs.Pushya Sitaraman JUDGMENT JUDGMENT OF THE COURT WAS DELIVERED BY K.RAVIRAJA PANDIAN,J The revenue came up on appeal against the order of the Income Tax Appellate Tribunal Madras 'A' Bench dated 5.8.2005 in I.T.A.Nos.1321 and 1322/Mds/2000. The relevant assessment years are 1994-95 and 1997-98. The common substantial questions of law formulated in these appeals are as follows:- https://hcservices.ecourts.gov.in/hcservices/ "Whether in the facts and circumstances of the case, the Tribunal was right in holding that the commission termed as "additional sale price/sale consideration" received from the export house constitutes eligible profit eligible for the benefit of Section 80HHC of the Income tax Act? 2. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the sale receipts through export houses, forms part of export turnover for the purpose of determining the deduction under Section 80HHC? 2. As the issue involved in these appeals is one and the same, these appeals are taken together and are disposed of by this common order. The Tax Case (Appeal) No.890 of 2008 is taken as a typical case, the facts of which are as follows: The assessee is a sea food exporter. The return of income was filed on 20.2.1995 for the assessment year 1994-95 admitting nil income after deduction under Section 80HHC and 80I. The return was processed under Section 143(1)(a). The assessee company apart from exporting sea-food to the extent of FOB value of Rs.3,08,43,262/- directly for the assessment year 1994-95, also as supporting manufacturer exported through export house to the extent of FOB value of Rs.14,57,56,576/-. The assessee company has received an amount of Rs.64,72,768/- from the export houses as margin of sale price over and above the actual sale price of the exports. The assessee has claimed that this is additional sale consideration. The claim has not been accepted by the assessing officer on the premise that the amount paid by the export houses is nothing but a portion of export incentive earned by the export house on account of the exports made through them which is passed on to the supporting manufacturer and these receipts are squarely fall within the clause (baa) under the explanation to Section 80HHC(4A) as other receipt of similar nature. That order has been carried on appeal to the Commissioner of Income- tax (Appeals, who allowed the appeal by following the Tribunal's order in the assessee's own case for the assessment years 1994-95 and 1995-96 (I.T.A.Nos.54 and 1869/Mds/98). The revenue carried the matter on appeal to the Income-tax Appellate Tribunal, which confirmed the order of the Commissioner of Income-tax (Appeals). The correctness of the same is now put in issue before this Court in these appeals by formulating the above said question of law. 3. Learned counsel for the revenue fairly submits that the issue is now once and for all settled by the Supreme Court in the case of COMMISSIONER OF INCOME-TAX, THIRUVANANTAPURAM VS. BABY MARINE EXPORTS, (2007) 290 ITR 323. https://hcservices.ecourts.gov.in/hcservices/ 4. In the case of COMMISSIONER OF INCOME-TAX, THIRUVANANTAPURAM VS. BABY MARINE EXPORTS, (2007) 290 ITR 323, the assessee was engaged in the business of selling marine products both in the domestic market and also exporting them directly as well as through export houses. In relation to exports through export houses, the export house agreed to pay the assessee an incentive of 2.25 per cent of the f.o.b. Value as an incentive commission. The assessee showed the premium as part of its total turnover for the purpose of the special deduction under Section 80HHC of the Income-tax Act, 1961. The assessing officer rejected the claim of the assessee holding that the assessee, a supporting manufacturer, sold the goods to the export house in respect of which the export house had issued a certificate under the proviso to section 80HHC(1); that the export house premium was nothing but an integral part of sale price realised by the assessee; that the premium could not possibly be considered to be either commission or brokerage, as a person could not earn commission or brokerage for himself; and that the export house premium received by the assessee was includible in the "profits of the business" of the assessee while computing the deduction under section 80HHC. On appeal by the Department the High Court also held that the assessee was entitled to the benefit of section 80HHC on the export premium received from the export houses. On appeal to the Supreme Court, the Supreme Court while affirming the decision of the High Court held that "since the sales were to the export house the provisions of sub- section (1) of section 80HHC did not apply to the case of the assessee. Only the provisions of sub-section (1A) of section 80HHC applied." 5. As the questions of law now raised in this appeal have already been decided against the review in the above said judgment, following the said judgement, these appeals are dismissed. Consequently, the connected M.P.No.1 of 2008 is also dismissed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.Assistant Registrar, Income-Tax Appellate Tribunal, III Floor, Rajaji Bhavan, Besant Nagar, Madras 90 (with records five copies). 2.The Secretary, Central Board of Revenue, New Delhi (3 copies). 3. The Commissioner of Income Tax (Appeals)-IV, Chennai 4. The Deputy Commissioner of Income-tax, Company Circle-IV(I), Chennai 5. The Commissioner of Income Tax, Chennai +1cc to Mrs. Pushya Sitaraman, Advocate Sr 36637 SS (CO) km/17.7. Tax Case (Appeal) Ns.890 and 891 of 2008 https://hcservices.ecourts.gov.in/hcservices/