The Commissioner Of Income Tax vs M/S.United Catalysts India Ltd on 22 September, 2010

       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

ITA.No. 177 of 2009(T)


1. THE COMMISSIONER OF INCOME TAX,
                      ...  Petitioner

                        Vs



1. M/S.UNITED CATALYSTS INDIA LTD.,
                       ...       Respondent

                For Petitioner  :SRI.JOSE JOSEPH, SC, FOR INCOME TAX

                For Respondent  :SRI.P.BALAKRISHNAN (E)

The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice K.SURENDRA MOHAN

 Dated :22/09/2010

 O R D E R
              C.N.RAMACHANDRAN NAIR &
                 K.SURENDRA MOHAN, JJ.
              -------------------------------------------
                I.T. Appeal No.177 of 2009
              -------------------------------------------
           Dated this the 22nd September, 2010

                           JUDGMENT

Ramachandran Nair, J.

Heard the Standing Counsel appearing for the

appellant and Adv.Sri.P.Balakrishnan appearing for the

respondent-assessee. The only question raised in the

departmental appeal is whether the Tribunal was justified

in holding that the commission received by the

respondent-assessee from a foreign company for

marketing the products of the foreign company is to be

treated as business income for the purpose of computation

of deduction on export profits under Section 80HHC of the

Income Tax Act.

2. After hearing both sides, we find that the Tribunal

as well as the Commissioner of Income Tax (Appeals) has

followed their orders for earlier years which have become

final. However, the standing counsel submitted that the

department has not contested the earlier orders on

I.T.No.177/2009 2

account of the small amount involved. The counsel for the

assessee, however, opposed the same stating that from

1991-1992 onwards, the assessee has been getting

commission and there is reference of the same at least for

two assessment years 1991-1992 and 1994-1995. In this

case, the orders produced are for the assessment year

1992-1993. The standing counsel has relied on the

decision of the Supreme Court in Commissioner of

Income Tax v K.Ravindranathan Nair (2007) 295 ITR

228, wherein the Supreme Court has held that processing

charges received for cashew exporters cannot be reckoned

as business income in the computation for deduction on

export profit under Section 80HHC. 90% of the

commission, brokerage etc. has to be excluded from the

scope of business income under explanation-(b(aa) of

Section 80HHC(4C) of the Income Tax Act. Since the

Supreme Court judgment is rendered after the Tribunal

decided the matter, these issues should be considered by

the Assessing Officer in the light of the above referred

judgment of the Supreme Court. The distinction drawn by

the assessee’s counsel that the amount involved in the

I.T.No.177/2009 3

above judgment is processing charges and not the income

received by the assessee as commission in this case and

the standing counsel’s contention that the commission is

specifically excluded under explanation above referred

will be considered by the Assessing Officer. The Assessing

Officer is directed to reconsider the issue in the light of

the judgment of the Supreme Court referred to above

after giving an opportunity to the assessee. The appeal is

disposed of as above.

C.N.RAMACHANDRAN NAIR
JUDGE

K.SURENDRA MOHAN
JUDGE

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