Decided on August 30,1967

CIT Appellant


- (1.) This is a reference at the instance of the Commissioner of Income Tax, Kerala, by the Income Tax Appellate Tribunal, Madras Bench, under S.256(1) of the Income Tax Act, 1961. The assessment year concerned is 1963-64; and the accounting period the Samvat year 2018. The question referred is: "Whether on the facts and in the circumstances of the case the assessee was an exporter entitled to the rebate contemplated in S.2(5)(i) of the Finance Act, 1963 -.
(2.) S.2(5)(i) of the Finance Act, 1963, provides that 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 supertax with which he is chargeable of an amount equal to the income tax and supertax calculated respectively at one tenth of the average rate of income tax and of the average rate of supertax on the amount of such profits and gains included in the total income" During the Samvat year 2018 the assessee received a sum of Rs. 53,446/- by way of commission. That sum included a sum of Rs. 22,776/- which the assessee earned for his services in pursuance of Annexure A dated the 14th May 1959.
(3.) The assessee is not a company and the sole question for determination is whether the sum of Rs. 22,776/- earned by the assessee in pursuance of Annexure A can be considered as "profits and gains derived from the export of any goods or merchandise out of India" Annexure A is entitled an AGENCY AGREEMENT. The clauses from that Agreement extracted in the order of the Appellate Tribunal and in the Statement of the Case read as follows:- "I. The Agents undertake to effect the purchase of Tea from the Cochin Auctions or private sales for the Buyers in full accordance with the Buyers' instructions. In no case are the Agents to buy defective tea including mouldy, musty, cheesy, sour, and damaged tea or tea with foreign admixture, with foreign smell, and increased moisture. XV. The Buyers are to pay to the Agents an agents' commission at the rate of 1/4 (one forth) per cent from the amount of the auction value of the goods purchased. All expenses connected with the storage, marking, hooping, gunnying, repairing (if necessary), delivery of the goods to the port, loading, export duties, Port Commissioner's toll, customs charges and insurance (after prompt) are to be borne by the Buyers (the schedule of the rates of the expenses is attached hereto). XVI. Payment is to be effected by an irrevocable Letter of Credit opened by the Buyers in favour of the Agents with the Central Bank of India Ltd., Cochin, for the full F. O. B. value of the goods against the Agents' and Brokers' invoices, full set of clean on board Bills of Lading and lot by lot specifications for the tea shipped, according to the form presented by the Buyers. The Buyers undertake to open the Letter of Credit upon receipt of the documents showing the quantities, prices and preliminary total F. O B. amount of the tea purchased. In case of any delay in shipment preliminary payment of the actual value of the goods is to be made on prompt date against invoices, godown warrants and specifications.,' For the ask of completeness the entire Agreement is reproduced as an Appendix to this judgment.;

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