P R PRABHAKAR Vs. COMMISSIONER OF INCOME TAX COIMBATORE
LAWS(SC)-2006-7-10
SUPREME COURT OF INDIA
Decided on July 18,2006

P.R.PRABHAKAR Appellant
VERSUS
COMMISSIONER OF INCOME TAX, COIMBATORE Respondents





Cited Judgements :-

COMMISSIONER OF INCOME TAX PUNE VS. SHIRKE CONSTRUCTION EQUIPMENT LTD [LAWS(SC)-2007-5-93] [REFERRED TO]
ZYDUS WELLNESS PRODUCTS LIMITED VS. UNION OF INDIA [LAWS(SIK)-2023-9-2] [REFERRED TO]
M/S. VEEJAY MARKETING VS. DEPUTY COMMISSIONER OF INCOME TAX, COIMBATORE [LAWS(SC)-2017-3-179] [REFERRED TO]
O N G C LTD VS. COMMNR OF CUSTOMS [LAWS(SC)-2006-8-101] [REFERRED TO]
SANT BABA SUNDER SINGH CANADIAN CHARITABLE TRUST VS. CENTRAL BOARD OF [LAWS(P&H)-2010-1-602] [REFERRED TO]
CIT VS. ANIL CHANANA [LAWS(DLH)-2012-8-263] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. INTERNATIONAL TRACTORS LTD. [LAWS(DLH)-2017-7-122] [REFERRED TO]
A P STEEL RE ROLLING MILL LTD VS. STATE OF KERALA [LAWS(SC)-2006-12-56] [REFERRED TO]
STATE OF ORISSA VS. TATA SPONGE IRON LTD [LAWS(SC)-2007-9-63] [REFERRED TO]
M/S NATH BROTHERS EXIM INTERNATIONAL LTD VS. UNION OF INDIA [LAWS(DLH)-2017-4-79] [REFERRED TO]
SEVEN STARS VS. DEPUTY COMMISSIONER OF INCOME [LAWS(BOM)-2020-1-341] [REFERRED TO]
DUNCANS INDUSTRIES LIMTIED VS. COMMISSIONER OF INCOME TAX [LAWS(CAL)-2011-9-28] [REFERRED TO]
COMMISSIONER OF INCOME TAX DELHI VS. SHRI RAM HONDA POWER EQUIP [LAWS(DLH)-2007-1-170] [REFERRED TO]
AJANTA EDUCATIONAL CENTRE VS. CHIEF COMMISSIONER OF INCOME TAX AND ANR. [LAWS(P&H)-2009-8-167] [REFERRED TO]
RELIANCE TRADING CORPORATION VS. ITO, WARD NO 2(3), JAIPUR [LAWS(RAJ)-2015-5-97] [REFERRED TO]
DIRECTOR OF INCOME TAX VS. RAUNAQ EDUCATION FOUNDATION [LAWS(DLH)-2007-4-159] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. ARIF INDUSTRIES LTD [LAWS(ALL)-2010-3-279] [REFERRED TO]
GINNI FILAMENTS LTD VS. COMMISSIONER OF INCOME TAX [LAWS(ALL)-2011-3-61] [REFERRED TO]


JUDGEMENT

- (1.)The Appellant carries on business of export of its own products as also procuring export contracts for other exporters on commission. In the assessment year 1990-1991 he derived an income of Rs. 56.69,321.00 by way of commission, whereas as an exporter of goods incurred a loss of Rs. 6,372.00. The value of the total exported goods outside India by the Appellant during the said assessment year was Rs. 3.67,600.00. He claimed a deduction in respect of aforementioned income in terms of Sec. 80HHC of the Income Tax Act, 1961 (for short "the Act"). Exemption claimed under the aforementioned provision was disallowed by the Assessing Officer on the premise that they having incurred toss in respect of export business were not entitled thereto. An appeal preferred thereagainst was rejected by the Commissioner of Income Tax (Appeal). The Income tax Appellate Tribunal, however, on further appeal preferred by the Appellant opined that the commission received by the Appellant from the other exporters is to be taken into consideration for the said purpose.
(2.)The Respondent aggrieved by and dissatisfied with the said decision filed an application for reference to the High Court and by an order dated 13.9.1996 the following questions were referred by the Tribunal:
1. Whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that the assessee is entitled to deduction u/s. 80HHC of the Income-tax Act even though the export business resulted in a loss of Rs. 6,372.00

2. Whether on the facts and in the circumstances of the case the Tribunal is right in law in holding that commission and brokerage for procuring export contracts for other exporters is exempt u/s. 80HHC of the Act on the ground that the same is export profits

(3.)By reason of the impugned judgement the High Court opined that income derived by the Appellant towards commission/brokerage for procuring orders of export for others is not eligible to exemption from tax u/s. 80HHC of the Act. Referring to the circulars issued by the Central Board of Direct Taxes (CBDT), the High Court held that although the said provision was amended with effect from 1.4.1992 by inserting an explanation whereby and whereunder the profit derived out of such commission/ brokerage was confined to 10% of the income, the same, being clarificatory in nature, would have retrospective effect. On the said findings, answers to both the questions were rendered in the negative and in favour of the Revenue.


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