2001 PLP 330 (PTD)

(2) Whether, on the facts and in the circumstances of the case, the above payments of the exporters and shipping agents are not towards the price of goods exported for or on their behalf? (3) Whether, on ‑the facts and in the circumstances of the case, the above amount received by the assessee is includible in the 'total turnover' for purposes of section 80HHC?" The assessee is the proprietor of Lakshmi Marine Products, dealing in marine products. For the assessment year 1982‑83, he filed a return of income declaring a total income of Rs.3,

100. The assessee claimed a deduction of Rs.12,27,463 under section 80HHC of the Act. Though return was filed under section 143(1A) (sic), the assessing authority to verify the correctness of the claim for deduction by the assessee, issued notice under section 143(2). On verification of accounts, the assessing authority noticed that the assessee had received a total sum of Rs.5,93,072 from various export houses. These receipts are credited in his trading account under the head "Export earnings premium". The assessee entered into agreements with various export houses. Under the agreements the export houses agreed to pay a percentage of the F.O.B. value of exports to the assessee. Such amount is described in different agreements as incentive/premium, etc. The assessing authority concluded as follows: "Actually, this amount is given to the assessee for various services enumerated in the agreement, being entered by him. It is only service charges. It is there (sic‑therefore) deductible from the profits and gains of business for arriving at the profit of business as defined in Explanation (baa)." On appeal, the appellate authority confirmed such finding of the Assessing Officer. On further appeal, the Income‑tax Appellate Tribunal also affirmed the order of the appellate authority. Under section 80HHC of the Act while computing the total income of the assessee a deduction of the profits, derived by the assessee from the export of goods shall be allowed. Subsection (1A) of section 80HHC enables a supporting manufacturer also to get the same benefit which accrues to an exporter under subsection (1) of section 80HHC. Clause (baa) to the Explanation below subsection (4A) defines "profits of the business" meaning the profits of the business as computed under the head "profits and gains of business or profession" as reduced by‑‑‑(1) ninety per cent. of any sum referred to, in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by' way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature, included in such profits. The assessing authority found that the premium/incentive received by the assessee‑admittedly, falling under subsection (1A) ‑‑‑ under various agreements, amounts to "charges", occurring under clause (baa), which he received for rendering a variety of services. This is how the Assessing Officer held that the profits of the assessee from the export deserve to be reduced by 90 per cent. for the purpose of deduction under section 80HHC. From the perusal of the order of the Assessing Officer, it appears that he simply concluded that the premium/incentive received by the assessee, was for rendering services and that fell within the nature of "charges", occurring in clause (baa). The Assessing Officer did not assign any reason as to why did he reach the c6nclusion that premium/incentive was received by the assessee under the various agreements for rendering services. What sort of service was rendered by the assessee to the export houses, it has not been elaborated by him. Except, the conclusion nothing else has been stated by the Assessing Officer in his order. We have also carefully gone through the order of the Appellate Tribunal, which found as follows: "Certainly it will fall within the meaning of the term any receipt towards 'charges' that entered the profits of the business. Similar is the case with brokerage or freight. In this view of the matter, we reject the contention of Sri Kesavan and uphold the computation of the Assessing Officer in reducing the profits by 90 per cent. of the export earnings premium and the brokerage in computing the profits for purpose of deduction under subsection (IA) of section 80HHC of the Income‑tax Act." The question for consideration is whether the bald order of this type passed by the Appellate Tribunal, can be approved. In CIT v. Greaves Cotton & Co. Ltd. (1968) 68 ITR 200, the apex Court observed as under (page 209): "We have, therefore, reached the conclusion that the question of law referred to the High Court cannot be answered in view of the defective finding by the Appellate Tribunal which is recorded without consideration of all evidence. It will be open to the Appellate Tribunal to rehear the appeal under section 66(5) of the Act and record a clear finding after hearing the parties and after considering all the relevant material in the case .... " In view of the aforesaid authority, we have no option, but to remit the case to the Appellate Tribunal for decision afresh after adverting to the entire materials available on the record and recording reasons in support of its finding. Learned counsel for the assessee urges that the Tribunal can simply confirm the findings of the appellate authority or of the Assessing Officer, as the case may be. No doubt, it can, provided the lower authority, whose order is to be confirmed, has given reasons in its order. In the case at hand, neither did the appellant authority nor did the Assessing Officer assign any reason whatsoever to come to the conclusion that premium/incentive was paid to the assessee for rendering services to the export houses; nor did either authority elaborate the services, allegedly rendered by the assessee to the export houses. In the result, we return the above referred questions without answering them, with the above directions to the Appellate Tribunal. M.B.A./142/FC Order accordingly.