$ R-30 * IN HIGH COURT OF DELHI AT NEW DELHI Decided on 7th April, 2015 + ITA 69/2001 COMMISSIONER OF INCOME TAX, DELHI ..... Appellant Through Mr. Rohit Madan, Mr. Ruchir Bhatia and Mr. Akash Vajpai, Advs. versus COMMER. AND ASSOCIATES P. LTD. ..... Respondent Through None CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K.GAUBA MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) % 1. following question of law arises : Whether ITAT has rightly interpreted provisions of Section 80- HHC of Income Tax Act, 1961 and whether ITAT is right in holding that commission received from Indian parties on transfer of export orders is entitled to deduction u/s 80-HHC of Income Tax Act, 1961? 2. At outset this Court notices that impugned order has relied upon special bench decision of ITAT International Research Park Laboratories Ltd. V. Assistant Commissioner of Income Tax (1995) 212 ITR (AT) 1. view expressed in that order of Tribunal by special bench was that income derived by assessee towards commission/brokerage for procuring export orders for others is eligible for ITA 69/2001 Page 1 benefit under Section 80HHC(3) of Income Tax Act. said view has been in effect approved by judgment of Supreme Court in P.R. Prabhakar V. CIT (2006) 284 ITR 548 SC. Facts before Supreme Court in P. R. Prabhakar are extracted below : 3. By reason of impugned judgment, High Court opined that income derived by appellant towards commission/brokerage for procuring orders of export for others is not eligible to exemption from tax under section 80HHC of Act. Referring to circulars issued by Central Board of Direct Taxes (CBDT), High Court held that although said provision was amended with effect from April 1, 1992, by inserting Explanation whereby and whereunder profit derived out of such commission/brokerage was confined to 10 per cent. of income, same, being clarificatory in nature, would have retrospective effect. On said findings, answers to both questions were rendered in negative and in favour of Revenue. 3. Supreme Court took note of plain meaning of expression business of export and held that it includes trading of goods . Court also relied on circular of Central Board of Direct Taxes i.e. No.621 dated 19.12.1991, as well as amendment which was brought into force from 1.4.1992. Court expressed its conclusions in para 12 and 13 of said judgment and in para 17, Supreme Court in fact extracted and approved order of special bench in International Research Park Laboratories (supra). said passage of Supreme Court is as follows: 17. Indeed question as to whether earning of income by way of commission/brokerage would attract section 80HHC of Act or not, precisely came up for consideration before Special Bench of Income-tax Appellate Tribunal, Delhi ITA 69/2001 Page 2 Bench in International Research Park Laboratories Ltd. v. Asst. CIT [1995] 212 ITR (AT) 1, wherein interpreting Central Board of Direct Taxes circular it was stated (at page 48) : Now, we come to whether commission received could form part of export profits. Here again, we are unable to see it differently. It is no doubt true that this commission is not turnover but it is profit relatable to exports. Coming back to section 80HHC(1), if assessee is exclusive exporter without having any local sales, then profit on commission is admittedly includible as profit of business computed under head Profits and gains of business or profession and whole of it would be eligible for exemption under clause (a) of sub-section (3) of section 80HHC. When such commission could be regarded as profit derived from export for purpose of clause (a), how can same be excluded for purpose of clause (b) unless it amounted to discrimination. interpretation of clauses (a) and (b) must be harmonious and not discriminatory, cutting against each other. What is sauce for goose is also sauce for gander. Secondly, we have just mentioned that this profit is profit derived from export and export is basis or foundation or nexus. argument of Shri B. B. Ahuja and all his effort to show to us that it has no reference to export is, therefore, unacceptable to us. In our opinion, argument advanced by Shri Ahuja overlooks fact that commission would not have come to assessee had he not been engaged in export business. He sought to justify his argument by referring to subsequent amendments made from April 1, 1992, whereunder as we have pointed out above by adding clause (baa) to Explanation at end of sub-section (4A) with effect from April 1, 1992, 90 per cent. of this commission, etc., is not to be regarded as profits derived from export business and this amendment as explained in Memorandum of Bill was only to clarify position. ITA 69/2001 Page 3 18. It is stated at Bar that Revenue did not prefer any appeal thereagainst. We, for reasons stated hereinbefore agree with law laid down by Tribunal. 19. For views, we have taken, judgment of High Court cannot be sustained. It is set aside accordingly. appeal is, accordingly, allowed. parties shall, however, pay and bear their own costs. 4. This Court also notices that view expressed in P.R. Prabhakar (supra) and International Research Park Laboratories (supra) has been noticed and approved subsequently in two Division Bench judgments Lotus Trans Travels Pvt. Ltd. V. CIT (2011) 332 ITR 463 and CIT V. Anil Chanana (2013) 350 ITR 47. For above mentioned reasons appeal is answered against revenue and in favour of assessee. 5. appeal is therefore dismissed. S. RAVINDRA BHAT (JUDGE) R.K.GAUBA (JUDGE) APRIL 07, 2015 vld ITA 69/2001 Page 4 Commissioner of Income-tax, Delhi v. Commer. And Associates P. Ltd