THE COMMISSIONER OF INCOME TAX COCHIN vs. M/S. UNITED CATALYSTS INDIA LTD. EDAYAR

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