TMI Blog1998 (6) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal is right in law and on facts in holding,--- (i) the assessee was not an agent of the export house ? (ii) in substance the export house has not purchased the goods ? (iii) export process has been actually done by the assessee and not the export house ? (iv) 'both are entitled to the benefit' ?" As the assessment orders considered in both the cases are relating to 1983-84 with similar set of facts and the real question to be considered is regarding the application of section 80HHC of the Income-tax Act, 1961, as requested by the parties, both the reference cases are answered by this common judgment. The assessees are processors of frozen sea foods. Some of their processed goods are exported directly to the foreign buyers. Part of their turn over are exported by the export houses. With regard to the direct exports by them to the foreign buyers there is no dispute. The question is whether they are entitled to the benefit of section 80HHC for the relevant year for the exports done through the export houses. It is not disputed that the foreign buyers had contracts only with the recognised export houses. In their turn, they have independent agreements with the processors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the export houses and goods were put on board by the assessees. The documents were prepared on account of the export houses. It is also not disputed that the benefit of section 80HHC during the relevant year was claimed by the export houses and they obtained the same. But, according to the Tribunal, that will not prevent the assessees from taking the benefit and the assessees being the real exporters are entitled to take the benefit of section 80HHC. During the relevant time section 80HHC was as follows : "80HHC. Deduction in respect of export turnover.-(1) Where the assessee, being an Indian company or a person (other than a company), who is resident in India, exports out of India during the previous year relevant to an assessment year any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, the following deductions, namely :--- (a) a deduction of an amount equal to one per cent. of the export turnover of such goods or merchandise during the previous year ; and (b) a deduction of an amount equal to five per cent. of the amount by whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be prescribed and verified in the manner prescribed that in respect of the export turnover mentioned in the certificate, the Export House or Trading House has not claimed the deduction under this section ; . . . ." Such disclaimer certificate was insisted upon only when the supporting manufacturers claim the benefit. When export houses are directly claiming, such certificates from the supporting manufacturers or processors were not necessary. During the relevant assessment year 1983-84, there was no specific provision for enabling the supporting manufactures to claim this benefit. The scheme of the Act is clear that the benefits can be availed only by one party and simultaneously cannot be claimed by export houses and processors or supporting manufacturers. The Tribunal after going through the agreement was of the opinion that the real exporters are the assessees, the processors, and export is done through the export houses and the benefits under section 80HHC can be claimed by the assessee even though such benefits were received by the export houses. The Tribunal relied on the decision of the Delhi High Court in Ferro Alloys Corporation Ltd. v. P.C. Mishra, Director, Tax Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. T. Ltd. v. Commercial Tax Officer [1997] 104 STC 94. There the Supreme Court considered the question whether the sale by the assessee is the penultimate sale in the course of export and covered by the terms of section 5(3) of the Central Sales Tax Act. The Supreme Court in the above case after relying on the decision in Bhopal Sugar Industries Ltd. v. Sales Tax Officer [1977] 40 STC 42 (SC), held that while interpreting the terms of the agreement, the court has to look into the substance rather than the form of it and found that the real exporter in the above case is not the State Trading Corporation but the C.T. Ltd., itself, even though the documents were prepared on account of the State Trading Corporation. But the facts of the case were different. It was found by the Supreme Court in the above case that under the terms of the contract between the appellant and the STC, the STC was merely an agent and there was no sale of the tea by the appellant to the STC and the sale of the tea was directly by the appellant, therefore, the sale done by the appellant was penultimate sale. Therefore, the clear finding on the basis of the agreement was that there was no sale by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with foreign buyers. The High Court held in respect of sales under the first two contracts directly with the foreign buyer there is exemption from sales tax being in the course of export. But it held that the sales under the contract with the STC were not exempt from sales tax under article 286(1)(b) of the Constitution read with section 5(1) of the Central Sales Tax Act, 1956. The majority of the Constitution Bench, speaking through Ray C.J., upheld the decision of the High Court against the assessee. In this connection we also refer to the decision of a Constitution Bench of the Supreme Court in Bell Gorm Nilgiri Plantations Co. v. Sales Tax Officer [1964] 15 STC 753 (SC). In the cases before us the assessees had not entered into any agreement with the foreign buyers. There was no privity of contract between the foreign buyers and the assessees. They could not sell any goods in their own name to the foreign buyers. Since as per the agreement between the export houses and the assessees the goods were to be boarded on the ship by them, the documents were prepared "on account of the export houses" as the export houses alone had contract to export goods to the foreign buyers. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the export houses the assessees shipped the goods on account of the exporter and merely because of a statement in the contract that the title to the goods will pass only after the goods crossed the customs frontiers that will not make the assessees exporters. Here the export houses have admittedly got the benefit under section 80HHC and there is no dispute that no certificate was issued by the export houses in favour of the assessees. As per the scheme of the statute, there will be only one exporter in respect of the export and that exporter had already got the benefit. Considering the entire facts and circumstances of the case we are of the view that the ratio of the decision of the Supreme Court in M. M. T C.'s case [1993] 201 ITR 851, referred to earlier applies in this case and the assessees are not entitled to the benefit of section 80HHC of the Act, as the real exporters are the export houses. Therefore, we answer the questions referred to this court in the negative, that is, against the assessees and in favour of the Revenue. A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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