Income Tax Appellate Tribunal - Kolkata
Duncan International (India) Ltd. vs Income-Tax Officer on 27 January, 1986
Equivalent citations: [1987]23ITD161(KOL)
ORDER
Egbert Singh, Accountant Member
1. This is the appeal by the assessee which is directed against the order of the Commissioner (Appeals) dated 31-1-1981 for the assessment year 1976-77.
2. The first ground of appeal is of general nature which requires no decision.
3. The next point of appeal is that the Commissioner (Appeals) erred in sustaining the disallowance of Rs. 7,91,079 claimed by the assessee as deduction on account of export duty refundable as per conditions of sale to the foreign buyer and that the Commissioner (Appeals) failed to appreciate the terms and conditions of contract for sale which should have been considered for ascertaining the liability of the assessee to refund the amount during the accounting year, as an ascertaining liability.
4. The ITO noted in the assessment order that the accounting period of the assessee relevant to the year under consideration ended on 30-9-1975. The assessment was done Under Section 143(3)/144B of the Income-tax Act, 1961 ('the Act')- The method of accounting was noted to be mercantile. He pointed out that on 30-9-1975 the assessee debited gunny export sale account with Rs. 7,91,079.60 with a corresponding credit to account styled 'amount refundable to parties on account of customs duty reduction'. He noted that for payment of customs duty and cess expenses, the assessee debited its trading account with Rs. 38,86,757, which represented actual payment of customs duty and cess to the Government on the export sales during the year, He pointed out also that during the year the assessee received four orders for sale of jute goods to the General Organisation for supply of goods, Cairo (Egypt) and the orders were received through the State Trading Corporation of India (STC), which in turn negotiated such orders through the Trade Centre of Arab Republic of Egypt, Calcutta Centre. The details of those four orders were narrated by the ITO in the assessment order.
5. The goods to be supplied to the foreign buyer consisted of hessian cloth, hessian bags, etc., of different sizes. During the year the customs duty on such hessian goods was at Rs. 600 per metric ton and that customs duty was abolished from June 1975. The ITO noticed that against" the above orders received from the Egyptian parties certain goods were exported after the abolition of export duty in June 1975, thereby the assessee was not required to pay any customs duty on those shipments, i.e., at the rate of Rs. 600 per metric ton which works out to Rs. 7,91,079. He pointed out that the total value of the goods covered by these subsequent shipments as per the bills concerned came to Rs. 65,35,143 and on the basis of the letter of credit issued by the Egyptian importer, the assessee got payment against the bills, from the Bank of Baroda, Calcutta Branch on the basis of sight drafts issued. The ITO examined the bills and sight draft and noticed that the bills were encashed at the prevailing exchange rate and the sale proceeds were fully credited in the accounts. The ITO, therefore, found that the sale proceeds at the contracted rate were realised by the assessee during the year under account.
6. It was contended by the assessee that the contracts for sales included the customs duty enforced at relevant point and as there was abolition of customs duty with effect from 1-6-1975, the Egyptian party had a case for claiming refund for the customs duty accounting to Rs. 7,91,079. In order to provide for such anticipated claims, the assessee debited sales account accordingly and in that process claimed the above amount to be deducted from the sales. The ITO asked the assessee whether any such claim was made by the Egyptian party and it was clarified that there was no such claim. The ITO further found that on 30-9-1976 (relevant to the assessment year 1977-78) the assessee credited the account with the above sum and showed the amount under miscellaneous income for that assessment year. Thus, the ITO inferred that the assessee was not required to pay any amount to the Egyptian party as there was no claim as such. The ITO also perused the letter dated 10-3-1976 given by the Trade Centres of Arab Republic of Egypt to the effect that it was confirmed that the Egyptian party had no claim pending with the assessee in respect of the contracts for jute goods shipped during the year 1975. According to the ITO, on the basis of the terms of the contracts, the Egyptian party cannot have any legal claim against the assessee because of the abolition of the customs duty as mentioned above.
7. The assessee submitted in his letter dated 7-11-1978 on that basis of the terms of the sale, the customs duty recovered from the buyer was a liability on the date of the closing of the relevant year and hence it was shown as such in the accounts and that, however, the consequent to the negotiation the assessee was not required to refund and the amount was accordingly credited to the profits and loss account for the assessment year 1975-76. The ITO could not appreciate such contention of the assessee so as to justify the claim made for the year under consideration. He was of the view that as an exporter the assessee was responsible for payment of customs duty and the question of recovery from the buyer did not arise at all. He pointed out that the contracts for sale were entered into at the stipulated FOB, Calcutta and the importer had no concern with the payment of customs duty by the exporter to the Government. He inferred that the claim of the assessee was without any basis and that there was no liability ascertained during the year as there was no claim made by the Egyptian party, nor there was any enforceable legal liability accrued to the assessee during the year. The ITO observed that it was settled that sales tax or other duty, i.e., excise or export duty, was a part of the dealer's trade or business receipt, even if the tax or duty was charged separately or credited to separate account in the accounts, while liability to pay tax or duty would be deductible as business expenditure in the year when such payment was made or discharged. According to the ITO, the amount of the customs duty realised by the assessee on the sales was the trading receipt of the assesaee. In the circumstances of the case, particularly when there was no separate realisation of customs duty, there was no question of charging duty separately from the customer as the sale was effected at the stipulated rate on the basis of the term of the contract.
8. He also pointed out that the assessee credited the trading account with the gross sales proceeds and the customs duty paid on the export was separately debited in the account. He observed that there was no question of payment of any further duty on the aforesaid sales and even it was not the case of any contingent liability when the Egyptian party was bound by the rate specified. in the sales order. The ITO considered that deduction cannot be allowed as provision for an imaginary claim. The assessee drew attention of the ITO to the provision of Section 64A of the Sale of Goods Act, 1930 to support the claim for deduction. The ITO found that that Section had no application on the terms of contract entered into by the assessee and the Egyptian party.
9. On the point of the date of accrual of business profits, the ITO referred to the Commentary of Xanga and Palkhivala in Law and Practice of Income-tax, Vol. I, p. 171. The ITO in the circumstances concluded that there was absolutely no case to support the claim for reduction of Rs. 7,91,079 from the sales account of the assessee.
10. The assessee took up., the matter before the Commissioner (Appeals) raising similar contention. The Commissioner (Appeals) considered the provisions of Clause 8 of the standard FOB contract form of Calcutta Jute Fabrics Shippers Association (CJFSA) in which it was noted that export duty and Port Commissioner's charges based on rates in effect as bad debt of sales as defined therein and in the alteration therein in effect had shipment time or at time of shipment when shipment was delayed for reasons beyond the seller's control, to be on the buyer's account.
11. The Commissioner (Appeals) also took note of the Clause 17 in which it was stipulated that any claim has to be made within 115 days from the landing goods at destination. It was noted that as the goods were shipped after 1-6-1975, the limitation period of 115 days ended after 30-9-1975. The assessee made such provision for the legal liability to export duty refundable as on 30-9-1975. The assessee relied on the decisions as in Kedarnath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363 (SC) and Shrikant Textiles v. CIT [1971] 81 ITR 222 (Bom.).
12. The Commissioner (Appeals) considered different submissions made before him with which he disagreed. He pointed out that in the case of the assessee, STC was the exporter of jute goods of the Egyptian party and the STC purchased goods from the assessee as per the STC's certificate dated 5-12-1978. He also mentioned that as per STC's certificate dated 3-3-1980, the assessee exported the above goods to the foreign buyer of the STC on behalf of the STC and on STC's instruction.
13. The Commissioner (Appeals), therefore, did not accept that the Egyptian party could raise any claim against the assessee as the assessee had nothing to do with the foreign customers except that the assessee shipped the goods to that foreigner at the direction of the STC and as an agent of the STC. He, therefore, observed that if there was any claim due, the foreign party could make such claim from the STC alone which was real and legal exporter of jute goods. He referred also to the provisions of Section 64A, which fixes the liability on seller in respect of any decrees or remission of customs duty which takes effect after making of the contract of sale without stipulation as to the payment of such customs duty, i.e., the buyer may deduct so much of any contract price as will be. equivalent to the decrees of customs duty or remitted customs duty. He, accordingly wanted to see the sale contract between the STC and the Egyptian party to ascertain the stipulation, if any. But such contracts could not be made available to him, nor before the ITO. He, therefore, inferred that there was no direct contracts or agreement between the assessee and the Egyptian party. In the circumstances, he held that Section 64A cannot affect the assessee and no such liability could arise during the year to the Egyptian party. The action of the ITO was sustained. Hence, this appeal by the assessee.
14. As indicated earlier, the appeal by the assessee is that the Commissioner (Appeals) erred in sustaining the disallowance. It is urged by the assessee's learned counsel that the Commissioner (Appeals) failed to appreciate the facts in their proper perspective and he has decided without appreciating the terms and conditions of the contract under which the sale was effected to the Egyptian party. At the time of hearing, the assessee's learned counsel refers to the various papers placed in the paper book in order to strengthen the claim of the assessee. The various submissions made before the authorities below are reiterated before us also. In particular, our attention is drawn to the form of contract and intimation of the supplies effected by the assessee which are at pages 5,6, etc., of the paper books. It is submitted that all the exports order were governed by the CJFSA contract terms and conditions, as confirmed by the STC in its certificate dated 5-12-1978 which is page 9. Item 8 of the Calcutta Jute Goods Standard FOB contract form as considered by the Commissioner (Appeals), is also brought to our notice in order to emphasise that the export duty charges, etc., in force on the relevant date would be as per the conditions defined in that contract and any alteration therein would be on the buyer's account. The assessee's learned counsel draws our attention also to Clause 17 of the above terms and conditions in which it has been specified that any claim must be made within 150 days from the landing of the goods at destination. It is also emphasised by the assessee's learned counsel that the transaction in question was back to back contracts through STC. It is submitted that the Commissioner (Appeals) erred in stating that it was the STC which exported the goods to the foreign buyers and not by the assessee, It is also submitted that the Commissioner (Appeals) erred in stating that the assessee failed to produce the contract agreement for examination by the Commissioner (Appeals). As such, contract, etc., were not available with the assessee and the STC authorities declined to part with the original contract which they would make available for examination by the Commissioner (Appeals) if properly requisitioned. It is, therefore, submitted that the Commissioner (Appeals) erred completely in ignoring the basic facts of the case particularly when the liability to the foreign buyer in respect of the customs duty which was found refundable as a result of the abolition of the customs duty with effect from 1-6-1976.
15. In this connection it is also submitted that for the next assessment year, i.e., 1977-78 the ITO in the assessment order had added the same amount as income of the assessee on the ground that the assessee has written back the same to the profit and loss account for that year. It is also clarified that there was a double addition for the same amount in two years and that the assessee came up before the Tribunal being IT Appeal No. 901 (Cal.) of 1983 which was disposed of by the Tribunal by its order dated 8-8-1984, by which the addition of Rs. 7,91,080 added for the assessment year 1977-78 was deleted. It is pointed out by the assessee's learned counsel that the Tribunal deleted the above amount for the assessment year 1977-78 as a protective measure, as would be apparent also from the draft statement of the case in Reference Appeal No. 704 (Cal.) of 1984 dated 28-8-1985 (para 4, last line). According to the assessee's learned counsel, since the liability was ascertained during the year under consideration, liability should be allowed as deduction during this year, i.e., 1976-77 and if this contention is accepted for the assessment year 1976-77, the assessee would undertake that it shall not agitate for deduction for the same amount for the same assessment year 1977-78 and in such event, the Tribunal may give a suitable direction in IT Appeal No. 901 (Cal.) of 1983 for the assessment year 1977-78 that the amount in question allowed in the appeal on a protective measure may be withdrawn and the addition as made by the ITO may be restored for the assessment year 1977-78. In fact, the assessee has filed this undertaking dated 16-10-1985 which is placed on record.
16. In the circumstances, the assessee's learned counsel, therefore, contends that the appeal by the assessee for the assessment year 1976-77 may be allowed on facts.
17. The learned departmental representative supports the order of the Commissioner (Appeals), stating that for the assessment year under consideration, there was no liability which can be enforced by the parties concerned and that in fact, the Egyptian party has subsequently confirmed the point that they had no claim against the assessee relating to the export in question. It is emphasised before us that the export was done by the STC and not by the assessee, as mentioned in the certificate dated 3-3-1980 issued by the STC. It is submitted that these facts established that the assessee shipped the goods to the Egyptian buyer on behalf of the STC and, therefore, if there was any liability to refund any amount to the foreign buyer, it would the liability of the STC and not of the assessee. It is also submitted that Section 69A would have no application to the case of the assessee.
18. We have heard both the sides and have perused the orders of the authorities below for our consideration. We have also gone through the order of the Tribunal for the subsequent year which has been placed by the assessee's learned counsel before us, for our consideration. At the outset we have to mention that the ITO declined to allow deductions of the above amount from the total sales account as in his view, the amount represented customs duty collected by the assessee from the buyer as per the terms of the contract and in the meanwhile the customs duty on such goods was abolished with effect from 1-6-1975. The ITO was of the view that like sales tax customs duty was a part of the dealer's trade or business receipts, even the duty was charged separately or credited to the separate account in the accounts and that the liability to pay the duty would be deductible as the business expenditure in the year in which it arises or is discharged depending on the dealer's method of accounting. The ITO treated the customs duty collected by the assessee on the sales as trading receipts. He noted that in the instant case, there was no separate realisation of customs duty from the Egyptian party and the sale was made at the rate stipulated in the contract and there was no question of charging duty separately from the customer.
19. It is not disputed that the assessee collected the amount of customs duty from the Egyptian party as per the terms of the contract while supplying the said four supply orders. Certain supplies were shipped after 1-6-1975, i.e., after the abolition of the customs duty on such goods. There is some justification in the stand taken by the revenue that the sale was made by the assessee at the rates stipulated in the contract and there was no question of charging duty separately from the customer. The customs duty is payable if such goods were to be exported. In the case of the assessee the liability to pay the customs duty was with the order of the assessee. There is similarity between the liability of the exporter on account of customs duty payable and liability to pay sales tax which is of the dealer whether he realises such tax from the customers or not. When the dealer collects sales tax from his customers, such amount would constitute a revenue receipt and as and when the amount is paid to the Government, the dealer can claim such payment as deduction. This was the view of the Hon'ble Calcutta High Court in the, case of CIT v. Bird & Co. (P.) Ltd. (1981) 128 ITR 600 in which the ratio of the decision in the case of Chowringhee Sales Bureau (P.) Ltd. v. CIT (1973) 87 ITR 542 (SC) was followed.
20. There might be circumstances in which certain amounts may be due to the third parties, which were not claimed by the third parties and if such unclaimed amounts were transferred to the profit and loss account, then such amount may constitute income of the assessee, as held by the Hon'ble Allahabad High Court in Pioneer Consolidated Co. of India Ltd. v. CIT (1972) 85 ITR 410. But in the instant case before us and from the materials available, we find that there was no amount due to the third party, i.e., the Egyptian importer as payable by the assessee during the year. In fact, the period of 115 days was stated to have expired after the close of the accounting year relevant to the assessment year 1976-77. Crediting an amount to an account 'amount refundable to parties on account of customs duty reduction' was a unilateral act on the part of the assessee as we find that there was no claim for refund of amount supposed to have been paid by the Egyptian party on account of customs duty. Actually that fact was confirmed by the Egyptian authority's letter dated 10-3-1976 which is at page 4 of the paper book.
21. If there was any liability by the assessee to refund any amount of customs duty to the buyer, such liability would not come to an end by the unilateral act of the debtor. There can be a cessation of liability by bilateral acts by both the creditor and the debtor or by the refusal of the debtor to honour his liability. This is the view of the Hon'ble Calcutta High Court in the case of CIT v. Sugauli Sugar Works (P.) Ltd. (1983) 140 ITR 286.
22. But as indicated earlier, the assessee claimed that the liability to refund the amount of customs duty to the Egyptian buyer came to an end by the expiry of 115 days which fell within the assessment year 1977-78 which issue has come up before the Tribunal with which we are not concerned.
23. As indicated by us earlier, the liability to customs duty is similar to the liability to sales tax. The contract sale price was stipulated in the contract itself which was inclusive of customs duty payable on the export of such goods, for which account the letter of credit was issued by the Egyptian importer in favour of the assessee who has collected the payments through the Bank of Baroda, Calcutta Branch. In our opinion, the amount of customs duty collected by the assessee on the facts of the instant case constituted the trading receipts of the assessee. Deduction on account of such customs duty would be an admissible deduction as and when such payment would be made to the Government or refunded to the customer concerned. But during the year under consideration it is noticed that there was no payment of the customs duty concerned as the same was abolished on 1-6-1975 and there was no refund also of such amount on account of customs duty to the foreign customer. It would not be important to refer to the decision of the Hon'ble Supreme Court in the case of Cement Marketing Co. of India Ltd. v. Asstt. CST 1980 Tax LR 107. Of course, in that decided case the issue was under the M.P. General Sales Tax Act, 1959 and the Central Sales Tax Act, 1956. On the facts of that decided case, it was held that by reason of the provision of the Cement Control Order which governed the transaction of sale of cement entered into by the assessee with the purchasers, the amount of freight formed part of the sale price within the meaning of first part of the definition of the term 'sale price'. From the facts available in the instant case before us it cannot be said that the amount of the customs duty payable on the goods exported did not form part of the sale price as per the terms and conditions of supply by the assessee to the foreign buyer.
24. On the facts available before us, there could only be one conclusion that the customs duty collected by the assessee as an exporter formed part of the trading or business receipts although the assessee credited the amount so received under the head 'Amount refundable to parties on account of customs duty reduction' which would make no material difference. The nature of the amount collected by the assessee on account of customs duty in our opinion was trading or business receipt of the assessee. Aa stated earlier, the assessee would be entitled to deduction as and when such customs duty is paid to the Government. For this proposition, we may refer to another decision of the Hon'ble Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. (supra).
25. The above amount of Rs. 7,91,080 had not been claimed by the assessee as an ascertained liability for payment of customs duty in view of that the customs duty on that particular type of goods exported by the assessee, was abolished with effect from 1-6-1975.
26. As mentioned earlier, the assessee's learned counsel submits that the Commissioner (Appeals) went wrong in stating that it was the STO which exported the goods and not the assessee and as such the liability to the Egyptian party would lie with the STO and not with the assessee. The contention of the assessee is that it exported the goods and as such the liability was with the assessee for refunding the excise and customs duty collected from the foreign buyers. It is, however, seen from the letters dated 28-2-1975 and 14-3-1975 appearing at pages 2, 5 and 8 of the paper book addressed by the assessee to the STC that it was the assessee who confirmed having sold to the STC the articles mentioned in those letters. In fact, the STC also has given certificate copy of which is at page 9 of the papers book that it certified that it placed purchase orders of the goods mentioned therein on the assessee for export purpose and that by certificate dated 3-3-1980, copy of which appearing at page 10, the STC certified that the assessee exported the goods mentioned therein on behalf of the STC against the noted orders with the foreign buyers in Cairo. Apparently because of this factual information, the Commissioner (Appeals) formed the opinion that it was the STC and not the assessee which exported the goods to the Egyptian buyer.
27. We have given our opinion in the preceding paragraph of the customs duty collected by the assessee from the buyers would constitute trading or business receipt during the year concerned irrespective of the fact whether such amount was credited or not in the accounts. In our opinion, the ITO was justified on the facts of the case in not deducting the said amount from the sale proceed account for the year under consideration. In the circumstances, as discussed, the order of the Commissioner (Appeals) sustaining the order of assessment cannot be set aside although the inclusion made is confirmed by us although on different grounds and reasoning. In this view of the matter, we maintain the addition.
28. Again as mentioned earlier, the assessee claimed the above amount as deduction on account of a liability. We are of the view, on reasons recorded earlier, that customs duty received by the assessee in his character as an exporter would constitute or form part of its trading or business receipt. The assessee of course could claim deduction of the amount as and when the same is paid to the Government or refunded to the customers concerned. But these two contingencies did not take place during the year under consideration. The assessee did not pay the amount to the Government and neither refund to the foreign importer. In fact, importer did not file any claim at all. As such a unilateral act of the assessee would not create a liability as the accounting' system followed by the assessee would not be conclusive or decisive keeping in view the ratio of the decision in the case of Chowringhee Sales Bureau (P.) Ltd. (supra).
29. In a slightly different situation in the case of CIT v. Bijli Cotton Mills (P.) Ltd. (1970) 76 ITR 625 the Hon'ble Allahabad High Court noted that the assessee collected excise duty in March 1948, which was not paid to the Government. Part of the excise duty was refunded to the customers concerned in the year 1950 and credited the balance of the account collected, to the capital reserve account of the assessee. It was held on the facts of that case that there was force in the contention of the revenue that the receipt in March 1948 was in the nature of a trading receipt but would not be taxable in the year when the assessee credited later on the balances of the unpaid amount to the capital reserve account. In this decision the Hon'ble Allahabad High Court has also noted the provisions of Section 64A relied on by the assessee in the present case before the ITO. It was noted in that judgment that the seller may add so much to the contract price as will be equivalent to the amount paid or payable in respect of the excise duty on goods, Under Section 64A(a) of the above Act. Thus, in our view on the present facts of the case, there was no liability of the assessee which the assessee would be entitled to claim for deduction when such liability was not in existence. On the facts available, we noticed that the assessee unilaterally made the claim, but there was no corresponding claim for refund from the foreign importer that the amount relatable to the customs duty embedded in sale price as per contract was refundable to it subsequent to the abolition of the export duty on the items so exported by the assessee. The liability to pay customs duty was solely of the exporter whether he realised such duty from the customers or not. In our opinion, the customs duty charged by the exporter was in reality the part of the sales price, as indicated by the ITO in the assessment order on the basis of the contract agreement and as such it would be a trading receipt and not a liability of the year.
30. The Commissioner (Appeals) rejected the claim of the assessee on the reasons recorded by him in the impugned order which was discussed by us in the preceding paragraph. The Commissioner (Appeals) apparently came to the conclusion that the liability to refund the customs duty (which had been abolished) to the foreign importer was that of the STC in view of the correspondence between the assessee and the STC copies of which are at page 5 onwards of the paper book in which the assesses in its letters to the STC confirmed having sold those specific items to the STC, of course subject to the terms and conditions of the CJFSA contracts. The STC in its letter dated 5-12-1978 and 3-3-1980 has confirmed to the assessee exported the goods to the Egyptian importer on behalf of the STC against the undernoted orders of the STC to the foreign buyers in Cairo. But the claim of the assessee that these contracts were made subject to the terms and conditions of the CJFSA contracts and which were back to back contracts involving export of jute goods, it is urged on behalf of the assessee that the liability under the terms and conditions of the contracts, was that of the assessee and not of the STC as alleged by the Commissioner (Appeals). There appears to be some force in this aspect of the submissions made on behalf of the assessee in view of the last paragraph of the certificate of STC dated 3-3-1980 copy of which is at page 10 of the paper book in which it has been stated that that contracts and sales were governed by the terms and conditions of the standard contracts of the CJFSA and the entire claims against the foreign party were on account of Duncan International Ltd., i.e., the assessee. But as indicated earlier, we are of the view that there was no such liability for the assessee to meet during the year under consideration which would entitle the assessee to claim for deduction.
31. At the time of hearing it is submitted by the assessee's learned counsel that the same issue has came up for the succeeding assessment year in which the Tribunal allowed the claim of the assessee in respect of the deduction of the same amount of Rs. 7,91,080 which was added in the assessment by the ITO. Copy of the orders of the Tribunal dated 8-8-1984 is placed in our file on the facts of the case, it is argued by the assessee's learned counsel that the Tribunal allowed the claim of the assessee though as a matter of fact, it should not have been done as the liability to refund the amount of customs duty to the foreign importer, ceased during the subsequent year, i.e., the assessment year 1977-78, whereas during the year under consideration, i.e., 1976-77, the liability on account of customs duty was very much there. It is urged, therefore, that if the claim of the assessee in respect of the same amount is allowed during the assessment year 1976-77, presently before us, then the assessee would not agitate for deduction of the same amount in the assessment year 1977-78. To reinforce this submission the assessee filed a statement dated 16-10-1985 to that effect with a request that in such an event, suitable direction for the assessment year 1977-78 should be given to the ITO for restoration of the amount of Rs. 7,91,080 deleted by the Tribunal by its earlier order as stated above,
32. We have heard both the sides and have considered the different aspects of the arguments keeping in view the facts of the case. In our opinion in matters of taxation, each year is independent and has to be treated separately. In fact, there is no waiver or estoppel or res judicata in respect of the same, as was the view of the Hon'ble Calcutta High Court in the case of Pioneer Spring & Steel Concern (P.) Ltd. v. CIT (1982) 135 ITR 522. As indicated earlier, the Tribunal had disposed of the appeal by the assessee for the assessment year 1977-78 earlier and the claim of the assessee was allowed. In our opinion, since the order has been passed by the Tribunal on 8-8-1984 and as the order became final as contemplated Under Section 254(4) of the Act, we have in fact become functus offlcio. In the circumstances, we cannot even have power to review or modify any part of such order, this also was the view of the Hon'ble Calcutta High Court in the case of Niranjan & Co. Ltd. v. IT AT (1980) 122 ITR 519. The Tribunal can rectify any mistake, only when such mistake is apparent from the record and that too if brought to notice either by the assessee or by the revenue only.
33. In view of that we have discussed and dealt with various contentions and submissions made before us on the facts available, we are of the opinion that the stand taken by the ITO was justified in not accepting the claim for reduction. In such a situation, the order of the Commissioner (Appeals) confirming such assessment order would be justified although the Commissioner (Appeals) adopted different reasoning for rejecting the claim of the assessee. The subject-matter before us is the same. As such the order of the Commissioner (Appeals) impugned before us requires to be sustained.
34. As far as the decision of the Tribunal for the assessment year 1977-78 is concerned, we are of the view that as stated earlier, such order has become final. In the circumstances, we find no justification or material to concede to the claim, of the assessee for the year under consideration.
35. The next ground of appeal by the assessee is that the Commissioner (Appeals) erred in directing the ITO to allow the weighted deduction Under Section 35B of the Act relating to salary of employees engaged entirely on export business to only 75 per cent of such salary. It is also the appeal by the assessee that the Commissioner (Appeals) should have seen that once it is held that these employees were engaged exclusively for the export business, there is no ground for restricting the relief to 75 per cent only.
36. We have heard both the sides and have perused the orders of the authorities below for our consideration, It is seen that the Commissioner (Appeals) noted that the proportionate salary for export was shown at Rs. 2,51,958. The Commissioner (Appeals) directed the ITO to ask the assessee to furnish the amount of salary of the employees exclusively employed for export Section and to allow 75 per cent thereof following the decision of the Tribunal, Special Bench in the case of J.H. & Co. v. Second ITO [1982] 1 SOT 150 (Bom.). Having regard to the facts of the case and the conclusion and guidance given by the Special Bench, we find no scope to interfere with the order of the Commissioner (Appeals) on the point. This point of appeal by the aesessee is not accepted.
37. The next ground of appeal is that the Commissioner (Appeals) erred in directing the ITO to determine the interest Under Section 215 of the Act after giving effect to the appellate order, whereas the contention of the assessee was that it was not liable to be charged with any interest at all. The Commissioner (Appeals) at paragraph 9 of his order noted that the assessee disputed the imposition of the interest and the assessee wanted only consequential relief in the case the assessment was reduced in appeal. The Commissioner (Appeals) concluded that the assessee would get the relief automatically if the income is reduced as a result of appeal. It was also noted that the assessee had already applied to the ITO for relief under Rule 40 and the matter is pending. In appeal before us it has not been shown that the statement of the Commissioner (Appeals) was wrong in saying that the assessee wanted consequential relief only in case the assessment is reduced. Be it as it may, since the interest chargeable would depend on computation of income as a result of the appellate orders in the quantum of appeals, the ITO. should work out the relief admissible. He should also dispose of the application of the assessee under Rule 40 expeditiously.
38. In the result, the appeal by the assessee is treated as partly allowed.