Law:

Section:

Section 2(5) of the Finance Act, 1963 - Export incentives - Assessment years 1963-64 to 1966-67 - Assessee was exporter of tanned hides and skins - It had entered into agency agreements with foreign firms to represent it in foreign market on commission basis - Foreign agent placed orders on assessee - Assessee purchased goods from local dealer who on letter of authority from assessee, dispatched goods directly to foreign agent - Assessee received one per cent discount from local dealers - Tribunal found that goods were dispatched on account of and at assessee's risk that invoices prepared by dealers containing prices less commission to agents and discount to assessee was signed by assessee; that there was no privity of contract between foreign agents and local dealers and that any difference in prices was invariably debited against assessee by foreign agents - Further, assessee was also found to be responsible for ensuring quality of goods and their proper shipment - Whether though exports were made by dealers from whom assessee purchased goods in India, those dealers acted merely as agents of assessee for exports in question and it was assessee which was really exporter in respect of said goods - Held, yes - Whether, therefore, discount earned by assessee on export of said goods constituted assessee's profits derived from export of hides and skins and, assessee was entitled to rebate thereon as per relevant provisions of Finance Act - Held, yes FACTS The assessee was an exporter of tanned hides and skins. To represent the assessee in foreign markets, it entered into agency agreements with foreign firms. Selling commission of 2 per cent, on all sales was payable by the assessee to the foreign representatives. The foreign representatives placed an order for the supply of hides and skins specifying the trade mark and also quoting the rate. On receipt of the order, the assessee approached the local dealers, negotiated the price and then sent a confirmatory letter to its foreign representatives giving relevant details of the commodity exported. On letter of authority by the assessee, the local dealer shipped the goods to the foreign representatives directly. In the…

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