Commissioner of Income Tax vs Chemmeens and G. Gangadharan Nair

G. Sivarajan, J.—These two appeals are filed by the Commissioner of Income Tax, Cochin, against two separate orders of the Income Tax Appellate Tribunal, Cochin Bench in I.T.A. Nos. 610 (Coch)/94 and 484 (Coch) of 1996 in the case of two different assessees in respect of the assessment year 1992-93. Since a common question of law arises for consideration in these cases, both the appeals are being disposed of by this common judgment. While admitting I.T.A. No. 166 of 2002 notices were ordered on the following three questions of law:

(1) Whether, on the facts and in the circumstances of the case the assessee is entitled to any benefit on the export house premia ?

(2) Whether, on the facts and the circumstances of the case and in the light of Explanation (baa) to Section 80HHC(4A) is not the exclusion of 90 per cent. of export premia in accordance with law ?

(3) Whether, on the facts and in the circumstances of the case and the ''profits of the business'' u/s 80HHC(4A) being the profits of the business as computed under the head ''Profits and gains of business or profession as reduced'' and considering the limited scope of ''derived from'', the assessee is entitled to any exemption on the export house premia ?

Similarly, while admitting I.T.A. No. 251 of 2002 notice was ordered on the following questions of law for decision of this court:

(1) Whether, on the facts and in the circumstances of the case the assessee is entitled to any benefit on the export house premia ?

(2) Whether, on the facts and in the circumstances of the case and in the light of the Explanation (baa) to Section 80HHC(4A) is not the exclusion of 90 per cent. of export premia in accordance with law ?

(3) Whether, on the facts and in the circumstances of the case and the profits of the business u/s 80HHC(4A) being the profits of the business as computed under the head ''Profits and gains of business or profession as reduced'' and considering the limited scope of ''derived from'', the assessee is entitled to any exemption on the export house premia ?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in directing to recompute the deduction u/s 80HHC by ignoring the loss derived from the export of trading goods ?

(5) Whether, on the facts and in the circumstances of the case, while computing deduction u/s 80HHC the loss derived from the export of trading goods has to be excluded ?

Though a number of questions are raised in both these appeals all the questions excepting questions Nos. 4 and 5 in I.T.A. No. 251 of 2002 relate to one issue, i.e., whether the export house premium received by the assessee is includible in the profits of the business of the assessee while computing the deduction u/s 80HHC of the Income Tax Act, 1961 (for short "the Act")). In the assessment of the respondent-assessees in both these appeals for the year 1992-93 the Assessing Officer has held that in view of Clause (baa) of the Explanation to Section 80HHC of the Act which defines profits of the business as profits of the business as computed under the head "Profits and gains of business or profession" as reduced by ninety per cent. of any sum referred to in Clauses (iiia), (iiib) and (iiic) of Section 28 or of any receipts by way of brokerage, commission, interest, rent charges, or any other receipts of similar nature included in such profits a portion of the deduction claimed by the assessee cannot be allowed. According to the Assessing Officer export house premium received by the assessee attracted the said clause. In the appeal filed by the respondent-assessee in I.T.A. No. 166 of 2002, the Commissioner of Income Tax agreed with the computation made by the Assessing Officer on the basis of the provisions of Clause (baa) of the Explanation to Section 80HHC. This was confirmed by the Appellate Tribunal in further appeal by the assessee. The assessee took up the matter in reference before this court and this court by judgment dated June 19, 1998, in ITR No. 36 of 1996 G. Gangadharan Nair Vs. Commissioner of Income Tax, set aside the order of the Tribunal and remitted the matter to the Tribunal for fresh decision. The Tribunal thereafter considered the appeal and by following its own decision in the case of United Marine Exports v. Deputy CIT [2000] KLJ 622, held that the assessee had not rendered any service to the export house and therefore the export incentives received by the assessee from the export houses cannot be excluded from the profits of the business.

However, in the case of the respondent-assessee in I.T.A. No. 251 of 2002 the Commissioner of Income Tax (Appeals) herself had allowed the claim made by the assessee following an earlier decision of the Tribunal in I.T.A. No. 498/Coch of 1995 in the case of A.M. Moosa v. Asst. CIT. In the appeal filed by the Department the Tribunal confirmed the order of the first appellate authority by following its own decision in United Marine Exports'' case [2000] KLJ 622 mentioned supra.

We have heard Sri P.K.R. Menon, learned senior counsel (Government of India, Taxes), appearing for the appellants and Sri P. Balakrishnan and Sri M. Pathrose Mathai, learned Counsel appearing for the respondents.

The senior counsel for the appellant wanted to argue the matter very elaborately. Counsel for the respondents then submitted that the very question was considered by this court in the judgment dated April 4, 2002, in I.T.A. No. 4 of 1999 and connected cases in the case of Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, where it was held that the amount described as premium is part of the price settled by the assessee for sale of its merchandise and it is neither brokerage, commission, interest, rent charges or collection of any amount of similar nature. The senior counsel for the appellant then submitted that the authorities and the Tribunal in the reported case and in the present cases had only considered the question whether the export premium received by the assessee partakes of the character of service charges so as to fall within Clause (baa) of the Explanation to Section 80HHC. The senior counsel submits that Section 80HHC of the Act only provides for deduction of the profits derived by the assessee from the export of goods or merchandise and therefore only the profits derived by the assessee from the export of such goods or merchandise can be reckoned for the purpose of relief u/s 80HHC of the Act. The senior counsel submitted that the export premium does not form part of the sale proceeds of the export and therefore export premium cannot be treated as profits derived from the export of the goods or merchandise. According to the senior counsel, at the most the export premium can be treated as "attributable" to the export business. The senior counsel submitted that the distinction between the expressions "derived by" and "attributable to" was considered by the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. Vs. The Commissioner of Income Tax, Gujarat-II, Ahmedabad, , A.M. Moosa, Bharath Sea Foods Vs. Commissioner of Income Tax, and Commissioner of Income Tax, Karnataka Vs. Sterling Foods, Mangalore, and submitted that the export premium received by the assessee from the export house cannot be said to have been derived from the export business of the assessee. The senior counsel further submitted that none of the authorities including the Tribunal and this court in Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, had considered the issue in the above light. Senior counsel further submitted that since this is a pure question of law the Department is entitled to raise this question before this court. He in support of this, relied on the decision of the Supreme Court in Salem Co-operative Central Bank Limited Vs. Commissioner of Income Tax, . The senior counsel accordingly submitted that the since the export premium received by the assessee cannot be treated as income derived from export business, the assessee is not entitled to the deduction u/s 80HHC of the Act.

Shri P. Balakrishnan, learned Counsel appearing for the respondent-assessee in I.T.A. No. 166 of 2002 on the other hand submitted that the claim of the assessee for deduction u/s 80HHC is not on the basis that the assessee is the exporter but only by virtue of the provision of Section 80HHC(1A) and that so far as the assessee is concerned, the export premium forms part of the export deal between the assessee and the export houses and therefore so far as the assessee is concerned, it forms part of the export transaction and consequently the income by way of export premium is profit derived by the assessee from the export of such goods or merchandise. Counsel submitted that the Tribunal in the case of the assessee had found that the facts of the case are similar to the facts of United Marine Exports'' case [2000] KLJ 622 and by following its earlier decision in that case held that the assessee had only received services from the export houses and the assessee had not rendered any service to the export house. Counsel further submitted that the Tribunal in its decision in United Marine Exports'' case [2000] KLJ 622 had elaborately considered the arguments now addressed by the senior counsel for the Revenue and rejected all those contentions. Counsel submits that the Tribunal in that case had categorically held that the export premium received by the assessee is intimately connected with the sale consideration received by the assessee and therefore the said amount cannot be excluded under the provisions of Clause (baa) from the profits of the business. He further submitted that the Tribunal in that case had clearly said that their view is in consonance with the view taken by the Tribunal in its latest decision in I.T.A. Nos. 47 and 48/Coch of 1998 dated March 31, 2002, in the case of Baby Marine Exports. The counsel submitted that this decision in Baby Marine (Eastern) Exports'' case has come up before this court in I.T.A. No. 4 of 1999 and connected cases which was decided by this court in the judgment dated April 4, 2002 Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, , counsel on that basis submits that there is no merit in the contention taken by the senior counsel based on the expression "derived by" used in Section 80HHC and the decision of the Supreme Court bringing out the distinction between the expressions "derived by" and "attributable to".

Mr. M. Pathrose Mathai, counsel for the respondent-assessee in I.T.A. No. 251 of 2002, in addition to the above submissions pointed out that the decisions relied on by the senior counsel are rendered by the Supreme Court and by this court based on the facts of those cases and since this court on similar circumstances held that the export premium received by the assessee from the export houses forms part of the price settled between the parties for sale of the merchandise and that it is neither brokerage, commission, interest, rent, charges etc., there is no scope for the application of those decisions to the facts of this case. Counsel also pointed out that though the Revenue had filed review petitions-R.P. No. 350 of 2002 and other petitions for review of the judgment dated April 4, 2002 in I.T.A. No. 4 of 1999 (see Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, and connected cases, the Division Bench dismissed the said review petitions stating that there is no error apparent on the face of the records.

We have considered the rival submissions. The question, as already noted, is as to whether export premium received by the assessee from export houses as per agreements entered into between them is liable to be excluded from the profits of the business by applying Clause (baa) of the Explanation to Section 80HHC in the computation of deduction u/s 80HHC of the Act. The assessees in both these cases had exported marine products through various export houses as per the agreements entered into between the assessees and the export houses. As per the agreement the assessees are entitled to get the f.o.b. value of the goods or merchandise exported in foreign exchange directly and in addition the assessee gets in Indian rupees the incentive referred to in the relevant agreement from the export house. Thus the consideration received by the assessee for routing the export of marine products through the export house are (i) the f.o.b. value of the export, and (ii) the export premium. According to the assessee it has not done any service to any export house except the services referred to in the relevant agreement with the concerned export houses and that too is the routing of the export through the concerned export house and attending to the modalities of the export as per the terms of the agreement. It is also their case that the export premium received will not fall under any of the items mentioned in Clause (baa) of the Explanation to Section 80HHC. In other words, it is their contention that export premium cannot be treated as brokerage, commission, interest, rent, charges, etc. which do not partake of the character of turnover. But according to the Revenue the export premium received by the assessee is unconnected with the turnover and further the export premium is in the nature of service charges received attracting the provision of Clause (baa) referred to above. As already noted, the order under appeal in I.T.A. No. 166 of 2002 was passed by the Tribunal on remand by this court for entering a definite finding with regard to the materials based on which the authorities and the Tribunal had taken the view that the export premium received by the assessee represents service charges. In other words, the only contention taken by the Department before the appellate authorities was that the export premium partakes of the character of service charges so as to attract Clause (baa) of the Explanation to Section 80HHC. The Tribunal, as already noted, has decided the matter following its earlier decision in United Marine Exports'' case [2000] KLJ 622 . In that case the Tribunal had elaborately considered the nature and character of export premium received by the assessee from the export houses. With reference to the various agreements entered into between the assessee and the export houses, the Central Board of Direct Taxes circular explaining the circumstances for inserting Clause (baa) of the Explanation to Section 80HHC and the decision of the Supreme Court in Commissioner of Income Tax, Karnataka Vs. Sterling Foods, Mangalore, and Cambay Electric Supply Industrial Co. Ltd. Vs. The Commissioner of Income Tax, Gujarat-II, Ahmedabad, and this court in Commissioner of Income Tax Vs. Sea Pearl Industries (No. 1), and G. Gangadharan Nair Vs. Commissioner of Income Tax, the Tribunal held that the export premium cannot be excluded under the provisions of Clause (baa) from the profits of the business. We also found that the Tribunal had observed that the decision taken by them in United Marine Exports'' case [2000] KLJ 622 is in consonance with the decision rendered by it in Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, . As already noted, in Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, , this court considered the identical question raised in the case on hand and had taken the view that the amount described as premium is in fact part of the price settled by the assessee for sale of its merchandise and it is neither brokerage, commission, interest, rent, charges of any amount of similar nature. We find that the senior counsel for the Revenue had urged before the Division Bench in that case that the amount received by way of export premium is nothing but a consideration paid in excess of the price and it is not the price nor it would be part of the price as contended by the assessee. Further contention was that once the deal is struck and the purchaser agrees to pay the amount received as the f.o.b. price to the vendee any payment being made in excess of the price can be only a brokerage or commission or interest or charges which is referred in Section 80HHC(4B), Explanation (baa) of the Act. The Division Bench considered the above contentions with reference to the meaning of the word "premium" in standard dictionaries and thereafter posed the question in paragraph 21 as follows (page 95):

Our enquiry is whether the premium or service charges as earned would come within the ambit of any of the clause as mentioned above.

The Division Bench considered the question in paragraphs 22 to 27 of the judgment as follows (page 95):

The premium or the service charge earned is not a brokerage or interest or rent or charges as envisaged in the section. It may be either a commission or any other receipt of a similar nature. The supporting manufacturer is the vendor; hence it does not stand to reason that he earns a commission on his own sales. If it be so it has to fall in the residuary clause. The question then is can we apply the rule of ''noscitur a sociis'' to interpret the said expression.

We are of the view that in the instant case this rule cannot be invoked. The rule means that the expression should take colour from the words it is associated. As stated, compiling of that word already referred to in the section together with the expression ''premium or service charges'' would not synchronise. If the money received is neither a brokerage, nor interest nor rent nor charges nor commission then it is not possible to secure the same meaning to the expression ''premium'' or ''service charges'', as the case may be, by invoking the rule of ''noscitur a sociis''. The collection being made cannot be held to partake of similar character as the other expression specifically referred to. It is something else. Generally, in trade practice, a seller discovers a buyer who buys the wares in the course of his business. In the instant case, the supporting manufacturer is the seller and the export house is an intermediary. The intermediary using his own skill and labour locates a foreign buyer and after expending his expertise and labour, settles the sale. He thus incurs overhead charges. Normally, his seller should absorb the overheads and give credit to the expenses incurred by that intermediary. But, the intermediary in the instant case as per the term of the agreement, the f.o.b. price fetched at the sale by the intermediary is made over to the seller by him without providing for his overheads he suffered and referred to above. Besides over and above the f.o.b. price realised by him, he pays something more which is described as premium/service charges. What does this payment represent to the buyer in his trade practice ?

From the intermediary''s point of view, this is nothing but the price paid by him for having chosen him as the trader to deal with. May be in a given case higher share of such payment could have been demanded by the seller for settling the transaction. Can we treat the as the commission earned ?

Buyer trades in the wares purchased by him as business deal. But where does his profit arise ? This is provided in the following clause in the agreement, namely:

The benefits of Income Tax u/s 80HHC will be to the account of the processor/shipper. The export house agrees to give the necessary disclaimers. All other benefits available under the ITC policy for export houses will be to the account of the exporter.

(Similar clause exists in all other transactions. Exporter referred to above is the exporter).

Namely, the seller parts to the intermediary the import licence earned by him by virtue of the export of the goods which he sold to the intermediary. To put it differently, the charges in the nature of overheads incurred by the intermediary as also the premium paid by him to his seller is the price of the merchandise traded by him under the above clause. His merchandise is not merely the raw materials but his goodwill in the form of import permit. Is it not the income earned by the seller by his trade of marine products ?

The answer should be in the positive. On the date of settling of the deal between the seller and buyer, the credit of import permit is the concluded right acquired by the seller. The parties settled the value of the existing right. Obviously it does not partake of the character of winning a game of chance. Besides the question considered by A.M. Moosa, Bharath Sea Foods Vs. Commissioner of Income Tax, is not similar. There the sale of the import entitlement did not form part of a single transaction. It is treated as an independent commodity and dealt with as such. Therefore, as such this court felt that the profit derived by trading of import licence cannot be treated as an income derived out of the business.

It would appear that counsel for the Revenue did not argue the matter before the Division Bench on the basis of the decisions of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. Vs. The Commissioner of Income Tax, Gujarat-II, Ahmedabad, and in Commissioner of Income Tax, Karnataka Vs. Sterling Foods, Mangalore, which drew a distinction between the expressions "derived from" and "attributable to". It is in view of the above the Revenue filed review petitions in I.T.A. No. 4 of 1999 and connected cases decided by this court as above. However, the Division Bench while dismissing the review petitions had observed that the decision was rendered after due consideration of the question involved in that case and that this court held finally that the amount described as premium is in fact part of the price settled by the assessee for sale of its merchandise and it is neither a brokerage, commission, interest, rent, charges etc.

As already noted, the contention of the senior counsel for the Revenue is that the export premium received by the assessees from the export houses is not part of the price of the goods or merchandise sold and that export premium is paid in excess of the price. The present contention of the senior counsel is that it cannot be treated as profits derived by the assessees from the export of any goods or merchandise. If, on a consideration of the facts and circumstances of the case, it is held that the export premium forms part of the deal between the assessees and the export houses for routing the export through the export houses certainly it will form part of the price for which the goods or merchandise are exported through the export houses. In that event there cannot be any doubt that the export premium forms part of the profits derived by the assessee from the export of the goods or merchandise. In such a situation there is no scope for applying the decision of the Supreme Court mentioned earlier, which drew a distinction between the expressions "derived by" and "attributable to". In the present case, as we already noted, on similar facts the Tribunal and this court had taken the view that export premium received by the assessee from the export houses are intimately connected with the sale consideration and that the premium really forms part of the price. The Division Bench in Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, has clearly held that Clause (baa) of the Explanation to Section 80HHC is not attracted to the facts of that case. In these circumstances we agree with the Tribunal that Clause (baa) of the Explanation to Section 80HHC is not attracted to the facts of that case. In these circumstances we agree with the Tribunal that Clause (baa) of the Explanation to Section 80HHC of the Act has no application to export premium received by the assessee from the export houses. Respectfully following the Division Bench decisions in Baby Marine (Eastern) Exports Vs. Assistant Commissioner of Income Tax, we also hold that the income by way of export premium received by the assessee as per the agreement entered into between the assessee and the export houses is profits derived by the assessee from export of goods or merchandise.

In fairness to the senior counsel for the Revenue we will refer to the decision relied on by him. The senior counsel fairly submitted that neither the Assessing Officer had a case that export premium received by the assessee from the export house is not profit derived from the export of goods or merchandise nor did the Department address the arguments before the two appellate authorities with reference to the expression "derived by" occurring in Section 80HHC(1) of the Act and the distinction drawn by the Supreme Court and by this court in the decision cited by the counsel. According to the senior counsel, since this is a pure question of law arising from the order of the Tribunal the Department can raise the said question before this court for the first time. For the said purpose the senior counsel relied on the decision of the Supreme Court in Salem Co-operative Central Bank Limited Vs. Commissioner of Income Tax, . In that case the question for consideration was whether the Tribunal was right in holding that a sum of Rs. 19 being the interest received on the deposit made with the Electricity Board is a business receipt and accordingly deleting the additional surcharge of Rs. 81,920 charged for the assessment year 1963-64. The High Court returned the reference unanswered by directing the Tribunal to consider the case on all points that require consideration of the question whether the additional charge was attracted. The High Court directed the Tribunal to consider whether the additional surcharge was attracted even if the income of Rs. 19 is chargeable under the provision of profits and gains of the business. It was contended before the Supreme Court that by giving the impugned direction the High Court sought to widen the scope of enquiry which it is not empowered to do u/s 256. The Supreme Court observed that if the Tribunal proceeds upon an assumption which is erroneous in law and refers a question ,to the High Court, it cannot be said that the High Court is bound by the terms of the question referred and cannot correct the erroneous assumption of law underlying the question and if such power is not conceded to the High Court, the result would be that the answer given by the High Court may equally be erroneous in law. Such a situation cannot certainly be countenanced. It would not be in the interest of law or justice. The Supreme Court also relied on its earlier decision in Commissioner of Income Tax, Bombay Vs. Scindia Steam Navigation Co. Ltd., . In that case it was held that the High Court had jurisdiction to entertain the new contention raised by the assessee for the first time inasmuch as it was within the scope of the question framed by the Tribunal and was implicit therein.

The senior counsel then relied on the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. Vs. The Commissioner of Income Tax, Gujarat-II, Ahmedabad, , which considered the scope of the expression "attributable to" and, "derived from" in the context of the provision of Section 80E of the Act. The question involved in that case was as to whether the profits u/s 41(2) of the Income Tax Act, 1961, arising from the sale of machinery and building should be taken into account while computing the deduction of 8 per cent. u/s 80E(1) of the Act. The Supreme Court observed that, it cannot be disputed that the expression, "attributable to" is certainly wider in import than the expression "derived from" and that had the expression "derived from" been used, it could have with some force been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and distribution of electricity. Since the expression of wider import, namely, "attributable to", has been used, the Legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity. The Supreme Court in Commissioner of Income Tax, Karnataka Vs. Sterling Foods, Mangalore, was concerned with the question as to whether the receipts from the sale of import entitlements could not be included in the income of the assessee for the purpose of computing the relief u/s 80HH of the Income Tax Act, 1961. The Supreme Court considered the question whether the income derived by the assessee by the sale of the import entitlement was profits and gains derived from its industrial undertaking of processing sea food. The Supreme Court noted that the Division Bench of the High Court, relying on the decision in Cambay Electric Supply Industrial Co. Ltd. Vs. The Commissioner of Income Tax, Gujarat-II, Ahmedabad, came to the conclusion that the income which the assessee had made by selling the import entitlements was not a profit and gain which it had derived from its industrial undertaking. The Supreme Court also noted that the Division Bench observed that to obtain the benefit of Section 80HH, the assessee had to establish that the profits and gains were derived from its industrial undertaking. It was further noted that referring to the meaning of the word "source" the High Court held that the import entitlements that the assessee had earned were awarded by the Central Government under the scheme to encourage exports and that the source referable to the profits and gains arising out of the sale proceeds of the import entitlement was, therefore, the scheme of the Central Government and not the industrial undertaking of the assessee. The Supreme Court then referred to the following observations in National Organic Chemical Industries Ltd. v. Collector of Central Excise [1997] 106 STC 467 :

The dictionaries state that the word ''derive'' is usually followed by the word ''from'' and it means : get or trace from a source ; arise from, originate in ; show the origin or formation of.

The sue of the words ''derived from'' in item 11AA(2) suggests that the original source of the product has to be found. Thus, a matter of plain English, when it is said that one word is derived from another, often in another language, what is meant is that the source of that word is another word, often in another language. As an illustration, the word ''democracy'' is derived from the Greek word ''demos'', the people, and most dictionaries will so state. That is the ordinary meaning of the words ''derived from'' and there is no reason to depart from that ordinary meaning here.

A Division Bench of this court in A.M. Moosa, Bharath Sea Foods Vs. Commissioner of Income Tax, was also concerned with relief u/s 80HH and 80J of the Act and held that in order to claim special deductions under the said sections the profits should be relatable to the industrial undertaking and that profit or gain can be said to have been derived from an activity carried on by a person only if the said activity is an immediate and effective source of the said profit or gain.

In the present case the assessees are getting the deduction not by virtue of the provision of Section 80HHC(1) but only by virtue of the provision of Section 80HHC(1A), the said Sub-section provides that the assessee, being a supporting manufacturer, has during the previous year, sold goods or merchandise to any export house or trading house in respect of which the export house or trading house has issued a certificate under the proviso to Sub-section (1) there shall in accordance with and subject to the provisions of Section 80HHC be allowed in computing the total income of the assessee, a deduction of the profits derived by the assessee from the sale of goods or merchandise to the export house or trading house in respect of which certificate has been issued. From the above, it would appear that it is the sale of goods or merchandise to the export house which entitles the assessee to get the deduction under the sub-section and it is the profits derived by the assessee from the sale of goods or merchandise to the export house that is liable to be deducted in the computation of the total income. It is only by virtue of the agreements between the assessee and the export houses the assessees got the f.o.b. value of the goods exported and a percentage of the f.o.b. value as export premium. Thus both the amounts constituted the consideration received by the assessee for the sale of goods or merchandise to the export house. Thus even applying the principles laid down by the Supreme Court and of this court in the decisions relied on by the senior counsel for the Revenue it has to be held that the assessees are entitled to the benefits of Section 80HHC on the export premium received from the export houses. We accordingly answer all the questions raised in I.T.A. No. 166 of 2002 and the first three questions raised in I.T.A. No. 251 of 2002 and specified in paragraph 1 of this judgment in favour of the assessee and against the Revenue. Question Nos. 4 and 5 raised in I.T.A. No. 251 of 2002 is as to whether the loss suffered in the export of trading goods can be adjusted against the profits from the export of manufactured/processed goods in the computation of the deduction u/s 80HHC of the Act. This question is covered by our judgment dated March 12, 2003, in I.T.A. No. 96 of 1999 Commissioner of Income Tax Vs. Smt. T.C. Usha, where it was held that the loss suffered in the export of trading goods cannot be adjusted against the profits from the export of manufactured/processed goods vice versa. In the light of the said decision we answer questions Nos. 4 and 5 in I.T.A. No. 251 of 2002 in favour of assessee and against the Revenue. These two appeals are accordingly dismissed.