Customs rebate treated as revenue where contracts, accounting and conduct show the rebate belonged to the exporter and is taxable.

Customs rebate receipts were held to be the assessee's revenue where factual evidence-contractual terms, correspondence, contemporaneous accounting entries crediting a customs rebate account, absence of repayments, and admissions by the assessee-established the real agreement between parties. The operative effect is that such rebates, when found by the fact-finder to belong to the exporter, are to be treated as revenue receipts and assessable to tax. The Tribunal's factual finding on ownership of the rebate was supported by evidence and therefore sustained.

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Issues: (i) Whether the customs rebate amounts received by the assessee were liable to be taxed in the hands of the assessee; (ii) Whether there is evidence to justify the Tribunal's finding that the customs rebate was not received by the assessee on behalf of the mills and was a revenue receipt of the assessee.

Issue (i): Whether the customs rebate amounts received by the assessee were liable to be taxed in the hands of the assessee.

Analysis: The Court considered the Tribunal's factual finding that the rebate receipts belonged to the assessee rather than to the mills. The Tribunal evaluated contract forms, letters from mills, the assessee's books of account which credited the amounts to a customs rebate account, absence of any repayment to mills, and admissions by the assessee's representative indicating no intention to repay. The Court held that the Tribunal had taken into account the material evidence tendered by both parties, and that there was evidence to support the conclusion that the rebate was the assessee's revenue.

Conclusion: Answered in favour of the Revenue (against the assessee).

Issue (ii): Whether there is evidence to justify the Tribunal's finding that the customs rebate was not received by the assessee on behalf of the mills and was a revenue receipt of the assessee.

Analysis: The Court examined the Government circular directing payment of the rebate to exporters, the contractual footnotes purporting to reserve repayment to mills, contemporaneous accounting entries crediting the rebate to the assessee's account, lack of any repayments, and the assessee's conduct and admissions. The Tribunal treated the real agreement between parties and concluded that the rebate formed part of the price and belonged to the assessee. The Court found that the Tribunal's finding of fact was supported by evidence and was not perverse.

Conclusion: Answered in favour of the Revenue (against the assessee).

Final Conclusion: The Tribunal's factual finding that the rebate receipts were the assessee's revenue is upheld, and the assessee's contention that the amounts were received on behalf of the mills is rejected.

Ratio Decidendi: Where a tribunal's finding of the real agreement between parties is supported by evidence including contractual terms, accounting treatment, conduct, and admissions, the receipt is to be treated according to that factual finding; a receipt found to belong to the assessee is a revenue receipt assessable to tax.

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