Freight rebate recorded in the manifest was a discount on carriage charges, making net freight the taxable amount.

Rebate of freight expressly recorded in the ship's manifest at loading was treated as part of the same commercial transaction, so the amount payable for carriage of goods under section 172(2) was only the net freight after rebate. The later refund did not change the character of the allowance because the rebate had already been agreed at shipment. The freight receipt could not be split into separate dealings as freight and independent expenditure. On these facts, the rebate operated as a discount on freight, and the revision order was unsustainable; the appeal was allowed.

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Issues: Whether the rebate of freight specified in the ship's manifest on the date of loading could be excluded from the gross freight for the purpose of section 172(2) of the Income-tax Act, 1961, so that only the net amount after rebate was the amount paid or payable on account of carriage of goods.

Analysis: The rebate was expressly recorded in the manifest prepared at the time of loading, and the freight and rebate formed one integrated commercial transaction. The subsequent refund after about two months did not change the character of the allowance, because the rebate had already been agreed to at the time of shipment. The amount could not be split into two separate dealings, one as freight receipt and the other as independent expenditure. On the facts, the arrangement was treated as a discount on the freight and not as a separate outgoing of the shipper.

Conclusion: The amount payable on account of carriage of goods was the net freight after rebate, and the revision was unsustainable. The appeal was allowed and the revision order was cancelled.

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