1993 (4) TMI 19 - HC - Income Tax

High Court upholds Travel Agency's right to weighted deduction under Income-tax Act

The High Court of BOMBAY ruled in favor of the assessee, a travel agency, in an application under section 256(2) of the Income-tax Act, 1961, regarding ... Development Allowance, Finding Of Fact, Question Of Law, Weighted Deduction Issues involved: Application u/s 256(2) of the Income-tax Act, 1961 for direction to ITAT to state the case and raise question of law regarding entitlement to weighted deduction u/s 35B.Summary:The High Court of BOMBAY delivered a judgment on an application u/s 256(2) of the Income-tax Act, 1961, concerning the entitlement to weighted deduction u/s 35B. The assessee, a travel agency, claimed weighted deduction for providing technical know-how to persons outside India. The Tribunal allowed this claim based on the definition of technical know-how u/s 80MM(2) which includes imparting information concerning industrial, commercial, or scientific knowledge, experience, or skill. The Tribunal found that the activities of the assessee, such as itinerary planning, suggesting places of interest, and providing information to foreign tourists, fell under this definition. Consequently, the Tribunal directed the Income-tax Officer to examine and allow weighted deduction on eligible expenditure u/s 35B.The High Court upheld the Tribunal's decision, stating that the assessee was engaged in the business of imparting commercial knowledge, expertise, or skill, as per the definition of technical know-how u/s 80MM(2). The Court emphasized that the Tribunal's findings on the nature of activities carried out by the assessee supported the conclusion that the assessee provided information falling under the definition of technical know-how. Therefore, the Court discharged the rule without delving into other contentions raised by the Department regarding expenditure location or other requirements of section 35B, as those were yet to be examined.