Weighted deduction for small scale exporters denied where ownership of the manufacturing undertaking was not proved.

Weighted deduction under section 35B(1A) was available only to an assessee exporting goods as an export house or as a small scale exporter, that is, one exporting goods manufactured or produced in a small scale industrial undertaking owned by it. Although the assessee showed that rough emeralds were processed, cut, polished and made marketable, the record did not establish that the undertaking was owned by the assessee. The burden of proving the statutory condition rested on the assessee, and the materials on record were insufficient to satisfy that requirement. Weighted deduction was therefore not admissible.

---

---

Issues: Whether the assessee was entitled to weighted deduction under section 35B(1A) of the Income-tax Act, 1961, as a small scale exporter exporting goods manufactured or produced in a small scale industrial undertaking owned by it.

Analysis: The relevant provision allowed the deduction only where the assessee was engaged in export of goods and either held an export house certificate or was a small scale exporter. A small scale exporter was one who exported goods manufactured or produced in a small scale industrial undertaking owned by him. The assessee showed that rough emeralds were processed, cut, polished, and made marketable through skilled labour, but the Tribunal had not recorded a finding that the industrial undertaking was owned by the assessee. The burden lay on the assessee to establish that the goods exported were manufactured or produced in a small scale industrial undertaking owned by it, and the materials on record did not satisfy that requirement.

Conclusion: The assessee was not entitled to weighted deduction under section 35B(1A) of the Income-tax Act, 1961, and the answer was against the assessee and in favour of the Revenue.

---