Weighted deduction under section 35B depends on ownership of the industrial undertaking, not merely business activity.

Weighted deduction under section 35B was treated as available only where the assessee owns the relevant industrial undertaking. Applying the earlier binding view on the same point, the Rajasthan HC noted that the assessee had no plant or machinery for manufacturing the goods in question. On those undisputed facts, the claim failed because ownership of the undertaking was a prerequisite to the deduction. The answer to the referred question was therefore against the assessee and in favour of the Revenue.

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Issues: Whether the assessee was entitled to weighted deduction under section 35B of the Income-tax Act, 1961, as a small scale industrial undertaking.

Analysis: The claim for weighted deduction was examined in the light of the requirement that the industrial undertaking be owned by the assessee. Following the earlier binding decision on the same point, the deduction under section 35B was held to be available only where the assessee owns the industrial undertaking. On the undisputed facts, the assessee owned no plant or machinery for manufacturing the relevant goods.

Conclusion: The assessee was not entitled to weighted deduction under section 35B, and the answer to the referred question was against the assessee and in favour of the Revenue.

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