Weighted deduction under section 35B fails where no goods are exported from India by the firm or on its behalf.

Weighted deduction under section 35B was unavailable because the business in question was a non-resident firm carrying on operations only in Malaysia, and no goods were exported from India by the firm or on its behalf. The partners were resident in India, but that fact did not satisfy the statutory export-linked condition. As the claim had to be founded on export-related activity from India, the absence of such exports meant the deduction could not be allowed, and the reference was answered against the assessee.

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Issues: Whether the assessee was entitled to weighted deduction under section 35B of the Income-tax Act, 1961, for the relevant assessment years when the business of the non-resident firm carried on by the partners was in Malaysia and no goods were exported from India by the firm or on its behalf.

Analysis: The claim for weighted deduction under section 35B depends on export-related activity from India. On the facts found, the firm was a non-resident firm carrying on business only in Malaysia. The partners, though resident in India, had not exported any goods from India on behalf of the firm. The stated legal position was consistent with the view that where neither the firm nor its partners exported goods from India, the statutory condition for claiming weighted deduction was not satisfied.

Conclusion: The assessee was not entitled to deduction under section 35B, and the question referred was answered in the negative, against the assessee.

Ratio Decidendi: Weighted deduction under section 35B is unavailable unless the claim is founded on export of goods from India by the assessee or on behalf of the relevant business.

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