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Issues: (i) Whether weighted deduction under section 35B of the Income-tax Act, 1961, was allowable on agency commission paid in India to a clearing agent for export-related business. (ii) Whether weighted deduction under section 35B of the Income-tax Act, 1961, was allowable on packing credit interest paid to a bank.
Issue (i): Whether weighted deduction under section 35B of the Income-tax Act, 1961, was allowable on agency commission paid in India to a clearing agent for export-related business.
Analysis: The expenditure on commission was incurred in India in connection with export or supply of goods outside India. Such expenditure falls within the exclusion under sub-clause (iii) of section 35B(1)(b), under which expenditure incurred in India in connection with the supply of goods outside India does not qualify for weighted deduction.
Conclusion: Weighted deduction was not allowable on the agency commission and the issue was answered against the assessee.
Issue (ii): Whether weighted deduction under section 35B of the Income-tax Act, 1961, was allowable on packing credit interest paid to a bank.
Analysis: The claim for packing credit interest was covered by the court's earlier decision on the same point, which held such expenditure outside the scope of the weighted deduction claim under section 35B.
Conclusion: Weighted deduction was not allowable on packing credit interest and the issue was answered against the assessee.
Final Conclusion: The reference was answered in favour of the Revenue, with both questions decided against the assessee.
Ratio Decidendi: Expenditure incurred in India in connection with the supply of goods outside India does not qualify for weighted deduction under section 35B(1)(b)(iii) of the Income-tax Act, 1961.
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