Weighted deduction exclusion for export freight bars air freight expenses for carrying goods to destinations outside India.

Weighted deduction under section 35B(1)(b)(iii) does not extend to air freight spent on carrying goods to their destination outside India. The provision allows deduction for expenditure on distribution, supply or provision outside India, but expressly excludes carriage of goods to their destination outside India. Because air freight for export carriage falls within that exclusion, such expenditure is not eligible for weighted deduction.

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Issues: Whether weighted deduction under section 35B(1)(b)(iii) of the Income-tax Act, 1961 is allowable on air freight expenses incurred for carrying goods to their destination outside India.

Analysis: The statutory language of section 35B(1)(b)(iii) allows weighted deduction for expenditure incurred wholly and exclusively on distribution, supply or provision outside India, but specifically excludes expenditure on the carriage of such goods to their destination outside India. The added words inserted with effect from 1 April 1968 make the exclusion explicit, and air freight paid for exporting goods falls within that excluded category.

Conclusion: Weighted deduction is not allowable on air freight expenses incurred for carriage of goods to their destination outside India, and the answer to the referred question is in the negative, in favour of the Revenue and against the assessee.

Ratio Decidendi: Expenditure on carriage of goods to their destination outside India is expressly excluded from weighted deduction under section 35B(1)(b)(iii) of the Income-tax Act, 1961, irrespective of where it is incurred.

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