Weighted deduction for customs duty turned on where carriage of goods ended before payment was made.

Weighted deduction for customs duty under section 35B depended on a factual finding as to when the carriage of goods ended. If the carriage had terminated at New York before payment, the expenditure could fall within the allowance for export-related outgoings; if the carriage continued beyond New York, the duty would not qualify. Because the authorities had not determined that factual issue, the legal question could not be answered on the material available and the referred question was declined.

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Issues: Whether customs duty paid in the United States qualified for weighted deduction under section 35B of the Income-tax Act, 1961, depending on when the carriage of goods ended.

Analysis: The answer depended on a factual finding as to whether the carriage of goods had terminated before the customs duty was paid or whether payment was made during the onward journey to the final destination. If the carriage had ended at New York, the duty could fall within the allowance contemplated by section 35B(1)(b)(iii); if the carriage continued beyond New York, the expenditure would not qualify. That factual issue had not been found by the authorities below and required determination before the legal question could be answered.

Outcome: The referred question was declined to be answered.

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