Weighted deduction for export commission was upheld where binding departmental instructions and certificate-based conditions were satisfied.

Commission expenditure claimed by an Export House Certificate holder was treated as eligible for weighted deduction under section 35B because the relevant CBDT instruction did not deny relief for the assessment years in question and, for expenditure incurred on or after 1 April 1978, its additional conditions were satisfied. The instruction was treated as binding on the Revenue, so the Revenue could not insist on a reference of the proposed question. The assessee's claim succeeded and the Revenue's petition for reference failed.

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Issues: Whether commission expenditure claimed by a holder of an Export House Certificate was entitled to weighted deduction under section 35B of the Income-tax Act, 1961, and whether the Revenue could compel a reference on that question in view of the binding departmental instructions.

Analysis: The relevant CBDT instruction was construed as not denying weighted deduction for the assessment years in question; rather, it imposed additional conditions for expenditure incurred on or after 1 April 1978, and those conditions were satisfied because the assessee held an Export House Certificate. The instruction was treated as binding on the Revenue, and on that basis the Revenue was not entitled to insist on a reference of the proposed question.

Conclusion: The assessee was held entitled to weighted deduction, and the Revenue's petition seeking a reference was rejected.

Final Conclusion: The decision confirms that binding departmental instructions can govern the Revenue's stand on weighted deduction claims, with the result that the Revenue's attempt to obtain a reference failed.

Ratio Decidendi: A departmental instruction binding on the Revenue, when properly construed, can foreclose a reference where the assessee satisfies the stated conditions for weighted deduction.

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