1977 (10) TMI 23 - HC - Income Tax

High Court rules on weighted deduction under Income-tax Act, 1961 section 35B, allowing expenses within and outside India.

The High Court discharged the rule sought by the Commissioner regarding the interpretation of section 35B of the Income-tax Act, 1961. The Court held that ... Development Allowance, Income Tax Act Issues involved: Application for reference to High Court u/r 23, Interpretation of u/s 35B of Income-tax Act, 1961Application for reference to High Court u/r 23: The Commissioner sought a reference to the High Court on two questions, but the rule was issued only on the question of whether the Tribunal was right in law in allowing the assessee to claim weighted deduction u/s 35B of the Income-tax Act, 1961. The Tribunal's decision was based on the contention that the expenses were not admissible under section 35B since they were incurred in India.Interpretation of u/s 35B of Income-tax Act, 1961: The original order of the Income-tax Officer indicated the expenses for which weighted deduction was claimed by the assessee. It was noted that while the claim for export duty might not be admissible under section 35B, as it was incurred in India, the amount in question was minimal. The judgment emphasized that where the legislature explicitly excludes expenditure incurred in India, the assessee can claim the benefit of weighted deduction for expenses incurred either within or outside India, as long as they pertain to the specified purposes. The burden lies on the assessee to demonstrate that the purpose aligns with the requirements of the section. Despite potential oversight in allowing the benefit for export duty, given the small amount involved, the court deemed it unnecessary to pursue a reference.Conclusion: The rule was discharged with no order as to costs.