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of <h1>ITAT Bombay-C Grants Partial Relief to Limited Company on Export Market Development Allowance</h1> <h3>NAVNITLAL & CO. Versus FIRST INCOME TAX OFFICER.</h3> NAVNITLAL & CO. Versus FIRST INCOME TAX OFFICER. - TTJ 026, 206, Issues:1. Allowance of export market development allowance under s. 35B of the IT Act.2. Disallowance of weighted deduction on local commission, exhibition expenses, and quota fees.3. Interpretation of s. 35B for claiming weighted deduction on specific expenses.Analysis:1. The appellant, a limited company, claimed export market development allowance under s. 35B of the IT Act for the previous year ending on 31st Dec., 1979. The ITO allowed weighted deduction on a portion of the claimed amount but disallowed it on local commission, exhibition expenses, and quota fees. The appellant appealed before the CIT (A) and subsequently before the ITAT Bombay-C.2. The appellant contended that the commission paid to local parties for obtaining market information outside India falls under s. 35B(1)(b)(ii) and should qualify for weighted deduction. The exhibition expenses were justified as they were incurred to boost exports and promote Indian textiles abroad. The quota fees paid were argued to be incidental to exports. The department, however, opposed these claims, relying on previous judgments and contending that the expenses did not meet the criteria for weighted deduction.3. The ITAT considered the past judgments and principles laid down in relevant cases. It was noted that the dispute over commission payment to local parties had differing interpretations based on previous court decisions. The ITAT upheld the appellant's contention on commission payment, citing relevant case laws and setting aside the lower authorities' orders. Regarding exhibition expenses, the ITAT ruled in favor of the appellant, considering the impact on promoting exports outside India. However, the ITAT upheld the disallowance of weighted deduction on quota fees, as they did not align with the criteria specified under s. 35B(1)(b).4. The ITAT emphasized the importance of examining expenses claimed for weighted deduction under s. 35B in light of established legal principles and court decisions. The judgment highlighted the need for expenses to pertain to activities outside India to qualify for weighted deduction. Ultimately, the ITAT partially allowed the appeal, overturning the disallowance of weighted deduction on commission and exhibition expenses but upholding the decision on quota fees.
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